Key Highlights

  • Adjusted diluted EPS was USD 0.58, ahead of company plans, against a GAAP diluted loss of USD 0.14 per share.
  • Full-year adjusted EPS guidance rose to above USD 5.20 from a prior floor of USD 4.80.
  • The consolidated health benefits ratio was 92.7%, with Medicaid at 93.6%, Commercial at 89.0% and Medicare at 93.8%.
  • Premium and service revenue rose 0.5% to USD 45.1 billion, while Medicaid membership fell 5.0% this year to 11.9 million.

Guidance Rises on Medicare and Marketplace

Centene (NYSE:CNC) reported third-quarter adjusted diluted earnings per share of USD 0.58 on Tuesday, which management said exceeded company expectations on outperformance in Medicare. The GAAP diluted loss was USD 0.14 per share, against a loss of USD 13.50 a year earlier that carried a USD 6.7 billion impairment. Total revenue was USD 50.6 billion against USD 49.7 billion, and premium and service revenue was USD 45.1 billion, up 0.5% on prescription drug plan membership growth and Medicaid rate adjustments.

Full-year adjusted EPS guidance rose to above USD 5.20 from a floor of USD 4.80. Management said Medicare Advantage is on pace for breakeven in 2026, a year ahead of its multiyear turnaround plan, and put the Marketplace pretax margin at 5.0%, the top of its prior range. Prescription drug plan margin is guided to the mid-3% to high 3% range, up from 3%.

Ratios, Membership and Costs

The consolidated health benefits ratio was 92.7%. Medicaid was 93.6% against 93.4% a year earlier, with a full-year target of 93.5%. Commercial improved to 89.0% from 89.9% on Marketplace pricing, and Medicare was 93.8%. The adjusted SG&A expense ratio was 6.5% against 7.0%. Headcount fell to 53,900 from 61,100 at the end of last year.

Medicaid membership was 11.9 million, down 5.0% since the start of the year. Marketplace membership was 3.4 million at quarter end, and management guided to about 3.2 million at year end. The chief executive said Medicare Advantage membership would be lower year over year in 2027 as the company concentrates on geographies with differentiated products. The finance chief said the company is exiting the Health Net commercial group business in California over 18 to 24 months.

Medical claims liability was USD 21.5 billion against USD 20.5 billion at the end of 2025, and days in claims payable were 48, up one day from the second quarter.

Debt and the 2027 Baseline

Total debt fell to USD 15.0 billion after the repurchase of USD 1.1 billion of senior notes, and full-year interest expense is guided to a USD 610 million midpoint. Management established a 2027 adjusted EPS jump-off point of USD 4.70, which excludes USD 0.50 of non-recurring 2026 benefits. The Medicaid composite rate is about 5% for 2026, with 40% of Medicaid revenue due for rerating on Jan. 1, and management guided a 2% to 3% prescription drug plan margin for 2027.

Management named several pressures, including program integrity measures and providers using the independent dispute resolution process under the No Surprises Act, which weighed on commercial results. Eligibility terminations for legal noncitizens under the One Big Beautiful Bill Act began on Oct. 1, and California moves the unsatisfactory immigration status population out of managed care in 2027, affecting about 175,000 Health Net members.

Managed Care Markers to Follow

Tracking points include the Medicaid health benefits ratio against the 93.5% full-year target, Medicaid membership relative to 11.9 million, and Marketplace membership against the 3.2 million year-end figure.

Further items are Medicare Advantage results against breakeven, SG&A ratio relative to 6.5%, and the January Medicaid rerates covering 40% of revenue.