(Reuters) -Centene raised annual earnings forecast after beating third-quarter profit estimates due to lower-than-expected medical costs at its commercial health insurance business, sending its shares up nearly 3% before the bell on Tuesday.
The company makes a major chunk of its revenue from enrolments in government-backed Medicaid plans for lower-income people, where it has been losing members following the end of pandemic-relief measures.
It also operates a commercial business for insurance plans provided by non-government entities, where memberships jumped 62.4% to over 4.1 million, as of Sept. 30.
The increase in memberships for Centene's individual plans helped keep medical costs below expectations, Morningstar analyst Julie Utterback said.
Centene's quarterly medical loss ratio, or the percentage of premiums paid out for medical services, was 87%, compared with analysts' estimate of 88.03%, according to LSEG data.
Easing fears over medical costs, which were expected to see a jump tracking a recovery in elective surgeries such as hip and knee replacements that were delayed by the pandemic, also helped rivals UnitedHealth Group and Elevance Health beat quarterly profit estimates earlier this month.
Centene also cut jobs in September in an attempt to lower costs. It sold some of its business units including British hospital operator Circle Health Group and its chain of GP clinics in August to refocus on core businesses.
The health insurer recorded non-cash writedowns of $393 million related to the sale of the UK businesses.
Centene raised its adjusted annual profit forecast by 15 cents to at least $6.60 per share. Analysts expected full-year profit at $6.50 per share.
On an adjusted basis, Centene earned $2 per share in the third quarter, above LSEG estimates of $1.57 per share.
https://www.yahoo.com/news/centenes-quarterly-profit-beats-estimates-101022548.html
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