Centene Jumps 16.3% in 3 Months: A Comeback or Calm Before the Storm?

After a bruising first half of 2025, Centene Corporation CNC, a major U.S. healthcare plan provider, is showing early signs of stabilization. Like most managed care players, the company has been pressured by elevated medical utilization and rising care costs. Yet market performance suggests sentiment is improving. CNC shares have climbed 16.3% over the past three months, sharply outperforming the industry’s 7.3% decline. By comparison, the S&P 500 has risen 3.3%, while sector leaders UnitedHealth Group Incorporated UNH fell 5.9% and Elevance Health, Inc. ELV has advanced a modest 1.7%.

The relative strength raises a timely question: has Centene absorbed the worst of the damage, and is it time for investors to reconsider the stock?

3-Month Price Performance: CNC, UNH, ELV, Industry & S&P 500

Let’s find out.

What’s Affecting CNC

The challenges facing Centene remain visible. Operating expenses increased 5.5% in 2023 and 5.8% in 2024, before accelerating sharply, up 26.5% in the first nine months of 2025, driven largely by higher medical costs. That pressure is evident in the health benefits ratio, which climbed from 87.7% in 2023 to 88.3% in 2024 and surged to 92.7% by the end of the third quarter of 2025.

As claims consume a larger share of premiums, profitability has narrowed. Adjusted net margin fell from 2.3% last year to just 0.5% in the third quarter of 2025, underscoring the margin squeeze.

The balance sheet adds another layer of concern. Centene’s long-term debt-to-capital stands at 45.51%, above the industry average of 40.23%, with long-term debt totaling $17.5 billion as of Sept. 30, 2025.

On the operating side, commercial membership continues to grow, but ongoing declines in Medicare and traditional Medicaid enrollment weigh on total membership. Intensifying competition across government-sponsored programs could also make winning new contracts more difficult in the near term.

What Do the Estimates Say?

The Zacks Consensus Estimate for 2025 earnings stands at $2 per share, implying a steep 72.1% year-over-year decline. However, projections point to a rebound in 2026, with EPS expected to recover 46.6% to $2.94. Revenues are forecast to rise a solid 18.5% in 2025 before edging down 0.3% in 2026.

Centene has beaten earnings estimates in three of the past four quarters, delivering an average surprise of 75.2%.

Centene Corporation Price, Consensus and EPS Surprise

Centene Corporation price-consensus-eps-surprise-chart | Centene Corporation Quote

What is Working in Centene’s Favor?

Despite near-term pressures, several factors work in Centene’s favor. Its commercial business is expanding quickly, with marketplace membership rising 29.5% in the first nine months of 2025, and these plans typically generate better margins than government programs.

From a valuation standpoint, CNC trades at a forward P/E of 15.11X, slightly below the industry average of 16.16X, though above its five-year median of 11.32X. Compared with UnitedHealth at 19.38X and Elevance at 13.46X, Centene sits somewhere in the middle and carries a Value Score of A.

Looking ahead, management expects improvement in Medicare Star ratings, while demographic tailwinds from an aging population and rising chronic disease prevalence support long-term demand for its offerings.

Conclusion

Centene remains a stock in transition. While near-term fundamentals are still under pressure from elevated medical costs, weaker margins, and enrollment mix challenges, recent share price strength suggests that much of the bad news may already be reflected in the valuation. The company’s expanding commercial marketplace business and expectations of a gradual earnings recovery in 2026 provide some support to the longer-term outlook. At the same time, leverage levels and competitive intensity in government-sponsored programs warrant caution.

Given this balanced risk-reward setup, Centene appears best suited for investors willing to stay patient rather than chase aggressive upside. The stock offers selective value and recovery potential. Centene currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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