Centene's Earnings Beat Estimates and the Company Raises Its Outlook

Centene Corp.'s stock relinquished its early gains to trade down by 4% on Friday, following the managed healthcare provider's impressive performance in surpassing earnings estimates for the first quarter and revising its full-year guidance upwards.

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Headquartered in St. Louis, Centene reported a net profit of $1.163 billion, or $2.16 per share, for the quarter, an increase from $1.130 billion, or $2.04 per share, in the corresponding period of the previous year.

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Excluding one-time items, the company's adjusted earnings per share stood at $2.26, significantly exceeding the FactSet consensus of $2.06.

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Revenue climbed to $40.407 billion from $38.889 billion a year ago, also surpassing the FactSet consensus of $36.432 billion.

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Premium and services revenue experienced a 4% increase to $36.337 billion, primarily driven by a 48% surge in commercial revenue to $7.751 billion. Medicaid revenue witnessed a 3% decline, while Medicare revenue saw a 1% increase.

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Centene secured several Medicaid contract wins in Oklahoma, Florida, and Michigan. By the end of the quarter, the company's membership across its product lines stood at 28.4 million, slightly lower than the 28.5 million reported in the fourth quarter.

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Medicaid enrollment declined by approximately 3 million as the company underwent the redetermination process to assess individuals' eligibility for the program. However, membership in Obamacare marketplace plans surged by 41% compared to the first quarter of 2023.

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The company's health benefits ratio, a key measure of profitability, decreased to 87.1% from 87.7% in the fourth quarter. A lower ratio signifies higher profitability, indicating a larger amount of premiums remaining after settling customer insurance claims.

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In light of its strong quarterly performance, Centene is raising its full-year guidance. It now anticipates earnings per share to exceed $5.94 and adjusted earnings per share to surpass $6.80. This outlook is above the FactSet consensus of $6.77 for EPS.

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Revenue is projected to range from $147.5 billion to $150.5 billion, compared to FactSet's expectation of $146.3 billion. The company also expects its health benefits ratio to range from 87.3% to 87.9%.

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Year-to-date, the stock has declined by 2%, contrasting with the S&P 500's gain of 5.8%.

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