Health insurer Centene Corporation (NYSE:CNC), a prominent player in the Healthcare Providers & Services industry with $153 billion in annual revenue, announced Tuesday it is withdrawing its 2025 earnings guidance due to significant marketplace risk adjustment challenges and increased Medicaid costs.
The company cited preliminary data from independent actuarial firm Wakely covering 22 of its 29 Health Insurance Marketplace states, representing about 72% of Centene’s marketplace membership. Analysis of this data revealed lower-than-expected market growth and significantly higher market morbidity than Centene had assumed in its previous guidance.
This discrepancy is expected to reduce Centene’s full-year net risk adjustment revenue transfer by approximately $1.8 billion, translating to an adjusted diluted earnings per share impact of about $2.75. The company has not yet provided estimates for its remaining seven marketplace states but anticipates additional reductions.
Centene also reported a "step-up" in Medicaid medical cost trends, particularly in behavioral health, home health, and high-cost drugs. These increases were more pronounced in specific states like New York and Florida. As a result, the company expects its second-quarter 2025 Medicaid Health Benefits Ratio to exceed first-quarter figures.
On a positive note, Centene indicated its Medicare Advantage and Medicare Prescription Drug Plan businesses are performing better than expected in the second quarter of 2025. The company also reported continued strong expense management relative to revenue growth.
In response to the marketplace challenges, Centene has begun refiling its 2026 marketplace rates to reflect higher projected baseline morbidity. The company expects to implement corrective pricing actions for 2026 in states representing a majority of its marketplace membership.
Centene plans to report its second-quarter 2025 results on July 25, according to the press release statement.
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