Centene Raises 2026 Earnings Floor to $5.20 a Share Despite Quarterly Loss
Key Facts
Centene raised its 2026 adjusted diluted earnings floor to more than $5.20 a share, an increase of $0.40, and lifted its GAAP earnings floor to more than $3.46. The announcement came with third-quarter results released on Oct. 27, despite the company reporting a GAAP diluted loss of $0.14 a share. Adjusted diluted earnings per share, by contrast, were $0.58. Total revenue reached $50.647 billion, compared with $49.690 billion in the year-earlier quarter. The company said fundamentals in its core businesses accelerated its earnings recovery trajectory relative to prior expectations, as it focused on a strong finish to the year and building on progress in 2027.
The updated outlook covered revenue and the health benefits ratio, which measures the cost of health benefits against premiums. Centene raised its 2026 annual revenue forecast range to $196.5–$200.5 billion and lowered its health benefits ratio forecast range to 90.4%–91.1%. The combined ratio in the third quarter was 92.7%, unchanged from the year-earlier quarter. The company said Medicare performance drove the quarterly ratio to a better-than-expected level, while Medicaid and Marketplace were on track. Second-quarter earnings were $2.19 a share under GAAP and $2.51 adjusted, while the health benefits ratio then stood at 89.6%. These figures place the third quarter in a context of a clear divergence between adjusted profitability and an accounting loss, and between the quarterly ratio and its annual target range.
Premium and service revenue in the third quarter was split among $24.039 billion from Medicaid, $11.263 billion from Medicare and $8.700 billion from the commercial business. Medicare revenue rose 20% year over year, while commercial revenue fell 21%. Centene said higher revenue was primarily tied to higher premium yields and membership growth in its PDP business. It also attributed the increase in part to Marketplace and Medicaid rate increases, risk adjustment transfers and state payments. These factors partly offset the effect of lower Marketplace and Medicaid membership. The comparison across business lines highlights a contrast between Medicare growth and a decline in the commercial business, while Medicaid remained the largest revenue source among the businesses cited.
Membership contraction was reflected in data at the end of September: Medicaid membership was about 11,895,900 on Sept. 30, 2026, down from 12,706,400 a year earlier. Marketplace membership fell to 3,403,300 from 5,828,100 in the same period. These figures are consistent with the company's statement that declining membership in the two programs offset part of the impact of revenue-supporting factors. By contrast, Medicare revenue growth was tied in part to increased membership in the PDP business, the company said. These shifts add an operational dimension to the earnings results, as the annual outlook was raised while membership and revenue trends diverged across business lines. The combined health benefits ratio, at 92.7% for the quarter, remains above the 90.4%–91.1% range the company set for 2026.
Cash used in operations totaled $3.669 billion in the third quarter. Centene attributed the cash use primarily to the timing of transfer payments, premiums and other payments, and said it was expected. The figure came in results in which the company raised its annual earnings-per-share and revenue outlooks while lowering its annual health benefits ratio range. The statement provided no other description of the cash flow's effect on the updated outlook. Commenting on the results, Chief Executive Sarah London said the company was "focused on a strong finish to 2026 and building on this progress in 2027." The remark sets out management's stated horizon beyond the quarterly results, extending its focus into next year.
Centene shares closed at $68.03 on Oct. 26, according to EL7 data, in the session before the results announcement. The company scheduled its results review call for Oct. 27, 2026, from 8:30 to 9:30 a.m. Eastern time. The call provides a time frame for management to present the quarterly results and updated annual guidance, including the increase in the adjusted earnings-per-share floor to more than $5.20. The new outlook also includes annual revenue and health benefits ratio ranges, as the company reported a quarterly GAAP loss and cash used in operations. London said the company is targeting a strong finish to 2026 and building on progress in 2027.