UPDATED: Feb. 6 at 12:15 p.m. ET
Centene is "laser-focused" on improving the performance of its Medicaid business following a difficult 2025.
CEO Sarah London told investors Friday morning on the company's earnings call that the team made headway in this effort in later part of 2025, with it's Q4 medical loss ratio of 93% on par with expectations set for analysts in October and showing notable improvement from the second quarter of 2025.
She said that utilization trend patterns seen in the third quarter largely carried into Q4, with behavioral health as the largest driver. Home health services and high-cost pharmaceuticals were also key factors in cost and utilization trends seen in the back half of the year, she said.
And while a spike in flu and other respiratory illnesses generated headlines late in the year, London said that utilization patterns in its Medicaid population were on par with expectations.
"As an organization, we have been laser-focused on restoring our Medicaid business to sustainable profitability while maintaining our focus on quality outcomes for our members and the communities we serve," London said.
London also outlined the strategies that Centene is deploying as it aims to right the ship. She said the team is looking to optimize its provider networks and implement new clinical programs that drive greater value. It's also working closely with state partners on setting rates and other reforms that can address these cost drivers.
She added that Centene is also looking to be more aggressive in rooting out provider fraud to support the integrity of the Medicaid program. An example of this at work is Centene's Applied Behavioral Analysis task force, which convened in 2025 to dig into cost drivers.
London said that the panel analyzed data across Centene's 29-state footprint to find anomalies, and identified scenarios where child patients were in therapy far longer than clinical evidence supports, or who were not enrolled in school-integrated care.
The task force also identified lacking oversight of behavioral technicians.
"These dynamics drive cost in the system, but far more importantly, they are red flags relative to the quality of patient care for a very vulnerable population," London said.
The team can then bring this data to state partners to develop solutions, she said. As a result of the task force's analysis, Centene has built out a ABA-focused program that's designed to engage members, parents and their patients.
"This is not algorithmic or theoretical for us," London said. "It is about being responsible stewards of taxpayer dollars and transforming the health of the communities we serve."
PUBLISHED: Feb. 6 at 7:41 a.m. ET
Centene Corporation posted a $1.1 billion loss in the fourth quarter of 2025 as it works to find ways to adapt to the elevated cost environment.
The company said in its earnings report released Friday morning that its medical loss ratio for the quarter was 94.3%, compared to 89.6% in the fourth quarter of 2024. The spike reflects higher morbidity in the Affordable Care Act (ACA) exchange market as well as changes to Medicare Part D that were rolled out as part of the Inflation Reduction Act.
For the full year, MLR was 91.9%, up from 88.3% in 2024. Centene said this was driven by reduced payouts from ACA risk adjustment as well as growing medical costs in both the marketplace and Medicaid spaces, with the latter seeing costs rise in particular for behavioral health and pharmaceuticals.
While it did post a loss in the fourth quarter, the profit results still surpassed Wall Street analysts' predictions, per Zacks Investment Research. By comparison, Centene reported $283 million in profit for the fourth quarter of 2024.
Centene posted $6.7 billion in losses across 2025 as market pressures squeeze the company, according to the report. It brought in $3.3 billion in profit for 2024.
"We are pleased to end a challenging year carrying positive momentum from the extensive and decisive actions taken in the back half of 2025 with the goal of restoring Marketplace profitability and stabilizing the trajectory of our Medicaid business," CEO Sarah London said in the press release. "As we look to 2026, we are positioned to deliver meaningful margin improvement and renewed adjusted diluted EPS growth."
In the earnings report, Centene noted that one of the steps it's taken to right the ship is to sell off the remaining Magellan Health business, and that in December it signed an agreement to divest that unit. The company had previously sold Magellan's pharmacy unit, Magellan Rx, and its Magellan Specialty Health division.
Centene said the sale generated noncash impairment charges of $513 million.
While the company posted significant losses in 2025, revenues have grown year over year. In the fourth quarter, Centene reported $49.7 billion in revenue, up from $40.8 billion in the prior-year quarter and also surpassing Wall Street's predictions. Revenue for all of 2025 was $194.8 billion, increasing from 2024's haul of $163.1 billion.
Centene boasted 27.6 million members as of Dec. 31, including 12.5 million in Medicaid and just shy of 6 million in its marketplace plans, per the report.
For 2026, Centene said it expects to bring in at least $3 in earnings per share as well as revenue between $186.5 billion and $190.5 billion.