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.
Can Centene's Medicare Advantage Strategy Unlock Better Margins?
Read MoreHide Full Article
Key Takeaways
Centene is simplifying its MA footprint and emphasizing dual-eligible members to improve portfolio quality.
Medicare's health benefits ratio improved to 89.5%, while MA is moving closer to full-year 2026 breakeven.
Medical-cost control, Stars execution and SG&A management remain key to Centene's 2027 margin goals.
Centene Corporation (CNC - Free Report) is reshaping its Medicare Advantage (“MA”) business by simplifying its plan footprint and placing greater emphasis on dual-eligible members. The strategy aims to improve the quality of its MA portfolio while better aligning resources with markets and member groups where CNC has an established healthcare presence.
The broader Medicare segment also showed improving economics. The segment’s health benefits ratio improved to 89.5% in the second quarter of 2026 from 90.9% a year ago, reflecting fundamental outperformance in both Medicare Advantage and PDP, along with favorable Medicare programmatic items and the absence of a 2026 premium deficiency reserve for MA. MA, which accounts for more than 40% of Medicare segment revenues in the second quarter of 2026, is moving closer to breakeven for full-year 2026. D-SNP members now account for about 40% of CNC’s MA portfolio.
For 2027, Centene plans to further simplify its MA footprint and focus its benefits on dual-eligible members, using its Medicaid experience to support more integrated care. This targeted approach could also reduce complexity and improve operating efficiency across the business.
The margin recovery path still depends on medical-cost control and Stars execution. Medical costs remain elevated versus historical levels, while changes in Stars methodology and higher cut points could pressure reimbursement. Even so, portfolio optimization, SG&A management and a greater focus on duals could support CNC’s target of achieving breakeven or better Medicare Advantage results in 2027, followed by further margin improvement.
How Are Competitors Faring?
Some of CNC’s major competitors in the healthcare service provider space are UnitedHealth Group Incorporated (UNH - Free Report) and Elevance Health, Inc. (ELV - Free Report) .
UnitedHealth Group is prioritizing Medicare Advantage margin recovery over membership growth, using repricing, benefit redesign and market exits to counter elevated medical costs and funding pressure. UNH’s medical care ratio improved to 86.7% in the second quarter of 2026 from 89.4% a year ago.
Elevance Health is taking a more selective approach to Medicare Advantage, accepting membership declines while repositioning the business for sustainable returns. Higher medical costs remain a pressure point, though pricing discipline and Carelon-led cost management could strengthen future profitability.
Shares of CNC have surged 59% in the year-to-date period compared with the industry’s growth of 20.3%.
Image Source: Zacks Investment Research
From a valuation standpoint, Centene trades at a forward price-to-earnings ratio of 12.57, below the industry average of 15.80. CNC carries a Value Score of A.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Centene’s 2026 earnings is pegged at $4.89 per share, implying 135.1% growth from the year-ago period.
View the Zacks #1 Rank List
Image: Shutterstock
Can Centene's Medicare Advantage Strategy Unlock Better Margins?
Key Takeaways
Centene Corporation (CNC - Free Report) is reshaping its Medicare Advantage (“MA”) business by simplifying its plan footprint and placing greater emphasis on dual-eligible members. The strategy aims to improve the quality of its MA portfolio while better aligning resources with markets and member groups where CNC has an established healthcare presence.
The broader Medicare segment also showed improving economics. The segment’s health benefits ratio improved to 89.5% in the second quarter of 2026 from 90.9% a year ago, reflecting fundamental outperformance in both Medicare Advantage and PDP, along with favorable Medicare programmatic items and the absence of a 2026 premium deficiency reserve for MA. MA, which accounts for more than 40% of Medicare segment revenues in the second quarter of 2026, is moving closer to breakeven for full-year 2026. D-SNP members now account for about 40% of CNC’s MA portfolio.
For 2027, Centene plans to further simplify its MA footprint and focus its benefits on dual-eligible members, using its Medicaid experience to support more integrated care. This targeted approach could also reduce complexity and improve operating efficiency across the business.
The margin recovery path still depends on medical-cost control and Stars execution. Medical costs remain elevated versus historical levels, while changes in Stars methodology and higher cut points could pressure reimbursement. Even so, portfolio optimization, SG&A management and a greater focus on duals could support CNC’s target of achieving breakeven or better Medicare Advantage results in 2027, followed by further margin improvement.
How Are Competitors Faring?
Some of CNC’s major competitors in the healthcare service provider space are UnitedHealth Group Incorporated (UNH - Free Report) and Elevance Health, Inc. (ELV - Free Report) .
UnitedHealth Group is prioritizing Medicare Advantage margin recovery over membership growth, using repricing, benefit redesign and market exits to counter elevated medical costs and funding pressure. UNH’s medical care ratio improved to 86.7% in the second quarter of 2026 from 89.4% a year ago.
Elevance Health is taking a more selective approach to Medicare Advantage, accepting membership declines while repositioning the business for sustainable returns. Higher medical costs remain a pressure point, though pricing discipline and Carelon-led cost management could strengthen future profitability.
Centene’s Price Performance, Valuation & Estimates
Shares of CNC have surged 59% in the year-to-date period compared with the industry’s growth of 20.3%.
Image Source: Zacks Investment Research
From a valuation standpoint, Centene trades at a forward price-to-earnings ratio of 12.57, below the industry average of 15.80. CNC carries a Value Score of A.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Centene’s 2026 earnings is pegged at $4.89 per share, implying 135.1% growth from the year-ago period.
Image Source: Zacks Investment Research
CNC stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.