Centene Corporation Conference Call Summary Company Overview - **Company**: Centene Corporation (NYSE:CNC) - **Date of Conference**: November 11, 2025 - **Speakers**: Sarah London (CEO), Drew Asher (CFO) Key Points Industry Context - Centene operates primarily in the healthcare services sector, focusing on government-sponsored programs such as Medicaid and Medicare. Financial Performance - Q3 results exceeded expectations, leading to an upward revision of the full-year outlook to at least $2 per share [4][7] - The company reported a revenue stream of approximately $5 billion from the Florida Medicaid contract, which is expected to decrease to between $4.5 billion and $9.3 billion next year due to contract changes [8][9] Medicaid Updates - Centene was not awarded the CMS Florida contract after six years, impacting their revenue but allowing for a focus on sustainable margins [5][8] - The company is prioritizing a seamless transition for affected members and is not planning to protest the contract decision [5] - Medicaid margins are expected to remain consistent next year, contrasting with some peers who anticipate declines [15][36] Medicare and Marketplace Insights - Open enrollment for Medicare is ongoing, with a focus on margin improvement rather than membership growth [49][54] - The company is optimistic about its position in the Medicare Advantage market, aiming for break-even by 2027 [49] - There is an uptick in call volume related to Marketplace inquiries, indicating member confusion over premium changes [20][22] Legislative and Subsidy Discussions - Ongoing discussions in Congress regarding enhanced subsidies could significantly impact members and the overall market [24][25] - Centene has prepared for various scenarios regarding subsidy extensions and has built pricing for 2026 accordingly [26][30] Operational Strategies - The company is focused on improving margins through various levers, including rate negotiations and utilization management [15][17] - Centene is actively engaged with state governments to optimize Medicaid programs and address issues like fraud and waste [41][42] Future Outlook - The company sees potential for growth in Medicaid and is exploring disruptive opportunities in employer-sponsored insurance [59] - Centene aims to maintain a flexible capital structure, targeting a debt-to-capital ratio below 40% to seize future opportunities [58] Behavioral Health and Cost Management - Behavioral health accounts for approximately 20% of Medicaid spending, and states are increasingly focused on managing these costs [42][43] - Centene is working with states to implement effective policy changes to control costs while maintaining care quality [41] Conclusion - Centene is navigating a complex healthcare landscape with a focus on sustainable growth, margin improvement, and proactive engagement with legislative changes and state partnerships [59][60]

Core Insights - Humana reported Q3 earnings with a revenue increase of 11% year-over-year to $32.65 billion, surpassing analyst expectations of $32 billion [1] - Adjusted earnings per share were $3.24, exceeding the forecast of $2.82 [1] - The medical cost ratio was 91.1%, aligning with company guidance and slightly above the analyst expectation of 90.9% [1] - The company reaffirmed its full-year adjusted earnings per share guidance of approximately $17 [1]

Financial Data and Key Metrics Changes - The company reported revenues of $69.7 billion and adjusted earnings of $7.83 per share for Q3 2025, reflecting sustained growth despite a dynamic market environment [8][31]. - A net after-tax special item benefit of $61 million or $0.23 per share was recorded during the quarter [4]. Business Line Data and Key Metrics Changes - Evernorth Health Services generated revenues of $60.4 billion, with pre-tax adjusted earnings of $1.9 billion, in line with expectations [31]. - Specialty and care services revenues increased by 10% to $26.3 billion, with pre-tax adjusted earnings up 11% to $928 million, driven by strong specialty volume growth and increased biosimilar adoption [32]. - Pharmacy benefit services revenues were $34.1 billion, with pre-tax adjusted earnings of $1 billion, reflecting ongoing investments to improve patient experience [32]. Market Data and Key Metrics Changes - The company noted that generic drugs account for 90% of all prescriptions in the U.S., with prices being one-third cheaper than in other countries [10]. - Brand name medications continue to see significant price increases, with the median price for new FDA-approved drugs projected at approximately $390,000 for a treatment course in 2025 [11]. Company Strategy and Development Direction - The company is focusing on a new rebate-free model for pharmacy benefits, aimed at improving healthcare affordability and patient experience [9][15]. - Strategic investments, such as the acquisition of Shields Health Solutions, are intended to expand the company's capabilities in the specialty market [8][22]. - The company aims to transition at least 50% of its business to the new pharmacy benefits model by the end of 2028 [16]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth despite challenges, reaffirming an adjusted EPS outlook of at least $29.60 for 2025 [18][34]. - The company anticipates margin pressure in the pharmacy benefit services segment over the next two years due to strategic investments and contract renewals [17][28]. - Management highlighted the importance of public-private partnerships and innovation in addressing healthcare challenges [75][78]. Other Important Information - The company reported a debt to capitalization ratio of 44.9% as of September 30, 2025, primarily due to debt issuance related to the investment in Shields Health Solutions [35]. - The company expects strong cash flow from operations in the fourth quarter, consistent with previous patterns [35]. Q&A Session Summary Question: Clarification on pharmacy business and renewal pricing - Management confirmed that the new rebate-free model is designed to be transparent and fee-based, aligning with regulatory priorities, and that the long-term growth algorithm for Evernorth remains intact despite short-term challenges [41][42]. Question: Magnitude of expected decline in pharmacy benefit services - Management indicated that the expected decline in pharmacy benefit services income is due to large client renewals and transitional investment costs, with the decline being more than half attributable to the new margin profile from these renewals [56]. Question: Profitability of large contracts - Management clarified that while large contracts may have lower margins compared to the overall portfolio, they do not operate at a loss and are strategically important for the company [66][68]. Question: Adoption of the new pharmacy benefits model by employers - Management expressed confidence in the new model's appeal to employers, emphasizing its potential to simplify costs and improve employee satisfaction [62][63].

For the quarter ended September 2025, Centene (CNC) reported revenue of $49.69 billion, up 18.2% over the same period last year. EPS came in at $0.50, compared to $1.62 in the year-ago quarter.The reported revenue represents a surprise of +4.35% over the Zacks Consensus Estimate of $47.62 billion. With the consensus EPS estimate being -$0.21, the EPS surprise was +338.1%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine the ...

The upcoming report from Molina (MOH) is expected to reveal quarterly earnings of $3.97 per share, indicating a decline of 33.9% compared to the year-ago period. Analysts forecast revenues of $10.9 billion, representing an increase of 5.4% year over year.The consensus EPS estimate for the quarter has undergone an upward revision of 7.8% in the past 30 days, bringing it to its present level. This represents how the covering analysts, as a whole, have reassessed their initial estimates during this timeframe.A ...

Core Viewpoint - The significant buying activity in UnitedHealth Group (UNH) by prominent investors, including Warren Buffett's Berkshire Hathaway, indicates a potential bottoming out of the stock after a severe decline due to negative events and market sentiment [1][2][3]. Group 1: Investment Activity - Berkshire Hathaway purchased approximately $1.57 billion worth of UNH shares, while Dodge & Cox acquired about $1.87 billion [2]. - Other notable investors included Renaissance Technologies with $500 million, David Tepper with $764 million, and Michael Burry who bought options and stock [1][2]. - The collective buying from these high-profile investors has instilled confidence in retail investors to follow suit [1][2]. Group 2: Stock Performance and Market Reaction - Following the disclosure of Buffett's investment, UNH's stock surged by 12%, reclaiming a price above $300 [3]. - The stock had previously experienced a dramatic decline of 60% due to a series of negative events, including a significant earnings miss and the resignation of its CEO [1][10]. Group 3: Company Fundamentals and Market Position - UNH is the largest health insurance company in the U.S., covering nearly 50 million people, which makes its stability crucial for the healthcare system [13]. - The company holds a 30% market share in Medicare and is the second-largest in Medicaid, indicating its significant role in the healthcare landscape [13]. - Analysts project an EPS of approximately $25 for the next year, with the stock trading at about 12 times earnings, alongside a 3% dividend yield and a $12 billion share buyback plan [13][15]. Group 4: Future Outlook - The consensus among investors is that UNH has already priced in the worst-case scenarios, and any improvement in business operations could lead to substantial stock price recovery [12][15]. - The presence of a safety net in the form of an 8% shareholder return through dividends and buybacks further supports the investment thesis for UNH [15].

Core Viewpoint - UBS maintains a "Buy" rating on Elevance Health with a target price of $435, indicating a potential upside of nearly 53% from the current closing price of $283.48 [1] Financial Performance - Elevance Health reported Q2 revenue of $49.8 billion, exceeding market expectations [1] - Adjusted earnings per share (EPS) for the quarter were $8.84, in line with market expectations [1] Earnings Guidance - The company lowered its full-year EPS guidance by $4.50, which translates to a pre-tax profit reduction of $1.3 billion [1] - Elevance Health raised its 2025 medical loss ratio forecast by 90 basis points [1] Market Factors - The increase in medical loss ratio expectations is attributed to unfavorable cost trends in the Affordable Care Act (ACA) exchanges and Medicaid business [1] - Despite the challenges, UBS remains optimistic about the potential profitability and growth in the commercial insurance and Carelon business segments [1]

Core Viewpoint - UBS reiterated a "Buy" rating for Elevance Health (ELV.US) with a target price of $435, indicating a potential upside of nearly 53% from the recent closing price of $283.48 [1] Financial Performance - Elevance Health reported Q2 revenue of $49.8 billion, exceeding market expectations [1] - Adjusted earnings per share (EPS) for Q2 were $8.84, in line with market expectations [1] - The company lowered its full-year EPS forecast by $4.50, equating to a pre-tax profit reduction of $1.3 billion [1] Future Projections - Elevance Health raised its 2025 medical loss ratio forecast by 90 basis points [1] - The increase in medical loss ratio expectations is attributed to unfavorable cost trends in the Affordable Care Act (ACA) transactions and Medicaid business [1] Investment Rationale - UBS maintains a "Buy" rating due to the potential profitability stability and growth opportunities in the commercial insurance and Carelon business segments, despite the raised medical loss ratio expectations [1]

Group 1: Impact on Healthcare Sector - The "Big and Beautiful" bill is expected to cut approximately $900 billion in Medicaid spending over the coming years, reversing many advancements made during the Biden and Obama administrations in healthcare [4] - The bill introduces stricter requirements for Medicaid beneficiaries, potentially leading to millions losing their healthcare coverage [5] - Companies heavily exposed to Medicaid, such as Elevance Health, Centene, and Molina Healthcare, are likely to see a direct impact on their revenues due to a decrease in Medicaid enrollment [5][6] Group 2: Effects on Renewable Energy Industry - The bill cancels several clean energy incentives from the Biden administration, imposing restrictions on solar and wind energy while encouraging fossil fuel production [7] - Changes in tax measures are expected to increase the burden on the renewable energy sector by approximately $4 billion to $7 billion [8] - The bill threatens around $450 billion in infrastructure investments in the renewable sector, potentially leading to the loss of about 300 gigawatts of solar and wind projects over the next decade [8] Group 3: Benefits to Corporations and High-Income Individuals - The bill reinstates tax policies that allow businesses to fully deduct equipment costs in the year of purchase, benefiting organizations like the U.S. Chamber of Commerce [11] - High-income households are projected to see a net income increase of nearly $13,000 after taxes and transfers, while middle-income families will see a smaller increase of $1,430 [12] - The bill provides additional tax incentives for semiconductor manufacturers building facilities in the U.S., aiming to stimulate investment in the manufacturing sector [11]