Centene (CNC) Up 12.7% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Centene Corporation reported a mixed performance in its latest earnings report, with adjusted earnings per share beating estimates but showing a decline compared to the previous year, while revenues increased significantly year over year [3][4]. Financial Performance - Centene's Q3 2025 adjusted earnings per share were 50 cents, surpassing the Zacks Consensus Estimate of a loss of 21 cents, but down from $1.62 per share in the prior year [3]. - Revenues increased by 18.2% year over year to $49.7 billion, exceeding the consensus mark by 4.4% [3]. - Premiums totaled $44.1 billion, up 22.2% year over year, driven by higher premiums and expanding membership in the Prescription Drug Plan (PDP) [6]. Revenue Breakdown - Medicaid revenues grew 9% year over year to $23.2 billion, while Medicare revenues surged 66% to $9.4 billion [5]. - Commercial revenues improved by 26% year over year to $11 billion [5]. - Service revenues decreased by 1.5% year over year to $772 million, although it beat estimates [7]. Membership and Costs - Total membership (excluding TRICARE) reached 28 million as of September 30, 2025, an 8% increase year over year [8]. - The health benefits ratio deteriorated to 92.7%, a decline of 350 basis points year over year [9]. - Operating expenses rose 37% year over year to $56.6 billion, driven by higher medical costs, which increased by 27% [9]. Cash Flow and Equity - Centene ended Q3 with cash and cash equivalents of $17.1 billion, up from $14.1 billion at the end of 2024 [11]. - Total stockholders' equity fell to $21 billion from $26.5 billion at the end of 2024 [12]. - The company generated $4.7 billion of net cash from operations in the first nine months of 2025, a significant increase from $741 million a year ago [12]. Share Repurchase - Centene repurchased common shares worth approximately $473 million in the first nine months of 2025 [13]. Market Sentiment and Outlook - There has been a downward trend in estimates, with the consensus estimate shifting down by 42.99% [14]. - Centene holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [16]. - The stock has a subpar Growth Score of D and a score of A on the value side, placing it in the top 20% for value investment strategy [15].