Centene beats, raises 2026 EPS floor, trims Marketplace margin outlook

 

Centene beats Q1 2026 estimates with non-GAAP EPS $3.37 (+16% YoY), raises 2026 EPS floor, trims Marketplace margin outlook

• Q1 2026 adjusted EPS was $3.37, nearly $0.50 above Centene’s internal plan.
• Full-year 2026 adjusted EPS guidance increased to >$3.40 from >$3.00, reflecting strong early momentum.
• Non-GAAP EPS $3.37 grew 16% YoY; Q1 2026 revenue was $49.9B, up 7% year over year.
• Q1 2026 GAAP EPS was $3.11, as disclosed in Centene’s first-quarter 2026 SEC filing.
• Centene issued full-year 2026 revenue guidance of $187.5B to $191.5B following its first-quarter 2026 results.
• Medicaid HBR improved to 93.1%, 50 bps better YoY, helped by initiatives and a light flu season.
• Medicare Advantage and PDP results beat expectations; segment HBR was 84.9%, supporting the 2027 breakeven goal.
• Marketplace pretax margin assumption cut to ~3% from ~4%, despite an expected Marketplace risk adjustment receivable.
• Company now forecasts a slight Marketplace risk adjustment receivable versus prior payable, pending June Wakely risk data.
• Consolidated HBR was 87.3%; SG&A ratio fell to 7.6% from 7.9% on cost discipline.
• Premium and service revenue reached $44.7B; Medicaid composite rate yield is still expected around 4.5%.
• Operating cash flow of $4.4B and $1B debt paydown lowered debt-to-capital ratio to 43.2%.
• Key risks include ACA Marketplace pricing and risk dynamics and elevated behavioral health and specialty drug trends.
• Main concern remains ACA Marketplace risk adjustment and utilization assumptions potentially shifting earnings later in 2026.
• Quarter described as strong, driven by Medicaid and Medicare outperformance and disciplined SG&A and medical cost initiatives.

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