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3mo ago

Centene Withdraws 2025 Guidance Following $1.8 Billion Risk-Adjustment Shortfall

Preliminary actuarial findings of slower marketplace growth coupled with higher morbidity forced the company to pull its outlook, leaving it to reevaluate its pricing strategy

FILE - This July 2, 2015, file photo shows the building housing the Centene Corporation headquarters in Clayton, Mo. Centene shares sank Monday, June 3, 2019, after rival health insurer Humana took the rare step of refuting reports that it was interested in a deal. Humana said in a brief statement that it would not make a proposal to combine with Centene, which specializes in running state-based Medicaid coverage programs. Humana is one of the nation’s largest providers of privately run Medicare Advantage plans. (AP Photo/Jeff Roberson, File)
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Overview

  • Centene officially rescinded its full-year 2025 earnings guidance after Wakely data covering 22 ACA marketplace states revealed weaker enrollment growth and elevated morbidity.
  • The insurer disclosed an expected $1.8 billion reduction in net risk adjustment transfers, translating into a $2.75 per-share hit to adjusted earnings.
  • Shares plunged roughly 40%, closing at an eight-year low as investors absorbed the implications of the revised outlook.
  • Centene has begun refiling its 2026 marketplace rates to reflect a higher projected baseline morbidity and anticipates elevated Medicaid health benefit ratios in Q2.
  • Management will provide a fuller update on its revised guidance and second-quarter financial results at the July 25 earnings release.