Centene Incurs Q4 Loss, Revenues Up YoY due to PDP Business Strength

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]