Centene is reckoning with multiple threats to its business, potentially leaving it with fewer and less-healthy enrollees signed up to its health-insurance plans.
The end of certain pandemic-era health-insurance benefits over the past year is prompting more Americans to drop out of coverage plans, which Centene said could hollow out its earnings. On top of that, the proposed Medicaid cuts in President Trump’s budget bill would limit the number of people enrolled in Centene’s largest business, Jefferies’s David Windley said.
“Centene didn’t anticipate the extent of this,” Windley said. “The people left in the market are fewer and sicker, and that’s killing the margins.”
The health-insurance provider withdrew its guidance on Tuesday after new data about the insurance marketplace showed growth was less favorable than anticipated. Centene now believes its annual earnings per share could be at least $2.75 lower than the $7.25 it previously guided for.
Shares plunged 39%, to $34.43, on Wednesday in the wake of the cut, marking their largest-ever percent decrease and making Centene the worst performing stock on the S&P 500.