Centene Surpasses Profit Forecasts, Posts $1.1 Billion in Q2
Centene Corp reported a second-quarter profit of $1.1 billion, exceeding Wall Street estimates. The increase in profit was largely attributed to the company's decision not to pay $1.3 billion towards the U.S. Centers for Medicare & Medicaid Services' risk adjustment program for 2023, a payment the agency has allowed Centene to forgo. The company's revenue for the quarter rose by 5.9% to $39.8 billion from $37.6 billion the previous year. Despite these gains, Centene's medical loss ratio increased to 87.6%, up from 87% last year, surpassing analysts' expectations of 86.84%.
The insurer faced significant challenges due to the ongoing reassessment of Medicaid enrollment eligibility following the end of COVID-19 policies that required insurers to maintain low-income American enrollments. This led to a decrease of nearly 3 million Medicaid members, reducing the total to 13.1 million as of June 30, down from 16.05 million at the end of 2023. Despite this drop, enrollment in individual coverage under the Affordable Care Act grew to 4.4 million from 3.3 million the previous year, offsetting some of the Medicaid losses. Premium and service revenues grew by 3% to $38 billion, driven by this increase in Marketplace membership.
Centene reaffirmed its 2024 adjusted earnings guidance of at least $6.80 per share and increased its full-year revenue outlook to between $155 billion and $157 billion. The company's shares have fallen approximately 9.2% since the beginning of the year, compared to the S&P 500's gain of 13.2%. Despite these challenges and mixed estimate revisions, Centene's stock rose in premarket trading following the Q2 profit beat.
