Updated Version 5 - Centene raises its 2026 earnings outlook, expects continued earnings growth in 2027

Updated content to reflect changes in the LSEG estimate in the final paragraph

Sneha S K/Padmanabhan Ananthan

Reuters, October 27 - Centene (CNC.N) raised its annual profit guidance and said it expects 2027 earnings to surpass this year, driving the health insurer’s share price up 3%.

In recent years, rising demand for medical services has increased medical costs, squeezing margins for health insurers and prompting them to raise prices and strengthen cost controls.

Centene CEO Sarah London said on the earnings call that the company has made significant progress in managing cost trends and optimizing its cost structure.

The company expects 2027 earnings per share to grow further from its updated baseline of $4.70, as well as its raised 2026 adjusted earnings per share forecast of more than $5.20.

According to LSEG data, analysts expect earnings per share of $5.34 in 2027.

Morningstar analyst Julie Utterback said, "Despite uncertainty in the important Medicaid market next year, investors might recognize this positive anticipated growth trajectory."

Due to stricter eligibility review rules, the company has faced declines in Medicaid enrollment, resulting in the exclusion of some beneficiaries. This means the population the insurer serves is less healthy on average and requires more care.

Centene said that states are adopting more systematic eligibility checks, which should ease the impact on enrollment throughout 2027 and into early 2028.

Centene stated that costs for its Medicaid plan serving low-income populations are in line with expectations, partly because states have increased reimbursement rates.

The company also said its "Medicare Advantage" business is expected to achieve breakeven in 2026, a year ahead of schedule.

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Costs brought under control

Centene lowered its full-year medical cost ratio—that is, the proportion of premiums spent on medical care—to a forecast range of 90.4% to 91.1%, from a previous estimate of 90.5% to 91.3%.

Its third-quarter medical cost ratio was 92.7%, flat from the previous quarter and better than expected. Analysts were expecting 92.84%.

The company benefited from improved pricing on its Affordable Care Act ("Obamacare") plan, established under former President Barack Obama’s Affordable Care Act, as well as improved performance in its "Medicare Advantage" plan for older Americans.

Centene reported third-quarter adjusted earnings per share of 58 cents. Excluding certain severance costs, LSEG calculated adjusted earnings per share at 16 cents, while analysts’ average estimate was 10 cents.

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