A month has gone by since the last earnings report for Centene (CNC). Shares have added about 12.7% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Centene due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Centene Corporation before we dive into how investors and analysts have reacted as of late.
Centene Q3 Earnings Beat Estimates on Increasing Premium
Centene reported third-quarter 2025 adjusted earnings per share of 50 cents, which beat the Zacks Consensus Estimate of a loss of 21 cents. However, the bottom line fell from the year-ago profit of $1.62 per share.
Revenues advanced 18.2% year over year to $49.7 billion. The top line beat the consensus mark by 4.4%.
The quarterly results benefited from solid premium growth, fueled by expanding membership in the Prescription Drug Plan (PDP) and Commercial Marketplace businesses, along with overall growth in the Marketplace business. However, the upside was partly offset by rising medical costs, declining service revenues and year-over-year membership declines in Medicaid and Medicare businesses.
Quarterly Operational Update of CNC
Revenues from Medicaid grew 9% year over year to $23.2 billion, while Medicare revenues of $9.4 billion surged 66% year over year in the quarter under review. Meanwhile, commercial revenues improved 26% year over year to $11 billion.
Centene's premium totaled $44.1 billion, which advanced 22.2% year over year on the back of higher premiums and an expanding membership base in the PDP business, coupled with overall growth in the Marketplace business and Medicaid rate hikes. The metric surpassed the Zacks Consensus Estimate by 3.1% and our estimate by 2.7%.
Service revenues of $772 million decreased 1.5% year over year in the third quarter. However, the metric beat our estimate of $723 million. Investment and other income grew 4.2% year over year to $450 million, which beat the Zacks Consensus Estimate of $381.4 million.
Total membership (excluding TRICARE) was 28 million as of Sept. 30, 2025, which grew 8% year over year, driven by growing commercial members, partially offset by membership declines in the Medicaid and Medicare businesses. The metric beat the consensus mark by 0.5%.
Centene’s health benefits ratio of 92.7% deteriorated 350 basis points year over year in the quarter under review, and slightly missed the consensus mark of 93%. Operating expenses totaled $56.6 billion, which escalated 37% year over year and came higher than our estimate of $47.6 billion. The year-over-year increase was due to higher medical costs, impairment expenses, and selling, general and administrative expenses. Medical costs alone jumped 27% year over year.
Adjusted net earnings were recorded at $245 million compared with year-ago figure of $849 million.
CNC’s Financial Update (As of Sept. 30, 2025)
Centene exited the third quarter with cash and cash equivalents of $17.1 billion, which advanced from the $14.1 billion figure at 2024-end. Total assets of $82.1 billion decreased from the 2024-end level of $82.4 billion.
Long-term debt amounted to $17.5 billion, which dipped from the $18.4 billion figure as of Dec. 31, 2024. The current portion of long-term debt totaled $38 million.
Total stockholders’ equity of $21 billion fell from the 2024-end figure of $26.5 billion.
Centene generated $4.7 billion of net cash from operations in the first nine months of 2025, up from $741 million a year ago.
Centene’s Share Repurchase Update
Centene bought back common shares worth around $473 million in the first nine months of 2025.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -42.99% due to these changes.
VGM Scores
Currently, Centene has a subpar Growth Score of D, a score with the same score on the momentum front. However, the stock has a score of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Centene has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Centene Corporation (CNC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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