Centene Corporation
CNC · NYSE
Sep 2026
Next quarter
Reports Oct 27, 2026, before the open.
Consensus is $0.07 EPS for Sep 2026 across 6 estimates, ranging $0.01 to $0.10.
CNC Jun 2026
- 182.02%
- -3.27%
- $0.89
- $2.51
- —
- $44.38B
Reported results
- $44.38B
- 10.40%
- $1.20B
- 2.70%
- $1.09B
- $2.19
Highlights
- Earnings beat: Adjusted diluted EPS was $2.51 versus consensus of $0.89, a 182% surprise; GAAP diluted EPS was $2.19 versus a $0.51 loss in Q2 2025.
- Profitability reset: Premium and service revenue rose 4% year over year to $44.4 billion, while the health benefits ratio improved to 89.6% from 93.0%, driving operating income to $1.20 billion from a $458 million loss.
- Segment improvement: Commercial HBR fell to 79.2% from 90.6%, Medicare HBR to 89.5% from 90.9%, and Medicaid HBR to 93.9% from 94.9%; segment gross margin increased 53% to $4.62 billion.
- Guidance raised: Centene lifted its 2026 revenue outlook by $6.0 billion to $193.5-$197.5 billion, premium and service revenue guidance by $2.0 billion to $173.0-$177.0 billion, and investment income guidance by $50 million to $1.50 billion.
- EPS outlook: The company raised its 2026 guidance floors to greater than $3.11 for GAAP diluted EPS and greater than $4.80 for adjusted diluted EPS, including approximately $0.50 of non-recurring Medicare and Commercial items.
- Commercial recovery: Commercial revenue declined 7% to $9.36 billion because Marketplace membership fell, but gross margin more than doubled to $1.95 billion, helped by pricing and 2025 and 2026 risk-adjustment transfers.
- Membership pressure: Total at-risk membership declined 8% year over year to 25.9 million, including a 2.32 million reduction in Marketplace members and a 709,000 reduction in Medicaid members; PDP membership grew 957,000 to 8.80 million.
- Cash and deleveraging: Operating cash flow was $3.59 billion in the quarter and $7.96 billion in the first half, while Centene repurchased $1.3 billion of senior notes in the first half, reducing total debt to $16.1 billion and debt-to-capitalization to 41.6%.
- Restructuring ahead: Centene expects $315-$365 million of additional severance costs during the remainder of 2026 following its voluntary separation program, on top of $47 million of enterprise-optimization and severance costs incurred in the quarter.
Analysis
Centene's second quarter was a sharp profitability recovery, with adjusted EPS of $2.51 versus consensus of $0.89 and $2.51 versus a $0.16 adjusted loss a year ago. GAAP diluted EPS was $2.19, up from a $0.51 loss in Q2 2025 but down from $3.11 in Q1 2026; premium and service revenue was $44.4 billion, broadly flat sequentially and up 4% year over year. Total revenue rose 10% to $53.6 billion, helped heavily by premium-tax and pass-through payments, while operating income reached $1.20 billion versus a $458 million loss last year and $1.86 billion in Q1.
The print was defined by a broad improvement in medical economics, especially Commercial, where pricing and risk adjustment drove gross margin above $1.9 billion despite a 7% revenue decline. Medicaid continued to improve with a 93.9% HBR, while Medicare benefited from favorable programmatic items, no 2026 premium deficiency reserve and PDP growth. The trade-off is shrinking membership, particularly Marketplace and Medicaid, and a substantial restructuring bill still ahead. Centene raised its full-year outlook, but flagged approximately $0.50 of non-recurring Medicare and Commercial benefit within the higher adjusted EPS floor. Strong cash generation also supported $1.3 billion of debt repurchases in the first half.
Medical cost recovery
- Consolidated economics: HBR improved 340 basis points year over year to 89.6%, while the adjusted SG&A ratio fell 20 basis points to 6.9%. The combination lifted segment gross margin 53% to $4.62 billion.
- Medicaid: Revenue rose 14% to $32.0 billion and gross margin increased 24% to $1.39 billion. The 93.9% HBR was described as in line with expectations and reflected rate increases, state-directed payments and progress managing medical cost trend.
- Medicare: Revenue grew 17% to $11.1 billion and gross margin rose 35% to $1.17 billion. The 89.5% HBR benefited from favorable resolution of 2025 programmatic elements, rate increases and the absence of a 2026 Medicare Advantage premium deficiency reserve.
- Commercial: Revenue declined 7% to $9.36 billion as Marketplace membership contracted, but HBR improved to 79.2% from 90.6% and gross margin rose 106% to $1.95 billion. Pricing actions covering 95% of Marketplace membership and risk-adjustment transfers were the main drivers.
Raised 2026 outlook
- Revenue: Total revenue guidance increased by $6.0 billion to $193.5-$197.5 billion, while premium and service revenue guidance rose by $2.0 billion to $173.0-$177.0 billion.
- Earnings: The GAAP diluted EPS floor moved above $3.11 and the adjusted diluted EPS floor above $4.80. The company said the increase reflects underlying business strength but includes approximately $0.50 of non-recurring items in Medicare and Commercial.
- Other income: Investment and other income guidance increased by $50 million to $1.50 billion. First-half investment and other income was $842 million, up from $753 million a year earlier.
Membership and mix
- Overall membership: At-risk membership fell 2.1 million, or 8%, year over year to 25.9 million and declined from 26.3 million at March 31. The decline reflects Medicaid eligibility redeterminations, Marketplace subsidy and regulatory changes, and lower Medicare Advantage membership.
- Marketplace: Membership fell to 3.49 million from 5.86 million a year earlier and 3.58 million in Q1. The contraction reduced revenue but improved mix and SG&A leverage because Marketplace carries a higher expense ratio.
- Medicaid and PDP: Medicaid membership declined to 12.1 million from 12.8 million a year earlier, while PDP membership increased to 8.80 million from 7.85 million. PDP growth supported a 17% increase in Medicare premium and service revenue.
- Forward risks: Centene expects approximately 250,000 California Medi-Cal members to move from managed care to fee-for-service in 2027, while Medicaid contract outcomes and ongoing Marketplace rule changes remain sources of uncertainty.
Cash flow and deleveraging
- Operating cash: Quarterly operating cash flow was $3.59 billion; first-half cash flow reached $7.96 billion versus $3.30 billion in the prior-year period. Management attributed the increase primarily to earnings and the timing of pass-through, premium and other payments.
- Debt reduction: Centene repurchased $260 million of senior-note par value in the quarter and $1.3 billion in the first half. Total debt ended at $16.1 billion, down from $17.4 billion at December 31, while debt-to-capitalization improved to 41.6% from 46.5%.
- Liquidity: Cash, investments and restricted deposits totaled $44.8 billion, including $715 million available for general corporate use. The company had no borrowings under its $4.0 billion revolving credit facility.
Optimization costs
- Restructuring charge: Centene incurred $47 million of enterprise-optimization vendor and severance costs in the quarter, including $37 million of enterprise-optimization costs and $15 million of severance in the adjusted EPS reconciliation.
- Separation program: After quarter end, the company committed to a voluntary separation program and expects $315-$365 million of additional severance costs during the remainder of 2026. Full-year adjusted SG&A guidance excludes approximately $355-$405 million of severance and contract-exit costs plus $85-$115 million of third-party optimization costs.
