Centene Corporation
CNC · NYSE
Next quarter
Expected to report Feb 5, 2027 — estimated from last year’s reporting date.
Consensus is -$1.14 EPS for Dec 2026 across 6 estimates, ranging -$1.27 to -$0.94.
CNC Sep 2026
- 728.57%
- $0.07
- $0.58
- —
- $45.10B
Reported results
- $45.10B
- 7.32%
- -$307.00M
- -0.68%
- -$71.00M
- -$0.14
Highlights
- Adjusted EPS beat: Adjusted diluted EPS was $0.58, versus consensus of $0.07, a $0.51 beat and 728.6% surprise; GAAP diluted EPS was a loss of $0.14.
- Guidance raised: Centene lifted its 2026 adjusted EPS floor by $0.40 to greater than $5.20 and its GAAP EPS floor to greater than $3.46.
- Medical costs and outlook: The health benefits ratio (HBR) was 92.7%, flat year over year and better than expectations; the company narrowed its full-year HBR range to 90.4%–91.1%, implying a midpoint improvement of 15 basis points.
- Revenue and mix: Premium and service revenue increased 0.5% year over year to $45.1 billion, as Medicare revenue grew 20% and offset lower Commercial revenue, down 21%.
- Membership contraction: At-risk membership fell 8.1% year over year to 25.7 million, including a 42% decline in Marketplace members to 3.4 million; Medicare PDP membership grew 12% to 8.9 million.
- GAAP loss included restructuring costs: Centene recorded a $307 million operating loss, including $311 million of severance and enterprise-optimization costs before other adjustments; adjusted net earnings were $290 million.
- Cash flow and debt: Operating cash flow was negative $3.7 billion in the quarter, which the company attributed mainly to payment timing. Debt was reduced by $1.1 billion since June 30, and Centene redeemed the remaining $569 million of its 2027 notes in October.
Analysis
Centene’s third quarter showed a faster-than-expected earnings recovery, led by medical-cost performance and a higher full-year outlook, despite a GAAP loss and continued membership declines. Adjusted diluted EPS of $0.58 beat the $0.07 consensus by $0.51; it compared with $0.50 a year earlier. GAAP EPS was a loss of $0.14, versus a $13.50 loss in Q3 2025, which included a large goodwill impairment. Sequentially, premium and service revenue rose to $45.1 billion from $44.4 billion in Q2, while GAAP EPS fell from $2.19 to a loss of $0.14. The GAAP result included substantial enterprise-optimization costs, while adjusted net earnings were $290 million.
The key operating signal was a 92.7% HBR, unchanged year over year but better than management expected, prompting a 15-basis-point improvement in the full-year midpoint expectation. Revenue grew just 0.5% year over year as Medicare and PDP growth and rate increases offset lower Marketplace and Medicaid membership. Centene raised its 2026 adjusted EPS floor by $0.40 to greater than $5.20. The quarter also consumed $3.7 billion of operating cash, primarily due to payment timing, while the company continued to reduce debt.
Earnings and guidance
Adjusted diluted EPS of $0.58 exceeded the $0.07 consensus, while adjusted net earnings were $290 million. GAAP diluted EPS was a loss of $0.14 and net loss attributable to Centene was $71 million. The $307 million operating loss included $276 million of severance and contract-exit costs and $35 million of enterprise-optimization vendor costs, partly offset by other items. By comparison, Q3 2025 GAAP EPS was a loss of $13.50, largely reflecting a $6.7 billion goodwill impairment; adjusted EPS was approximately $0.50. Q2 2026 GAAP EPS was $2.19.
- 2026 EPS floor: Raised to greater than $5.20 adjusted and greater than $3.46 GAAP; the adjusted floor increased by $0.40.
- Full-year HBR: Guidance narrowed to 90.4%–91.1%, with the midpoint expected at 90.75%, 15 basis points better than the prior midpoint.
- Other outlook: Interest expense guidance was reduced to $600 million–$620 million.
Medical cost trend
The consolidated HBR was 92.7%, matching Q3 2025 and better than expectations, with management identifying Medicare as the main source of the favorable result. The year-over-year comparison also reflects a prior-year Medicare Advantage premium deficiency reserve benefit that did not recur in 2026. Improved Marketplace pricing and risk-transfer results, alongside strong Medicare Advantage and PDP fundamentals, supported the quarter. Medicaid and Marketplace were described as on track.
- Medicaid: HBR was 93.6%, versus 93.4% a year earlier.
- Commercial: HBR improved to 89.0% from 89.9%.
- Medicare: HBR improved to 93.8% from 94.3%; this measure includes Medicare Advantage, PDP and Medicare Supplement.
Revenue and membership
Premium and service revenue increased 0.5% year over year to $45.1 billion. Rate increases, Marketplace risk-adjustment transfers and state-directed payments, along with PDP growth, offset lower Medicaid and Marketplace membership. Total reported revenue was $50.6 billion, including $5.5 billion of premium-tax revenue.
- Revenue by business: Medicaid revenue rose 4% to $24.0 billion; Commercial fell 21% to $8.7 billion; Medicare increased 20% to $11.3 billion.
- Membership: Total at-risk membership declined 8.1% to 25.7 million. Marketplace membership fell to 3.4 million from 5.8 million, and total Medicaid membership declined to 11.9 million from 12.7 million.
- PDP growth: Medicare PDP membership increased to 8.9 million from 8.0 million, supporting Medicare revenue growth and improving business mix.
Costs and efficiency
The GAAP SG&A expense ratio rose to 7.2% from 7.0%, reflecting severance and vendor costs for enterprise optimization. Excluding specified adjustments, the ratio improved to 6.5% from 7.0%. Centene attributed the decline to cost management and expense leverage, as well as a mix shift away from higher-SG&A Marketplace business toward lower-SG&A PDP. Adjusted SG&A expense was $2.9 billion, compared with $3.1 billion a year earlier. The quarter’s $311 million of severance and optimization vendor costs were among the main adjustments separating GAAP from adjusted earnings.
Cash flow and debt
- Operating cash flow: Cash used in operations was $3.7 billion in Q3, primarily due to the timing of pass-through, premium and other payments. For the first nine months, operations generated $4.3 billion.
- Liquidity: Cash, investments and restricted deposits totaled $39.9 billion at September 30; cash available for general corporate use was $175 million. Medical claims liabilities were $21.5 billion, and days in claims payable was 48, up one day from Q2.
- Debt reduction: Centene reported $15.5 billion of total debt at quarter-end and no borrowings on its $4.0 billion revolving credit facility. It repurchased $558 million of 2027 and 2028 notes in Q3 and redeemed the remaining $569 million of 2027 notes in October.
