Centene Raises 2026 Adjusted Earnings Floor After Third-Quarter Loss

The Tip Desk · October 27, 2026 · 4 min read

Adjusted diluted earnings were $0.58 a share as the company lifted the 2026 adjusted EPS floor to greater than $5.20.

Centene Corporation (CNC) raised its 2026 adjusted diluted earnings per share guidance floor by $0.40 to greater than $5.20 after a third-quarter adjusted result of $0.58 a share, and lifted the GAAP diluted EPS floor to greater than $3.46.

The healthcare company reported a GAAP diluted loss of $0.14 a share for the quarter ended September 30, 2026, versus a $13.50 loss a year earlier. Adjusted diluted earnings were $0.58 a share, compared with $0.50 a year earlier.

Chief Executive Officer Sarah M. London said solid underlying fundamentals in core businesses had powered a faster recovery to the earnings trajectory than previously anticipated. The company said it remains focused on a strong finish to 2026 and building on that progress in 2027.

Premium and service revenues were $45.1 billion, up 0.5% from $44.9 billion a year earlier, after a 4% year-over-year increase in the second quarter. Total revenues were $50.6 billion. The company said the increase was driven by premium yield and membership growth in the PDP business, rate increases in Marketplace and Medicaid to address medical trend, Marketplace risk adjustment revenue transfer for the 2026 benefit year, and state-directed payments, partially offset by lower Marketplace and Medicaid membership.

Medicare premium and service revenues rose 20% to $11.26 billion from $9.39 billion a year earlier, after a 17% year-over-year increase in the second quarter. Medicaid premium and service revenues increased 4% to $24.04 billion from $23.17 billion a year earlier. Commercial premium and service revenues fell 21% to $8.70 billion from $10.99 billion a year earlier. Other revenues were $1.10 billion.

The consolidated health benefits ratio was 92.7%, unchanged from 92.7% a year earlier, after 89.6% in the second quarter. The company said the consolidated HBR was better than expectations, driven by the Medicare segment, with Medicaid and Marketplace on track. It said the HBR benefited from a lower Marketplace HBR from improved pricing and risk transfer reflecting Marketplace membership acuity, as well as strong fundamental performance in Medicare Advantage and PDP. The 2025 HBR was positively impacted by a decrease to the premium deficiency reserve versus no premium deficiency reserve in 2026 for Medicare Advantage.

The SG&A expense ratio was 7.2%, compared with 7.0% a year earlier. The adjusted SG&A expense ratio was 6.5%, down from 7.0% a year earlier, after 6.9% in the second quarter. The company said the GAAP increase was primarily driven by enterprise optimization severance and vendor costs. It said the adjusted decrease was driven by cost management, leveraging of expenses over higher revenues, reduced Marketplace membership, and growth in PDP, which operates at a meaningfully lower SG&A expense ratio.

The effective tax rate was 46.7%, compared with 0.6% a year earlier. On adjusted earnings, the effective tax rate was 14.5%, compared with 2.5% a year earlier. The company said the 2026 rates reflect a decrease to the estimated annual effective tax rate applied to year-to-date operating results. The 2025 rates reflected estimating interim period taxes on the year-to-date tax method and the non-deductible nature of the goodwill impairment.

Cash flow used in operations was $3.67 billion, after cash flow provided by operations of $3.59 billion in the second quarter. The company said the use was primarily driven by the timing of pass-through, premium and other payments, as expected.

Total at-risk membership was 25.70 million at September 30, 2026, down from 27.97 million a year earlier. Marketplace membership was 3.40 million, down from 5.83 million a year earlier. Medicare Prescription Drug Plan membership was 8.95 million, up from 7.97 million a year earlier. Total Medicaid membership was 11.90 million, down from 12.71 million a year earlier.

During the third quarter the company repurchased $558 million of par value senior notes due 2027 and 2028. Total debt was $15.5 billion, with no borrowings on the $4.0 billion revolving credit facility at quarter end. In October 2026 the debt repurchase program was increased by $2.0 billion and the company repurchased the remaining $569 million of 2027 Senior Notes. Debt was reduced by $1.1 billion since June 30, 2026. With the increase and subsequent repurchase, $1.9 billion remained available under the program as of October 27, 2026.

The company is updating its 2026 HBR guidance range to 90.4% to 91.1% and its interest expense guidance range to $600 million to $620 million. The full-year 2026 HBR mid-point expectation was improved by 15 basis points to 90.75%. Full-year total revenues are guided at $196.5 billion to $200.5 billion and premium and service revenues at $173.0 billion to $177.0 billion.