Core Viewpoint - Health insurance companies experienced a slight increase in stock prices after market hours on January 9, with notable gains among major players in the sector [1] Group 1: Company Performance - UnitedHealth's stock price rose by 0.8% [1] - CVS Health Group's stock price increased by 0.4% [1] - Humana's stock price saw a rise of 0.9% [1] - Centene's stock price also increased by 0.9% [1]

Core Insights - Centene Corporation (CNC) is enhancing its Medicaid-focused growth strategy through a new partnership with Cityblock Health, targeting 10,000 Medicaid members across 17 counties in Illinois [1][9] Partnership Details - The collaboration will provide a comprehensive 24/7 wrap-around care model, including primary and urgent care, behavioral health support, social care coordination, clinical pharmacy, and overall care management, specifically designed for Medicaid populations facing complex issues [2][9] - This partnership marks the fourth regional collaboration between Centene and Cityblock, following previous partnerships in New York, Ohio, and Florida, reflecting Centene's commitment to value-based care models [3][9] Strategic Implications - By integrating Cityblock's innovative care model, Centene aims to enhance member engagement, reduce unnecessary hospital visits, and lower overall care costs, which are crucial for maintaining healthy margins in Medicaid contracts [4][9] - Such partnerships may strengthen Centene's position as a leading Medicaid operator, adapting to evolving care models and enhancing its competitive edge with state regulators during contract renewals [5] Financial Performance - Over the past six months, Centene's shares have increased by 38.3%, significantly outperforming the industry growth of 10.7% [6]

Core Insights - US health insurance companies continue to dominate the global insurance market, with UnitedHealth Group Inc. leading in net premiums written (NPW) for 2024 at $308.81 billion, reflecting a year-over-year increase of 6.2% [1][5] Group 1: Top Insurers by Net Premiums Written - Four of the top five insurers and five of the top ten are US health insurers, with Centene Corporation in second place at $159.87 billion, up 6.9% from 2023 [2] - Elevance Health, Inc. and Kaiser Foundation Health Plan Group hold the third and fourth positions, reporting premiums of $144.17 billion and $128.81 billion, respectively [2] - State Farm Group moved up to fifth place from seventh, with a significant NPW increase of 16.4% to $114.47 billion, the highest percentage increase among the top ten [3] - China Life Insurance (Group) Co. fell to seventh from fifth, reporting $110.02 billion in NPW [3] Group 2: Notable Changes in Rankings - Progressive Corp., ranked 12th, recorded the highest percentage increase among the top 25 insurers, with premiums rising 20.9% to $74.42 billion [4] - Nippon Life Insurance Co., ranked 24th, experienced the largest percentage decline, down 10.9% to $44.95 billion in NPW [4] Group 3: Top Insurers by Non-Banking Assets - Berkshire Hathaway Inc. leads the ranking of the world's top 25 insurers by non-banking assets, reporting $1.15 trillion, an increase of 7.8% year over year [6] - Allianz SE fell to second place with $1.09 trillion in assets, up 6.2% [6] - The top five non-banking asset rankings remained unchanged, with China Life Insurance (Group) Co., Ping An Insurance (Group) Co. of China Ltd., and Prudential Financial, Inc. in third, fourth, and fifth places, respectively [7] Group 4: Changes in Non-Banking Assets - Athene Holding Ltd. recorded the largest percentage increase in non-banking assets, rising 20.9% to $363.34 billion [7] - Japan's National Mutual Insurance Federation of Agricultural Cooperatives, ranked 21st, saw the largest decline, with assets falling 2.6% to $384.02 billion [8]

Core Insights - Cityblock Health and Meridian Health Plan of Illinois have partnered to provide comprehensive, community-based care to 10,000 Medicaid beneficiaries across 17 counties in Illinois [1][2] Group 1: Partnership Overview - Meridian is a leading managed care organization in Illinois and a subsidiary of Centene Corporation [2] - Cityblock Health focuses on value-based healthcare for Medicaid and dually eligible beneficiaries and has been operating in Illinois since 2024 [2] - This partnership marks the fourth regional collaboration between Centene and Cityblock, following previous partnerships in New York, Ohio, and Florida [2] Group 2: Care Model and Services - The partnership aims to enhance clinical and care coordination for Medicaid members by integrating Meridian's primary care services with Cityblock's wrap-around care services [3] - Cityblock's wrap-around model includes 24/7 access to primary and urgent care, behavioral health, social care, clinical pharmacy, care management, and support services [3] - The care model leverages multidisciplinary clinical expertise, advanced technology, and data insights to improve care quality and member experience [4] Group 3: Market Context and Need - Nearly one in four residents in Illinois are enrolled in Medicaid, highlighting the need for improved access to quality care for this population [4] - Cityblock Health serves over 100,000 members and collaborates with various Medicaid health plans and health systems across more than ten states [6]

Core Insights - Centene Corporation is showing early signs of stabilization after a challenging first half of 2025, with shares rising 16.3% over the past three months, outperforming the industry's 7.3% decline [1][8] - The company faces ongoing challenges, including increased operating expenses and a rising health benefits ratio, which has impacted profitability [6][7] Financial Performance - Operating expenses increased by 5.5% in 2023, 5.8% in 2024, and surged by 26.5% in the first nine months of 2025, primarily due to higher medical costs [6] - The health benefits ratio rose from 87.7% in 2023 to 92.7% by the end of Q3 2025, indicating a squeeze on margins [6] - Adjusted net margin fell from 2.3% to 0.5% in Q3 2025, highlighting profitability challenges [7] - Long-term debt stands at $17.5 billion, with a debt-to-capital ratio of 45.51%, above the industry average of 40.23% [7] Market Position and Membership Trends - Centene's commercial membership is growing, with a 29.5% increase in marketplace membership in the first nine months of 2025, which typically offers better margins than government programs [11] - However, declines in Medicare and traditional Medicaid enrollment are weighing on total membership, and competition in government-sponsored programs is intensifying [9] Earnings Estimates and Projections - The Zacks Consensus Estimate for 2025 earnings is $2 per share, reflecting a 72.1% year-over-year decline, but a rebound to $2.94 is expected in 2026, representing a 46.6% recovery [10] - Revenues are projected to rise by 18.5% in 2025 before a slight decline of 0.3% in 2026 [10] Valuation and Future Outlook - Centene trades at a forward P/E of 15.11X, slightly below the industry average of 16.16X, indicating a balanced valuation [12] - Management anticipates improvements in Medicare Star ratings and benefits from demographic trends, such as an aging population and rising chronic disease prevalence [14] - Despite near-term pressures, the company's expanding commercial business and expectations of earnings recovery in 2026 support a longer-term positive outlook [15]

Core Viewpoint - Centene Corporation is a healthcare company focused on providing government-sponsored and commercial health insurance plans, particularly for underinsured and low-income populations, with a market cap of $20.5 billion [1] Financial Performance - Analysts anticipate Centene to report a non-GAAP loss of $1.25 per share for the fourth quarter, representing a 256.3% decline from the profit of $0.80 per share in the same quarter last year [2] - For fiscal 2025, the expected non-GAAP EPS is projected to be $2, down 72.1% from $7.17 in 2024, but a recovery is expected in fiscal 2026 with earnings forecasted to increase by 47% year over year to $2.94 per share [3] Stock Performance - Centene's stock has decreased by 27.3% over the past 52 weeks, significantly underperforming the S&P 500 Index's increase of 16.2% and the Health Care Select Sector SPDR Fund's rise of 11.6% during the same period [4] - On January 5, Centene shares rose by 4.2% following an upgrade from Barclays plc to "Overweight," with a price target increase from $44 to $54, attributed to improved prospects in the Affordable Care Act market [5] Analyst Ratings - The consensus rating for Centene stock is cautious, with an overall "Hold" rating; among 19 analysts, three recommend "Strong Buys," 13 suggest "Holds," one advocates "Moderate Sell," and two give a "Strong Sell" rating [6]

Fund Performance - Artisan Mid Cap Value Fund's Investor Class fund ARTQX returned 0.97%, Advisor Class fund APDQX posted a return of 0.98%, and Institutional Class fund APHQX returned 0.97% in Q3 2025, compared to a 6.18% return for the Russell Midcap Value Index [1] Market Context - Equity markets continued to rally in Q3 2025 as investors overlooked tariff concerns, driven by strong corporate earnings, rising AI capital expenditures, and hopes for economic support from US fiscal policy and lower interest rates [1] Centene Corporation Overview - Centene Corporation (NYSE:CNC) is a healthcare enterprise that provides services to under-insured and uninsured families and commercial organizations, with a one-month return of 10.30% and a 52-week loss of 33.35% [2] - As of January 2, 2026, Centene's stock closed at $41.78 per share, with a market capitalization of $20.536 billion [2] Performance Analysis of Centene Corporation - The portfolio's stock selection was broadly negative across sectors in Q3 2025, with the healthcare sector being a significant source of underperformance, particularly due to Centene Corporation, Align Technology, and Baxter International [3] - Centene's shares declined after the company withdrew its 2025 guidance due to higher-than-expected market acuity on the ACA marketplaces and elevated Medicaid cost trends, compounded by a declining trend in Medicaid enrollment [3] - The end of the pandemic-era policy prohibiting disenrollment from Medicaid has led to millions losing coverage, and new work requirements from the Big Beautiful Bill (BBB) set to take effect on January 1, 2027, are expected to create additional headwinds for Medicaid enrollment [3] - Although Centene can reprice risk annually, the multitude of challenges it faces, including changes from the BBB, will likely delay recovery, prompting the fund to exit its position in Centene [3]

Core Viewpoint - Centene's stock appears to be in a balanced state, with no significant potential for a major increase or decrease in the near term for investors planning to hold the stock [1] Summary by Relevant Categories Company Analysis - Centene's stock is currently priced at a level that suggests stability, indicating that it may not experience drastic fluctuations in the short term [1] Market Perspective - The analysis emphasizes a disciplined approach to evaluating companies, focusing on numerical data and underlying business performance rather than market narratives [1]

Core Insights - Sunshine Health, a subsidiary of Centene Corporation, is partnering with elite female athletes to promote health and well-being in Florida [1][4] - The first collaboration features Dana Mathewson, a Paralympian and cancer advocate, emphasizing the importance of health awareness and prevention [2][3] - The partnership aims to support Florida's Medicaid program by focusing on mental health, child and maternal health, and community wellness [3][4] Company Overview - Sunshine Health is one of the largest healthcare plans in Florida, offering managed care through Medicaid, Long Term Care, and Medicare Advantage [6] - The organization operates 10 Community Connections Centers across Florida, providing local support and resources to enhance community health [4][6] - Sunshine Health's specialty plans cater to various needs, including mental illness, HIV/AIDS, and children with special healthcare requirements [6]

Industry Overview - The healthcare sector is entering 2025 with challenges, particularly for managed care stocks like HMOs, due to high medical utilization, tighter reimbursement assumptions, and uncertainty around government-sponsored plans [1][3] - However, the industry is showing signs of recovery, with improved cost trends, better rate visibility, and insurers regaining control over margins as they adapt post-pandemic [2][8] Recent Developments - Higher-than-expected medical utilization has been a significant issue for HMOs, leading to recalibrated pricing and guidance from insurers [3] - Regulatory uncertainties regarding Medicare Advantage reimbursement have kept valuation multiples low, causing investors to remain cautious [3] Company Performance - UnitedHealth Group (UNH), Elevance Health (ELV), and Centene Corporation (CNC) faced sell-offs due to worsening medical-cost trends, while CVS Health (CVS) saw gains after delivering strong results and raising guidance [4][7] - UNH benefits from scale and integration with Optum, allowing it to normalize margins after earlier pressures [7][14] - CVS has improved cost controls and is leveraging its retail and pharmacy operations to enhance efficiency, positioning itself for growth in 2026 [15][16] Future Outlook - The sector is expected to become more investable as pricing discipline returns, scale advantages are reasserted, and demographic trends support steady demand [9][10][11] - The Zacks Consensus Estimate for UNH's 2026 earnings is $17.60 per share, reflecting an 8% growth from 2025 [15] - CVS's 2026 earnings estimate is $7.14 per share, indicating a 7.5% increase from 2025 [16] - Centene's 2026 earnings estimate is $2.94 per share, showing a significant 46.6% surge from 2025 [19]