CNC · Centene Corporation

Centene's first quarter 2026 results significantly exceeded expectations, with GAAP diluted EPS of $3.11 and adjusted diluted EPS of $3.37, the latter surpassing the company's own guidance by approximately $0.50. The strong performance was driven by margin improvements across all segments. The Medicaid health benefits ratio (HBR) improved 50 basis points year-over-year to 93.1%, reflecting continued progress in managing medical costs and a moderate flu season. The Medicare segment posted an HBR of 84.9%, benefiting from outperformance in both Medicare Advantage and PDP. Commercial HBR of 75.3% was slightly above expectations due to higher acuity among Marketplace Silver Tier members, though overall Marketplace pre-tax earnings were in line with expectations. Premium and service revenues grew 5% to $44.7 billion, driven by premium yield and membership growth in PDP, state-directed payments, and rate increases in Medicaid, partially offset by lower Marketplace and Medicaid membership. The SG&A expense ratio improved to 7.6% from 7.9% a year ago, reflecting strong cost management and a favorable business mix shift toward PDP. The company also reduced debt by $1.0 billion during the quarter through a senior note repurchase, ending the period with total debt of $16.4 billion and no borrowings on its revolving credit facility. Management expressed confidence in the long-term earnings power of the enterprise. CEO Sarah M. London noted, 'We continue to make tangible progress in our margin recovery efforts while strengthening the fundamental operations of each of our businesses.' Based on the strong first quarter, Centene raised its full-year 2026 adjusted diluted EPS guidance to greater than $3.40, up from the prior outlook, and increased its premium and service revenue guidance range by $1.0 billion to $171.0-$175.0 billion. The company also raised its investment and other income expectation by $50 million to $1.45 billion. The guidance implies continued margin recovery and operational discipline for the remainder of the year.