Centene Takes A Hit As Medicaid Membership Shrinks

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].