Centene just pulled its 2025 earnings forecast. The numbers didn’t slip, they cratered. The company warned of a $2.75 per share hit, wiping out $1.8 billion in adjusted earnings. That’s not a guidance tweak. That’s a full retreat. The trigger came from updated morbidity data across 22 states, covering 72% of Centene’s ACA marketplace footprint. The population is sicker. The pool is smaller. The cost curve snapped. The phrase used by analysts wasn’t “death rate.” It was “the people left.” That’s how they framed it. Fewer and sicker. That’s what’s killing the margins.
Shares dropped 40% in a single session. The stock hit $34.46 before stabilizing. That’s the lowest level since 2017. Analysts at Mizuho say the original $7.25 EPS forecast could be cut in half. Medicaid costs are also rising. New York and Florida are flagged. Behavioral health, home care, and high-cost drugs are driving the spike. Centene says Q2 medical costs will be higher than Q1. That’s already baked in.
The company is refiling 2026 rates. They’re adjusting pricing to match the new morbidity baseline. But that won’t help 2025. The damage is done. Risk adjustment revenue is falling. Federal reimbursements are shrinking. The ACA exchange is under pressure. Centene’s largest segment is exposed. The company says it will implement corrective pricing in most states. That’s the plan. But the current year is already off track.
Marketplace enrollment growth slowed. That’s part of the problem. Fewer healthy enrollees. More high-cost patients. The risk pool deteriorated. Centene’s predictive models missed the shift. The company says the data was “materially inconsistent” with prior assumptions. That’s the language. But the impact is real. Profitability is compromised. The Medicaid segment is also under strain. Centene flagged elevated costs in multiple states. Contracts may be underpriced. Rate negotiations are coming.
Centene’s Medicare Advantage and PDP businesses are performing better than expected. That’s the offset. SG&A leverage is holding. CMS risk adjustment results from 2024 were in line. But those positives aren’t enough to counter the $1.8 billion hit. The company is facing a reset. Investors are watching Q2 results for clarity. The guidance is gone. The risk pool is heavier. The pricing is reactive. That’s the setup.
Sources
https://finance.yahoo.com/news/centene-stock-plummets-healthcare-firm-141239583.html
https://wallstreetpit.com/127845-centene-stock-crashes-40-after-withdrawing-2025-guidance/
https://ca.finance.yahoo.com/news/centene-plunges-pulling-forecast-revenue-112900700.html