We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Medical Expenses Erode Centene's Bottom Line in Rare Q2 Earnings Miss
Read MoreHide Full Article
Key Takeaways
CNC reported Q2 adjusted loss of 16 cents/share, missing estimates and down from year-ago profit of $2.42.
Rising medical costs and lower Medicare and Medicaid membership pressured CNC's bottom line.
Revenues rose 22.4% to $48.7B, driven by premium growth, PDP business strength and Medicaid rate hikes.
Centene Corporation (CNC - Free Report) reported second-quarter 2025 adjusted loss per share of 16 cents, which missed the Zacks Consensus Estimate of earnings of 68 cents, a rare feat. Moreover, the bottom line fell from the year-ago profit of $2.42 per share.
The weak quarterly earnings took a hit from rising medical costs, declining service revenues, investment and other income and lower membership in Medicaid and Medicare businesses. The negatives were partially offset by solid premium growth and rate hikes.
Revenues advanced 22.4% year over year to $48.7 billion. The top line beat the consensus mark by 10.9%.
Centene Corporation Price, Consensus and EPS Surprise
Revenues from Medicaid grew 7% year over year to $21.7 billion, while Medicare revenues of $9.5 billion soared 58% year over year in the quarter under review. Meanwhile, commercial revenues improved 18% year over year to $10.1 billion.
Centene's premiums totaled $41.7 billion, which advanced 18.8% year over year on the back of higher premiums and expanding membership base in the PDP business, coupled with overall growth in the Marketplace business and Medicaid rate hikes. The metric surpassed the Zacks Consensus Estimate by 4.6%.
Service revenues of $727 million decreased 12.7% year over year in the second quarter. The metric lagged the consensus estimate by 6.1%. Investment and other income dropped 19.9% year over year to $371 million, which missed our model estimate of $378.2 million.
Total membership (excluding TRICARE) was 28 million as of June 30, 2025, which grew 8.9% year over year due to growing commercial members, partially offset by membership declines in the Medicaid and Medicare businesses. The metric beat the consensus mark by 0.8%.
Centene’s health benefits ratio of 93% deteriorated 540 basis points year over year in the quarter under review and came above the consensus mark of 90.82%. Operating expenses totaled $49.2 billion, which escalated 27.4% year over year and came higher than our estimate of $44.1 billion. The year-over-year increase was due to higher medical costs, premium tax expense and selling, general and administrative expenses. Medical costs alone jumped 26.1% year over year.
Adjusted net loss was recorded at $79 million against year-ago earnings of $1.3 billion.
CNC’s Financial Update (As of June 30, 2025)
Centene exited the second quarter with cash and cash equivalents of $14.5 billion, which advanced from the $14.1 billion figure at 2024-end. Total assets of $86.4 billion increased from the 2024-end level of $82.4 billion.
Long-term debt amounted to $17.6 billion, which dipped from the $18.4 billion figure as of Dec. 31, 2024. The current portion of long-term debt totaled $25 million.
Total stockholders’ equity of $27.5 billion fell from the 2024-end figure of $26.5 billion.
Centene generated $3.3 billion of net cash from operations in the first half of 2025, up from $1.7 billion a year ago.
Centene’s Share Repurchase Update
Centene bought back common shares worth around $432 million in the second quarter of 2025.
Centene currently has a Zacks Rank #5 (Strong Sell).
Among its peers, Elevance Health, Inc. (ELV - Free Report) reported second-quarter 2025 adjusted earnings per share (EPS) of $8.84, which missed the Zacks Consensus Estimate by 3.5%. The bottom line decreased 12.6% year over year. Medical membership of Elevance Health was around 45.6 million, which slipped 0.3% year over year. Total expenses of $47.5 billion rose 16.1% year over year and were higher than our estimate of $45.3 billion. Elevance Health also has a Zacks Rank #5 at present.
UnitedHealth Group Incorporated (UNH - Free Report) , a bellwether in the healthcare sector, is set to release its second-quarter 2025 results on July 29. Despite a projected 12.8% year-over-year increase in total revenue to $111.55 billion, its UnitedHealthcare unit is expected to have positioned the company for a significant year-over-year decline in profits. The Zacks Consensus Estimate for UnitedHealth’s second-quarter earnings is pegged at $4.84 per share, representing a steep 28.8% decline from $6.80 a year ago. UnitedHealth currently has a Zacks Rank #4 (Sell).
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Shutterstock
Medical Expenses Erode Centene's Bottom Line in Rare Q2 Earnings Miss
Key Takeaways
Centene Corporation (CNC - Free Report) reported second-quarter 2025 adjusted loss per share of 16 cents, which missed the Zacks Consensus Estimate of earnings of 68 cents, a rare feat. Moreover, the bottom line fell from the year-ago profit of $2.42 per share.
The weak quarterly earnings took a hit from rising medical costs, declining service revenues, investment and other income and lower membership in Medicaid and Medicare businesses. The negatives were partially offset by solid premium growth and rate hikes.
Revenues advanced 22.4% year over year to $48.7 billion. The top line beat the consensus mark by 10.9%.
Centene Corporation Price, Consensus and EPS Surprise
Centene Corporation price-consensus-eps-surprise-chart | Centene Corporation Quote
Quarterly Operational Update for CNC
Revenues from Medicaid grew 7% year over year to $21.7 billion, while Medicare revenues of $9.5 billion soared 58% year over year in the quarter under review. Meanwhile, commercial revenues improved 18% year over year to $10.1 billion.
Centene's premiums totaled $41.7 billion, which advanced 18.8% year over year on the back of higher premiums and expanding membership base in the PDP business, coupled with overall growth in the Marketplace business and Medicaid rate hikes. The metric surpassed the Zacks Consensus Estimate by 4.6%.
Service revenues of $727 million decreased 12.7% year over year in the second quarter. The metric lagged the consensus estimate by 6.1%. Investment and other income dropped 19.9% year over year to $371 million, which missed our model estimate of $378.2 million.
Total membership (excluding TRICARE) was 28 million as of June 30, 2025, which grew 8.9% year over year due to growing commercial members, partially offset by membership declines in the Medicaid and Medicare businesses. The metric beat the consensus mark by 0.8%.
Centene’s health benefits ratio of 93% deteriorated 540 basis points year over year in the quarter under review and came above the consensus mark of 90.82%. Operating expenses totaled $49.2 billion, which escalated 27.4% year over year and came higher than our estimate of $44.1 billion. The year-over-year increase was due to higher medical costs, premium tax expense and selling, general and administrative expenses. Medical costs alone jumped 26.1% year over year.
Adjusted net loss was recorded at $79 million against year-ago earnings of $1.3 billion.
CNC’s Financial Update (As of June 30, 2025)
Centene exited the second quarter with cash and cash equivalents of $14.5 billion, which advanced from the $14.1 billion figure at 2024-end. Total assets of $86.4 billion increased from the 2024-end level of $82.4 billion.
Long-term debt amounted to $17.6 billion, which dipped from the $18.4 billion figure as of Dec. 31, 2024. The current portion of long-term debt totaled $25 million.
Total stockholders’ equity of $27.5 billion fell from the 2024-end figure of $26.5 billion.
Centene generated $3.3 billion of net cash from operations in the first half of 2025, up from $1.7 billion a year ago.
Centene’s Share Repurchase Update
Centene bought back common shares worth around $432 million in the second quarter of 2025.
Centene currently has a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Brief Peer Comparison
Among its peers, Elevance Health, Inc. (ELV - Free Report) reported second-quarter 2025 adjusted earnings per share (EPS) of $8.84, which missed the Zacks Consensus Estimate by 3.5%. The bottom line decreased 12.6% year over year. Medical membership of Elevance Health was around 45.6 million, which slipped 0.3% year over year. Total expenses of $47.5 billion rose 16.1% year over year and were higher than our estimate of $45.3 billion. Elevance Health also has a Zacks Rank #5 at present.
UnitedHealth Group Incorporated (UNH - Free Report) , a bellwether in the healthcare sector, is set to release its second-quarter 2025 results on July 29. Despite a projected 12.8% year-over-year increase in total revenue to $111.55 billion, its UnitedHealthcare unit is expected to have positioned the company for a significant year-over-year decline in profits. The Zacks Consensus Estimate for UnitedHealth’s second-quarter earnings is pegged at $4.84 per share, representing a steep 28.8% decline from $6.80 a year ago. UnitedHealth currently has a Zacks Rank #4 (Sell).