Centene lifts profit outlook after earnings jump
The health insurer raised its 2026 adjusted earnings guidance above $3.40 a share.
Centene (CNC) posted first-quarter earnings that handily beat expectations and raised its full-year profit outlook, signaling confidence in its margin recovery. Adjusted diluted earnings rose to $3.37 a share, up 16% from a year earlier and more than triple the prior quarter’s $0.80.
The results marked a sharp rebound for the Medicaid-focused insurer, which had grappled with elevated medical costs and membership declines in its commercial business. Revenue climbed 7% to $49.9 billion, driven by higher premium yields, state-directed payments, and rate increases in Medicaid, even as membership in that segment fell to 12.4 million from 12.9 million a year earlier. Medicare membership growth, particularly in prescription-drug plans, helped offset the decline, with PDP enrollment rising 12% to 8.8 million.
Premium and service revenues reached $44.7 billion, up 5% year-over-year, with Medicaid contributing a 6% increase and Medicare an 18% gain. Commercial revenues, however, fell 6% as Marketplace membership plunged 36% to 3.6 million, reflecting redeterminations and market exits. The health benefits ratio improved slightly to 87.3% from 87.5% a year earlier, as Medicaid’s ratio dropped 50 basis points to 93.1% on better cost management, though Commercial’s ratio ticked up to 75.3% due to higher acuity among Marketplace members.
Cost discipline played a key role in the quarter’s performance. The SG&A expense ratio fell to 7.6% from 7.9% a year earlier, extending a four-quarter streak of sequential improvement as the company leveraged revenue growth and reduced its higher-cost Marketplace footprint. Cash flow from operations surged to $4.4 billion, boosted by net earnings and the partial sale of 2025 Medicare prescription-drug receivables.
The company also took steps to strengthen its balance sheet, cutting debt by $1 billion through senior note repurchases, lowering total debt to $16.4 billion. Days in claims payable rose to 48 from 46 in the prior quarter, reflecting timing shifts and state-directed payment impacts.
Centene raised its 2026 adjusted earnings guidance to more than $3.40 a share, up from its prior outlook of more than $3.00, citing strong first-quarter performance and confidence in continued margin recovery. Revenue guidance was also lifted by $1 billion, to a range of $171 billion to $175 billion, driven by Medicaid growth.
The company’s decision to stop reporting TRICARE eligibles, which had stood at 2.7 million in the prior quarter, underscored the completion of contract transitions in that segment.