Centene Corporation has announced the withdrawal of its previous earnings guidance for 2025, including both GAAP and adjusted diluted earnings per share. This decision follows the company’s first analysis of industry data related to the Health Insurance Marketplace, provided by independent actuarial firm Wakely, covering 22 of Centene’s 29 states, which account for approximately 72% of its Marketplace membership.
The preliminary findings indicate that overall market growth in these states is below expectations, with a significant increase in morbidity levels that does not align with the company’s initial assumptions. As a result, Centene now estimates a reduction in its risk adjustment revenue expectations by about $1.8 billion, translating to an approximate adjusted diluted EPS impact of $2.75.
Additionally, Centene is initiating a re-evaluation of its 2026 Marketplace rates to better reflect the newly anticipated morbidities. They expect to take corrective pricing actions in the majority of states where they operate.
Amidst these challenges, the company’s Medicaid segment has shown an increase in medical cost trends, particularly in behavioral health and home health services in states like New York and Florida. In contrast, Centene’s Medicare Advantage and Prescription Drug Plan businesses are reportedly performing above expectations.
The company is currently finalizing its second quarter analysis and plans to release its results on July 25, 2025, which will provide further insights into its performance across Marketplace and Medicaid sectors.
In light of recent developments, investors might focus on the strategies Centene is implementing to adapt to the evolving market dynamics. While the withdrawal of guidance signals challenges ahead, the company’s response could potentially position it for future recovery and growth.