Health Insurer Centene's Q2 Premium Revenue Cushions Fall In Medicaid Enrollment, Raises Annual Outlook

On Friday, Centene Corporation CNC reported second-quarter sales of $39.84 billion, up 5.9% year-over-year, beating the consensus of $36.46 billion.

Centene earned an adjusted EPS of $2.42 during the quarter, beating the consensus of $2.07.

“While we have work to do in Medicaid as redeterminations wind down, the overall performance of the diversified portfolio enables us to remain on track for 2024 adjusted diluted EPS guidance,” said Chief Executive Officer of Centene, Sarah London.

In the second quarter, premium and service revenues rose by 3% to $36.0 billion, mainly due to membership growth in the Marketplace business, strong product positioning, overall market growth, and outperformance in Marketplace risk adjustment for the 2023 benefit year.

This increase was partially offset by recent divestitures in the Other segment and reduced Medicaid membership due to redeterminations.

The health benefits ratio (HBR) of 87.6% for the second quarter of 2024 represents an increase from 87.0% in the comparable period in 2023.

Centene said total managed care membership held steady at 28.48 million at the end of the second quarter, compared to 28.41 million a year ago.

Centene’s enrollment in its “commercial marketplace” business grew to 4.83 million members from 3.73 million a year ago. Total Medicaid memberships fell 18.2% to 13.14 million.

On Thursday, Astrana Health Inc. agreed to acquire Collaborative Health Systems, a company of Centene. The acquisition facilitates the expansion of Astrana’s and CHS’ payer-agnostic care delivery capabilities.

Guidance: Centene reaffirms the 2024 adjusted EPS guidance floor of over $6.80 versus a consensus of $6.83.

The company’s revenue guidance has been updated to $155.0 billion—$157.0 billion, compared to the prior guidance of $147.5 billion—$150.5 billion and the consensus of $149.64 billion.

The 2024 HBR is expected to be at the high end of the previous guidance range, approximately 87.9%.

Centene increased its 2024 Premium and service revenues guidance range by $5 billion to $141 billion—$143 billion versus prior guidance of $135.5 billion—$138.5 billion to reflect an additional $2 billion in commercial premium revenue, $2 billion in Medicare premium revenue, and $1 billion in Medicaid premium revenue.

Price Action: At last check on Friday, Centene stock was up 4.39% at $70.36.

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