UPDATED 6 pm ET
Centene brought in net profit of $1.5 billion in the first quarter, up 18% from the same period a year ago, as executives touted progress toward margin recovery efforts.
Centene CEO Sarah London said in February the insurer was "laser-focused" on improving the performance of its Medicaid business following a difficult 2025.
“Results in the quarter included excellent progress within our Medicaid business as we continue to drive margin improvement through targeted and increasingly scaled initiatives to modernize and standardize processes to better manage medical cost trend,” London said during the company’s first-quarter earnings call Tuesday morning. “Our Medicare segment results were ahead of expectations with outperformance from both Medicare Advantage and PDP offerings.”
London said the company’s commercial segment, the vast majority of which is made up of Marketplace, performed in line with expectations.”
Centene’s stock rose more than 13% Tuesday following the earnings call.
“We are out of the gate in 2026 with solid momentum,” London said, while cautioning that Centene was “taking a prudent outlook for the balance of 2026” as company leadership continues to gain visibility into key factors that will influence the remainder of the year.
Centene’s medical loss ratio for the quarter was 87.3%, compared to 87.5% in the first quarter of 2025, largely driven by outperformance in Medicaid and Medicare segment health benefit ratios, CFO Andrew Asher said during the earnings call.
The company's Medicaid health benefits ratio of 93.1% decreased by 50 basis points primarily driven by rate and revenue increases, continued tangible progress in managing medical costs and moderate flu costs, the insurer said.
The results were the result of a “multi-tenet program” that Centene deployed over the last one and a half years and “pulling levers around network optimization, further scaling clinical programs and all the work we're doing around payment integrity and fraud, waste and abuse,” London told investors on the call.
Centene ended the quarter with 12.4 million members in Medicaid, down slightly from the end of 2025.
“Our slate of initiatives on both revenue and medical expense are bearing fruit as we continue to navigate an elevated behavioral health and high-cost drug environment. While we have a way to go to get back to a reasonable Medicaid margin, this is the third consecutive quarter of progress toward that goal,” Asher said.
London told investors that Centene leadership is not counting on that outperformance to continue as part of its forecast for 2026.
“But given sort of the fundamental drivers of that, it obviously leans positive. And that would mean that we would come in at an HBR 15 or 20 basis points ahead of that 93.7%. As you've heard me say before, I would be disappointed if we didn't beat 93.7% given where we stand today,” London said during the call. “As we look ahead to 2027, our goal is to continue to drive margin improvement forward, and we obviously have work requirements, a number of policy changes that we're looking ahead to, but as we are strengthening the core operations of the business, we are doing that with a mind to and a goal to continue to drive progressive margin improvement through 2027.”
Centene reported 26.2 million members as of March 31, down from 27.9 million a year ago. That total includes 12.4 million members in Medicaid, with 10.9 million in traditional Medicaid.
The company's Affordable Care Act (ACA) marketplace membership fell sharply since Q1 2025, dropping to 3.6 million from 5.6 million a year ago.
London previewed ongoing ACA headwinds in March, noting that the company had braced for a likely downturn in enrollment following the expiry of the enhanced premium tax credits and the planned implementation of program integrity measures that proved controversial in the industry.
The insurer also is seeing a shift in enrollment in different metal tiers. Just under 50% of Centene’s marketplace plan members are enrolled in silver plans, roughly 35% of members are in bronze plans and the reminder are in gold plans, London noted during Tuesday’s call.
Last week, Elevance Health, in its Q1 earnings call, also noted that membership growth in the individual market plans reflected a shift toward bronze tier coverage following the expiration of enhanced premium tax credits at the beginning of this year.
Centene's commercial business had a health benefits ratio of 75.3%, slightly above the company’s expectations, primarily reflecting higher acuity among marketplace silver tier members prior to anticipated future 2026 net risk adjustment benefits, London noted.
The expiration of the enhanced premium tax credits drove a significant number of consumers out of the market and also drove a shift across the market from silver membership into bronze health plan products as consumers look for more affordable plans, London said.
“As a result, the silver tier remaining membership really follows the golden rule of risk pools that when it shrinks, it becomes more morbid,” she told investors.
Company leadership foreshadowed this shift earlier in the year. The company now has additional visibility with updated claims data and views this utilization “as consistent with the acuity of the silver members” the company enrolled. “We expect this membership to receive a meaningful risk adjustment offset as we look to the balance of the year,” London said.
“We continue to believe in our ability to deliver meaningful margin recovery in the marketplace business and look forward to updating our full year view,” London told investors.
7 am ET
Centene kicked off the first quarter with better-than-expected revenue and adjusted earnings results, signaling a recovery from a rough 2025 as the insurer makes progress in managing medical costs.
The company reported Q1 revenue of $49.94 billion, exceeding Wall Street expectations. Seven analysts surveyed by Zacks Investment Research expected revenue of $47.47 billion in the first quarter.
Centene also reported strong first quarter 2026 adjusted diluted EPS of $3.37, approximately $0.50 better than the company's expectations. Those results also topped Wall Street expectations. The average estimate of six analysts surveyed by Zacks was for earnings of $1.87 per share.
Centene's stock gained 4% in pre-market trading Tuesday morning.
The insurer raised its 2026 premium and service revenue guidance by $1 billion to a range of $171 billion to $175 billion, driven by strength in its Medicaid business, the company said in a press release. Centene also increasing its investment and other income expectation by $50 million to $1.45 billion.
And, the company updated its 2026 GAAP diluted EPS guidance floor to greater than $2.37 and its 2026 adjusted diluted EPS guidance floor to greater than $3.40.
Centene expects full-year revenue in the range of $187.5 billion to $191.5 billion.
"We continue to make tangible progress in our margin recovery efforts while strengthening the fundamental operations of each of our businesses," Sarah London, Centene CEO, said in a statement. "Our strong first quarter results position us to increase our full year 2026 adjusted diluted EPS guidance to greater than $3.40. We remain confident in the long-term earnings power of the enterprise and motivated by the positive and lasting impact we can deliver for the families and communities we serve."
For the first quarter, premium and service revenues increased 5% to $44.7 billion from $42.5 billion in Q1 2025. The increase was primarily driven by premium yield and membership growth in the PDP business, state-directed payments, and rate increases to address medical trend in the Medicaid business, partially offset by lower Marketplace and Medicaid membership, the insurer said.
The company said in its earnings report released Tuesday morning that its medical loss ratio for the quarter was 87.3%, compared to 87.5% in the first quarter of 2025.
The company's Medicaid health benefits ratio of 93.1% decreased by 50 basis points primarily driven by rate and revenue increases, continued tangible progress in managing medical costs and moderate flu costs, the insurer said.
The Medicare segment health benefits ratio was 84.9% as a result of outperformance in both Medicare Advantage and PDP, the company said.
The company reported a commercial medical loss ratio of 75.3%, slightly above the company's expectations, primarily reflecting higher acuity among Marketplace Silver Tier members prior to anticipated future 2026 net risk adjustment benefit.
The consolidated medical loss ratio decrease was also driven by an increase to the premium deficiency reserve (PDR) in 2025 versus no PDR in 2026 for Centene's Medicare Advantage business as a result of its progression towards profitability. The decreases were partially offset by the decline in Marketplace membership and the corresponding impact on consolidated member mix, the insurer said.