Core Insights - Centene Corporation (CNC) reported a fourth-quarter 2025 adjusted loss per share of $1.19, which was better than the Zacks Consensus Estimate of a loss of $1.25 per share, compared to adjusted earnings of 80 cents per share in the same quarter last year [1][9] - Total revenues reached $49.7 billion, reflecting a year-over-year increase of 21.9% and surpassing the consensus estimate by 3.1% [1][4] Revenue Breakdown - Medicaid revenues increased by 11% year over year to $23 billion, while Medicare revenues surged 75% year over year to $9.6 billion. Commercial revenues rose 24% year over year to $10.8 billion [3] - Premium revenues grew by 23.8% year over year to $44 billion, driven by higher premiums and membership in the PDP and Marketplace businesses, as well as Medicaid rate hikes, exceeding the Zacks Consensus Estimate of $43.5 billion [4] Membership and Costs - Total membership declined by 3.4% year over year to 27.6 million, missing the consensus mark of 27.9 million, primarily due to decreases in Medicaid and Medicare memberships [5] - The health benefits ratio worsened by 470 basis points year over year to 94.3%, with operating expenses rising 26.7% year over year to $51.5 billion, largely due to increased medical costs, which escalated by 30.4% year over year [6][9] Financial Position - As of December 31, 2025, Centene had cash and cash equivalents of $17.9 billion, a 27.2% increase from the end of 2024. Total assets decreased by 6.9% to $76.7 billion, while long-term debt fell by 5.8% to $17.4 billion [7] - The company generated $5.1 billion in net cash from operations in 2025, a significant increase from the previous year [8] Full-Year Performance - For the full year 2025, total revenues amounted to $194.8 billion, a 19.4% increase from 2024, while adjusted EPS dropped 71% year over year to $2.08. Premium and service revenues reached $174.6 billion, up 20% year over year [11] 2026 Guidance - Management projects premium and service revenues for 2026 to be between $170 billion and $174 billion, indicating a potential decline of 1.5% from 2025. Total revenues are expected to range from $186.5 billion to $190.5 billion, suggesting a 3.2% decrease from 2025 [12] - Adjusted EPS is anticipated to exceed $3.00, representing a 44.2% increase from 2025, while GAAP EPS is expected to remain above $1.98 [12]

Core Viewpoint - Centene Corporation's stock declined due to a mixed outlook for fiscal 2026, despite reporting better-than-expected earnings for Q4 2025 [1]. Earnings Snapshot - The company reported a fourth-quarter 2025 adjusted loss of $1.19 per share, which was better than the consensus loss of $1.22 per share, contrasting with an income of $0.80 per share a year ago [2]. - Centene's sales increased from $40.81 billion to $49.73 billion, surpassing the consensus estimate of $48.39 billion [2]. - The health benefits ratio (HBR) rose to 94.3%, up from 89.6% a year ago [2]. Membership and Costs - Total membership across Centene's portfolio decreased to 27.63 million from 28.60 million a year ago, mainly due to a drop in Medicaid membership from 13.00 million to 12.52 million [4]. - Commercial membership increased from 4.81 million to 5.99 million [4]. - The increase in HBR was primarily driven by higher Marketplace morbidity impacting medical costs and program changes in the PDP business due to the Inflation Reduction Act [3]. Management Commentary and Guidance - Centene anticipates adjusted earnings for fiscal 2026 to exceed $3 per share, compared to the consensus of $2.94 [5]. - The CEO stated that the company is positioned for significant margin improvement and renewed adjusted diluted EPS growth, aiming for adjusted diluted EPS greater than $3.00 in 2026 [6]. - The company expects 2026 sales to be between $186.5 billion and $190.5 billion, below the consensus of $193.43 billion, with premium revenues projected between $170 billion and $174 billion [7].

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Core Insights - Health Net, a Medi-Cal managed care health plan under Centene Corporation, partnered with the Pro Football Hall of Fame to host two events in Sacramento: "Salute to Service" and "Strong Youth, Strong Communities" to honor local heroes and inspire youth ahead of Super Bowl Sunday [1][11] Group 1: Salute to Service Event - The "Salute to Service" event recognized healthcare professionals serving vulnerable communities in Sacramento, highlighting the critical work of WellSpace Health, a non-profit community health system [2][4] - Amber Kemp, VP of Medi-Cal Strategy at Health Net, emphasized the importance of community support and honoring healthcare heroes to inspire youth [3] - The event featured Pro Football Hall of Famers and local leaders, providing WellSpace Health employees with opportunities for engagement and recognition [6] Group 2: Strong Youth, Strong Communities Event - The "Strong Youth, Strong Communities" assembly at River City High School engaged over 2,000 students with motivational talks from professional athletes and community leaders, focusing on life skills and leadership [7][10] - Darrell Green, a Pro Football Hall of Famer, highlighted the importance of mental health discussions for youth empowerment [8] - River City High School Principal Jacob Geivett expressed gratitude for the partnership, emphasizing the positive impact of the event on students' resilience and future potential [10] Group 3: Organizational Background - Health Net has been operating in California for over 45 years, providing health plans for various demographics, including those eligible for Medi-Cal and Medicare, serving over three million members [12] - WellSpace Health serves 125,000 individuals annually through various health services, demonstrating a commitment to vulnerable populations in Sacramento and Placer counties [13]

Financial Data and Key Metrics Changes - The company reported a fourth quarter adjusted diluted loss per share of $1.19, contributing to a full year 2025 adjusted diluted EPS of $2.08, which was slightly ahead of expectations outlined in the previous quarter [7][8] - The fourth quarter GAAP diluted loss per share was $2.24, including a $389 million net loss from the divestiture of the remaining Magellan business [40][41] - The company anticipates full year 2026 adjusted EPS to exceed $3, representing over 40% year-over-year growth [10] Business Line Data and Key Metrics Changes - Medicaid's health benefits ratio (HBR) improved to 93.0% in Q4, showing a 40 basis points sequential improvement and a 190 basis points improvement from Q2 levels [12][42] - The Marketplace segment's HBR was about a point higher than forecasted, with slight improvements in medical cost trends [44] - The Medicare segment delivered strong results, with expectations for membership growth in the PDP business and a focus on achieving break-even in Medicare Advantage by 2027 [28][29] Market Data and Key Metrics Changes - The company closed 2025 with approximately 12.5 million Medicaid members, with expectations for a 5%-6% decline in member months in 2026 [43][52] - Marketplace membership is projected to be around 3.5 million by the end of Q1 2026, down from 5.5 million in December [24][53] - Medicare segment revenue is expected to grow by approximately $7.5 billion, driven by premium yield increases and membership growth [54] Company Strategy and Development Direction - The company is focused on restoring Medicaid business to sustainable profitability while enhancing quality outcomes for members [11] - Key strategies include optimizing networks, implementing new clinical programs, and increasing vigilance against fraud [13][16] - The company is leveraging data and technology, including AI, to improve operational efficiency and member engagement [34][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in executing the 2026 outlook, citing positive momentum and opportunities for margin expansion [38] - The company acknowledged the challenges faced in 2025 but emphasized the strength gained from navigating those challenges [36] - Management highlighted the importance of proactive engagement with state partners to address rate adjustments and program reforms [100][102] Other Important Information - The company ended 2025 with approximately $400 million in cash available for corporate use and reduced debt by $189 million, resulting in a debt-to-cap ratio of 46.5% [50] - The adjusted SG&A expense ratio for Q4 was 7.5%, bringing the full year to 7.4%, reflecting continued discipline and scale [50] Q&A Session Summary Question: Medicaid rate expectation for 4.5% - Management explained that the 4.5% rate assumption is prudent, considering the favorable maturation of 2025 rates and ongoing efforts to bend trend [63][64] Question: Trend comparison for 2025 and 2026 - Management indicated that the 2025 trend was in the mid-6s, while the 2026 assumption is a net trend of mid-4s, reflecting aggressive actions taken in the latter half of 2025 [67][69] Question: Confidence in exchange member dynamics - Management expressed confidence in margin improvement for the Marketplace segment, citing improved visibility and historical data to support pricing strategies [75][84] Question: Incremental decline in Medicaid membership - Management acknowledged slight attrition in membership and discussed the impact of state eligibility tightening and program changes on future membership [86][89] Question: Actuarial soundness lookback process - Management emphasized the importance of shortening the lookback period and maximizing the inclusion of recent data in the actuarial process to inform rate adjustments [95][100] Question: Segment margins in 2026 guidance - Management provided insights into expected margins, indicating opportunities for improvement across all business lines, with specific targets for Medicaid, Marketplace, and Medicare segments [104][105]

Financial Data and Key Metrics Changes - The company reported a fourth quarter adjusted diluted loss per share of $1.19, contributing to a full year adjusted diluted EPS of $2.08 for 2025, which was slightly ahead of expectations [6][7][38] - The fourth quarter GAAP diluted loss per share was $2.24, including a $389 million net loss from divesting the remaining Magellan business [38] - The company anticipates full year 2026 adjusted EPS to exceed $3, representing over 40% year-over-year growth [8][58] Business Line Data and Key Metrics Changes - Medicaid's health benefits ratio (HBR) improved to 93.0% in Q4, showing a 40 basis points sequential improvement and 190 basis points improvement from Q2 levels [10][40] - The Marketplace segment's HPR was about a point higher than forecasted, with medical cost trends slightly better than expectations in Q4 [42] - The Medicare segment delivered strong results, with Q4 fundamentals in line with expectations, and the company aims for break-even in Medicare Advantage by 2027 [26][27][46] Market Data and Key Metrics Changes - The company closed 2025 with approximately 12.5 million Medicaid members, with expectations of a 5%-6% decline in member months for 2026 [41][51] - Marketplace membership is projected to be around 3.5 million by the end of Q1 2026, down from 5.5 million in December [22][52] - Medicare segment premium revenue is expected to grow by approximately $7.5 billion, driven by the PDP business and membership growth [53] Company Strategy and Development Direction - The company is focused on restoring Medicaid to sustainable profitability while improving quality outcomes for members [9] - Key levers for Medicaid improvement include optimizing networks, implementing clinical programs, and enhancing fraud detection [11][14] - The company is integrating data and AI into operations to enhance efficiency and member experience [32][34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2025 was challenging but expressed confidence in the ability to execute against the 2026 outlook, with expectations for margin expansion [36] - The company is proactively engaging with state partners to ensure appropriate rate adjustments and program reforms [99][102] - Management emphasized the importance of data-driven decisions and the need for timely adjustments to rates based on recent trends [100][102] Other Important Information - The company ended 2025 with about $400 million in cash available for corporate use and reduced debt by $189 million, resulting in a debt-to-cap ratio of 46.5% [48] - The adjusted SG&A expense ratio for Q4 was 7.5%, bringing the full year to 7.4%, reflecting continued discipline [48] Q&A Session Summary Question: Medicaid rate expectation for 4.5% - Management explained that the 4.5% rate assumption is prudent, considering the favorable maturation of 2025 rates and ongoing efforts to manage trends [63][65] Question: Trend comparison for Medicaid in 2025 - Management indicated that the 2025 trend was in the mid-6s, with the 2026 assumption reflecting a net trend of mid-4s based on recent performance [67][69] Question: Confidence in exchange member dynamics - Management expressed confidence in margin improvement for exchanges, citing improved visibility and historical data to support pricing strategies [76][78] Question: Membership attrition in Medicaid - Management discussed expectations for continued attrition in membership, considering state eligibility tightening and program changes [88][90] Question: Actuarial soundness lookback process - Management highlighted efforts to shorten the lookback period for actuarial adjustments and the importance of recent data in rate negotiations [96][98] Question: Segment margins in 2026 guidance - Management provided insights into expected margins, indicating opportunities for improvement across all business lines, with specific targets for Medicaid and Medicare segments [105][106]

Financial Data and Key Metrics Changes - The company reported a fourth quarter adjusted diluted loss per share of $1.19, contributing to a full year 2025 adjusted diluted EPS of $2.08, which was slightly ahead of expectations outlined in the previous quarter [4][22] - The fourth quarter GAAP diluted loss per share was $2.24, including a $389 million net loss from the divestiture of the remaining Magellan business [22] - The company anticipates full year 2026 adjusted EPS to exceed $3, representing over 40% year-over-year growth [5][32] Business Line Data and Key Metrics Changes - Medicaid's health benefits ratio (HBR) improved to 93.0% in Q4, showing a 40 basis points sequential improvement and 190 basis points improvement from Q2 levels [6][22] - The Marketplace segment experienced a slight improvement in medical cost trends, with Q4 results better than expectations [10][24] - The Medicare segment delivered strong results, with fourth quarter performance in line with expectations, setting a solid foundation for 2026 [15][25] Market Data and Key Metrics Changes - The company closed 2025 with approximately 12.5 million Medicaid members, reflecting slight attrition [23] - Marketplace membership is expected to decline to around 3.5 million by the end of Q1 2026, down from 5.5 million in December [12][29] - Medicare Advantage revenue is projected to be flat from 2025 to 2026, with membership intentionally reduced [29] Company Strategy and Development Direction - The company is focused on restoring Medicaid business to sustainable profitability while maintaining quality outcomes for members [5][7] - There is a strong emphasis on leveraging data and technology, including AI, to enhance operational efficiency and member engagement [18][19] - The company aims to achieve break-even results in Medicare Advantage by 2027, with ongoing improvements in service and member experience [15][17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2025 was a challenging year but expressed confidence in the company's ability to execute against the 2026 outlook [20][21] - The company expects continued margin expansion opportunities while keeping members at the center of its operations [21] - Management highlighted the importance of proactive engagement with state partners to ensure program sustainability and address cost pressures [34][38] Other Important Information - The company ended 2025 with approximately $400 million in cash available for corporate use and reduced debt by $189 million, resulting in a debt-to-cap ratio of 46.5% [27] - The medical claims liability totaled $20.5 billion, representing 46 days in claims payable, a decrease of 2 days compared to the previous quarter [28] Q&A Session Summary Question: Medicaid rate expectation for 2026 - Management explained that the 4.5% rate expectation for Medicaid is based on constructive conversations with state partners and reflects a prudent assumption given the data available [33][34] Question: Trend comparison for Medicaid in 2025 - Management indicated that the 2025 trend was in the mid-6s, and the 2026 assumption of mid-4s is a net trend expectation, considering the elevated baseline and actions taken in the latter half of 2025 [35][36] Question: Confidence in Marketplace margin improvement - Management expressed confidence in margin improvement for the Marketplace segment due to effective repricing and repositioning strategies, as well as favorable membership dynamics observed during open enrollment [39][40] Question: Membership attrition in Medicaid - Management acknowledged slight attrition in membership and discussed the impact of state eligibility tightening and program changes on future membership [43][44] Question: Actuarial soundness lookback process - Management emphasized the importance of shortening the lookback period for actuarial soundness and maximizing the inclusion of recent data in rate adjustments [46][49] Question: Segment margins in 2026 guidance - Management provided insights into expected margins across segments, indicating opportunities for improvement while noting that long-term targets are still being assessed due to ongoing policy changes [51][52]

Core Viewpoint - Centene has forecasted its 2026 profit to exceed Wall Street expectations, which stands in contrast to other peers that have indicated ongoing challenges due to high medical costs [1] Group 1 - Centene's profit forecast for 2026 is positioned above market expectations, highlighting a positive outlook for the company [1] - Other companies in the industry are facing persistent pressure from elevated medical costs, indicating a contrasting performance trend within the sector [1]

CENTENE CORPORATION 2026 GUIDANCE $7.5 $0 ($ IN BILLIONS) Medicaid $88 $34.5 $45 $4.5 Medicaid Com mercial Medicare Other Marketplace Medicare Advantage $174.6 $172.0 2026 Estimated Segment Premium & Service Revenue1 2026 Guidance Mid-point 2025 Actual Medicare PDP ($8.1) ($2.0) FEBRUARY 2026 Forward-Looking Statements All statements, other than statements of current or historical fact, contained in this presentation are forward-looking statements. Without limiting the foregoing, forward-looking statements ...

Centene (CNC) came out with a quarterly loss of $1.19 per share versus the Zacks Consensus Estimate of a loss of $1.25. This compares to earnings of $0.8 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +4.76%. A quarter ago, it was expected that this healthcare company would post a loss of $0.21 per share when it actually produced earnings of $0.5, delivering a surprise of +338.1%.Over the last four quarters, the company has s ...