Centene Q1 Earnings Beat Estimates on Marketplace Business Strength

Core Insights - Centene Corporation (CNC) reported first-quarter 2025 adjusted earnings per share (EPS) of $2.90, exceeding the Zacks Consensus Estimate by 22.9% and reflecting a 28% year-over-year increase [1] - Revenues increased by 15.4% year over year to $46.6 billion, surpassing the consensus mark by 7.2% [1] Revenue Breakdown - Medicaid revenues grew 4% year over year to $22.3 billion, while Medicare revenues surged 48% year over year to $8.8 billion [3] - Commercial revenues improved 31% year over year to $10.1 billion [3] - Total premiums reached $41.7 billion, a 17.4% year-over-year increase, driven by higher premiums and expanding membership in the Prescription Drug Plan (PDP) [4] Service Revenues and Income - Service revenues decreased by 3.8% year over year to $777 million, although it exceeded the consensus mark [5] - Investment and other income fell 29.9% year over year to $382 million, missing the consensus estimate [5] Membership and Health Benefits Ratio - Total membership was 27.9 million as of March 31, 2025, down 1.7% year over year, missing consensus expectations [6] - Membership in the Commercial business increased significantly by 27.3% year over year [6] - The health benefits ratio (HBR) deteriorated by 40 basis points year over year to 87.5% [6] Financial Performance - Adjusted net earnings rose 18.7% year over year to $1.4 billion [7] - Operating expenses totaled $45.1 billion, a 14.7% year-over-year increase, attributed to higher medical costs and administrative expenses [7] - Adjusted SG&A expense ratio improved by 80 basis points year over year to 7.9% [8] Cash and Debt Position - As of March 31, 2025, cash and cash equivalents were $14.8 billion, a 5.3% increase from the end of 2024 [9] - Total assets increased by 5.6% to $87 billion, while long-term debt decreased by 0.6% to $18.3 billion [9] Share Repurchase and Guidance - Centene repurchased common shares worth $41 million in the first quarter, with a remaining capacity of $2.2 billion under its share repurchase authorization [11] - For 2025, management anticipates premium and service revenues between $164-$166 billion, indicating a growth of 13.4% from 2024 [12] - Adjusted EPS is expected to exceed $7.25, reflecting a 1.1% increase from 2024 [13]