Centene (CNC) Q2 2025 earnings summary

Executive summary

• Q2 2025 reported a GAAP diluted loss per share of $(0.51) and adjusted diluted loss per share of $(0.16), reflecting significant headwinds from reduced Marketplace risk adjustment revenue and higher medical costs.

• Total revenues for Q2 2025 reached $48.7 billion, up 22% year-over-year, driven by growth in PDP, Marketplace, and Medicaid, as well as Medicaid rate increases and higher premium tax revenue.

• Managed care membership declined by 473,000, or 2%, year-over-year, with Medicaid membership down due to redeterminations, while Marketplace membership grew 33% and PDP membership increased 19%.

• Management is focused on restoring earnings trajectory, with aggressive actions underway to return Marketplace to profitability in 2026 and improve Medicaid margins.

• Medicare Advantage is on track for break-even in 2027, with PDP performance exceeding expectations.

Financial highlights

• Q2 2025 premium and service revenue was $42.5 billion, up 18% year-over-year, primarily from PDP and Marketplace growth and Medicaid rate increases.

• Full-year 2025 adjusted diluted EPS forecast reduced to $1.75 from $7.25, reflecting significant headwinds in Marketplace and Medicaid.

• Marketplace earnings pressured by a $2.4 billion risk adjustment transfer shortfall and higher utilization.

• Medicaid HBR reached 94.9% in Q2, driven by behavioral health, home health, and high-cost drugs.

• Net loss attributable to shareholders was $(253) million, compared to net income of $1.1 billion in Q2 2024.

Outlook and guidance

• 2025 adjusted diluted EPS forecast is $1.75, with downside risk to $1.25 if Medicaid trends worsen.

• Corrective pricing actions for 2026 Marketplace products are underway, with rate refilings in states covering most membership and 100% of the book targeted for repricing.

• Medicaid margins expected to improve as 88% of the book is re-rated between 7/1/2025 and 1/1/2026.

• Medicare Advantage remains on track for break-even in 2027, with PDP premiums increased due to IRA-driven cost-sharing changes.

• Medicaid and Marketplace membership expected to be pressured by regulatory changes, including the expiration of enhanced APTCs and the One Big Beautiful Bill Act (OBBBA).