Centene cuts 2024 profit forecast on govt-backed insurance uncertainty

(Reuters) -Centene Corp on Tuesday cut its adjusted profit forecast for 2024 as the U.S. health insurer expects a hit to Medicaid memberships and pressure on Medicare Advantage (MA) business due to policy changes.

The MA business is likely to contract following tweaks that will cut government payouts from next year, the company has said, while Medicaid memberships are expected to take a knock from the removal of pandemic-related relief measures.

On an adjusted basis, Centene (NYSE:) now expects 2024 profit of more than $6.60 per share, compared with its previous forecast of at least $7.15.

The company had warned in February of negative profit margins in its MA business in 2024 temporarily, as it also came under pressure after the U.S. Centers for Medicare and Medicaid Services (CMS) cut star rating for its plans in October.

Shares of larger rivals UnitedHealth (NYSE:) and Elevance dipped earlier this month despite both beating first-quarter earnings estimates on investor worries related to higher future medical costs.

Centene’s health benefits ratio, which measures medical costs in relation to premiums collected, was 87% for the first quarter, compared with Refinitiv IBES estimates of 87.26%.

The company raised its profit outlook for this year to at least $6.40 per share from $6.25 to $6.40 forecast earlier, expecting growth in its business that offers private health insurance plans to individuals and families.

Shares of the Missouri-based company rose 2% to $69.01 in premarket trade.

Excluding items, Centene earned $2.11 per share in the reported quarter, compared with estimates of $2.09.