Centene raises 2026 EPS outlook on Medicare and Marketplace strength

 

 plans 18-24 month exit from ~$4B Health Net commercial group business

• Q3 revenue $50.65B, up 2% YoY; adjusted EPS $0.58, up 16% and ahead internal expectations.
• Premium and service revenue totaled $45.1B in Q3, per company.
• Centene reported Q3 GAAP net loss of $71M and guides full-year revenue to $196.5B–$200.5B.
• 2026 EPS guidance floors raised to >$3.46 GAAP and >$5.20 adjusted, up from >$4.80 adjusted on segment strength.

• Management cited improved health benefits ratio and lower expected interest expense for higher 2026 EPS guidance.
• Company announced Health Net commercial group exit plan on Q3 earnings call as portfolio realignment initiative.
• Medicare segment beat expectations, with HBR 93.8% and PDP margins in the mid-to-high 3% range.
• Medicare Advantage now expected to breakeven in 2026, one year earlier than previously planned.
• Marketplace pretax margin now seen at 5%, the top of prior 4.5–5% target range.
• Medicaid remains stable, with Q3 HBR 93.6% and 2026 HBR ~93.5% on composite rate ~5%.
• OB3 work requirements expected to drive further Medicaid membership attrition and acuity shifts into 2027.
• Management expects 2027 EPS to grow versus both $4.70 baseline and >$5.20 2026 guidance levels.
• SG&A ratio improving; $480M workforce optimization charges are expected to create 2027 overhead tailwind.
• Key risk and concern: Medicaid work requirements and policy shifts creating rate–acuity mismatch, pressuring membership and margins if rates lag.
• Quarter characterized as strong, driven by Medicare and Marketplace outperformance and disciplined cost management.

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