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Centene Raises 2020 EPS Guidance Despite Market Volatility

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Centene Corporation (CNC - Free Report) recently updated its guidance for 2020. Improved earnings guidance amid the prevalent market uncertainty definitely highlights the company’s strong operating results and cash flow generation abilities.

This leading U.S. healthcare provider expects adjusted EPS for 2020 between $4.76 and $4.96 per share. Prior to this, concurrent with first-quarter 2020 earnings release, Centene had anticipated its adjusted annual earnings between $4.56 and $4.76 per share. The mid-point of this new guidance indicates an improvement of nearly 10% from the 2019 reported figure.

Further, Centene also projects 2020 revenues in the band of $109.5-$111.9 billion. The mid-point of the guidance indicates a rise of 48.4% from the 2019 reported figure. Previous guidance forecast the company’s revenues between $110 billion and $112.4 billion.

While the company’s top line is likely to be impacted by postponement of one North Carolina Medicaid contract till next year, the bottom line is likely to benefit from growing medical membership.

Moreover, Centene remains well poised to gain on improved membership, which can primarily be attributed to several contract gains and expansion across different regions. In the beginning of this month, the company’s subsidiary WellCare of Kentucky was awarded a new four-year Medicaid managed care contract. The new agreement, which is likely to benefit enrollees of the company’s Medicaid programs in Kentucky, will also boost its presence in the Medicaid market. Notably being the highest provider of Medicaid programs, WellCare of Kentucky presently serves 449,000 Medicaid members in the state as of May 31, 2020.

Other managed care organizations that won such contracts include Aetna, a subsidiary of CVS Health Corporation (CVS - Free Report) , Humana Inc. (HUM - Free Report) , UnitedHealthcare Group Inc. (UNH - Free Report) and WellCare Health Plans, Inc.

Shares of this Zacks Rank #3 (Hold) company have gained 12.6% in a year compared with the industry’s growthof 7.2%.

Additionally, Centene has ramped up efforts to contain the virus spread since March. It had previously waived certain “out-of-pocket” expenses for COVID-19 testing.  Not only this, it even eliminated costs for its Medicare Advantage members last month with regard to in-network primary care, behavioral health and telehealth visits for the rest of 2020. Increased access to telehealth services positions Centene well for long-term growth, especially considering the fact that thetelehealth industry has been one of the few industriesto have gained from the COVID-19 fallout. With observance of stringent social-distancing measures on account of the novel coronavirus, patients have been left with telehealth services as the only feasible option to seek medical help. This, in turn, enhances demand for telehealth market eventually.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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