Centene Reaffirms 2026 EPS Outlook as Medicaid Membership Decline Deepens

Key Points

• Centene reaffirmed its 2026 adjusted EPS outlook of more than $4.80, saying third-quarter performance remains in line with expectations and Medicaid rates support its roughly 5% full-year rate outlook.
• Centene now expects Medicaid membership to decline 9% by year-end, worse than its prior 6%–8% forecast, as states tighten eligibility ahead of work requirements; the company still targets a 93.5% health benefits ratio in 2026.
• The company is prioritizing profitability over growth by simplifying its Medicare Advantage portfolio around dual-eligible members, targeting break-even results in 2027, while expecting Part D margins above 3% in 2026.

Centene NYSE: CNC reaffirmed its 2026 adjusted diluted earnings-per-share guidance of more than $4.80 at the Deutsche Bank Healthcare Summit, with Chief Executive Officer Sarah London saying the company’s performance through the first two months of the third quarter was in line with expectations.

London said third-quarter trends across Centene’s businesses have remained broadly consistent with the second quarter. The company continues to expect a 4.5% to 5% margin in its marketplace business for 2026, while targeting break-even or better results in Medicare Advantage in 2027 and continued margin improvement thereafter.

Medicaid rates and work requirements

In Medicaid, London said state rate developments remain consistent with Centene’s full-year composite rate outlook of roughly 5%. The company continues to target a 93.5% health benefits ratio for 2026, reflecting year-over-year margin improvement.

Centene expects Medicaid membership to decline by 9% by year-end, compared with its earlier 6% to 8% expectation. London attributed the change partly to states tightening eligibility processes ahead of work requirements and, in some cases, advancing elements of implementation.

Most states are expected to use monthly eligibility checks for work requirements, which London said should create a more gradual membership impact during 2027 and 2028. Centene is building data interfaces with states to support eligibility determinations and plans to use its employment programs, nonprofit partnerships and member outreach resources to help eligible members maintain coverage.

“The goal is to get folks engaged and working and engaged in the community because we know that that actually drives better health outcomes,” London said.

Cost trends in Medicaid have generally remained in line with expectations, according to London. Behavioral health, home and community-based services, and high-cost drugs continue to be areas of focus. She said Centene has seen some year-over-year improvement in behavioral health trends, particularly in applied behavior analysis services, following efforts to steer members toward higher-quality providers and address fraud, waste and abuse.

Chief Financial Officer Drew Asher said Centene can quantify the impact of specific fraud, waste and abuse cases and is using artificial intelligence-supported tools to identify potentially problematic claims more quickly. The company has developed a “trust factor” using roughly 70 data points, he said, allowing it to pend claims for review more rapidly.

Medicare strategy centers on dual-eligible members

Centene is simplifying its Medicare Advantage portfolio for 2027, concentrating on dual-eligible and complex populations in markets where it can leverage its Medicaid footprint and local resources. London said the company is prioritizing sustainable profitability rather than membership growth.

The company continues to expect its Medicare Advantage business to reach break-even or better in 2027. London said Centene’s quality performance improved on a raw-measure basis, though the company has also prepared for pressure from changes in the Medicare Star Ratings program and rising performance cut points.

Centene is advocating for reforms to the Star Ratings system that would better account for the complexity of dual-eligible populations and rely more heavily on empirical, digitally measured clinical outcomes. London said a broad reform effort would likely take time, given the complexity of altering a prospective quality program.

Asher said Medicare Advantage utilization trends have been stable during 2026, with outpatient services and high-cost drugs representing modest areas of pressure. Centene’s Medicare Advantage trend outlook for 2027 remains elevated relative to historical levels, he said.

Part D and marketplace outlook

Centene said its standalone Medicare Part D business remains on track to generate margins above 3% in 2026. Asher attributed performance partly to the company’s cost structure and its ability to procure pharmacy benefit management services externally rather than operating its own PBM.

The company is positioned below benchmark in all 34 of its Part D regions for 2027. Asher said Centene did not rely on the continuation of premium subsidy demonstrations in its bidding assumptions and expects the business to remain in the 3% margin range over the long term, although final 2027 guidance will depend on competitive landscape data and membership distribution.

In the Affordable Care Act marketplace business, London said Centene has accounted for the expected impact of Centers for Medicare & Medicaid Services program-integrity initiatives in its 2026 guidance. The company has also included expected membership attrition and potential risk-adjustment effects in its outlook.

“Everything we’ve seen month to month … has largely developed in line with expectation,” London said of marketplace enrollment trends.

Leadership transition and organizational changes

Centene also addressed its finance leadership transition. Asher said his planned departure includes a lengthy handoff period: Chris Neczypor will join for four months before becoming CFO on Jan. 1, while Asher will remain with the company through 2027 to support areas including 2028 bids.

London said Centene’s recent restructuring efforts have focused on redesigning the company around the capabilities and talent needed to deliver health outcomes with an industry-leading cost structure. She acknowledged that organizational change can be difficult but said employees have rallied around the company’s mission and next phase of execution.

About Centene (NYSE:CNC)

Centene Corporation NYSE: CNC is a managed-care company that provides health insurance and related healthcare services, primarily through government-sponsored programs. Its offerings include Medicaid, Medicare Advantage and Medicare Prescription Drug plans, coverage for individuals and families through the health insurance marketplace, and health services for military families and veterans.

The company markets several healthcare brands, including Ambetter, which provides marketplace plans, and Wellcare, which offers Medicare products.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.