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Health insurer Centene beats profit targets on commercial plan strength

2024.10.25 07:35

(Reuters) -Centene beat Wall Street estimates for third-quarter profit on Friday, as strength in its commercial insurance business outweighed the impact of high costs related to its government-backed Medicaid plans for low-income people.

Shares of the health insurer jumped 11.65% to $68.80 in premarket trading after the company also maintained its annual profit forecast of greater than $6.80 per share, above analysts’ expectation of $6.73, according to data compiled by LSEG.

Wall Street expectations have been subdued after peers UnitedHealth (NYSE:) and Elevance, which also offer Medicaid plans, warned of a hit from high demand for healthcare services, bringing down the sentiment for the health insurance industry.

UnitedHealth also expects pressure across its government-supported health insurance businesses in 2025.

Centene (NYSE:) reported a medical loss ratio — the percentage of premiums spent on medical care — of 89.2% for the quarter ended Sept. 30, compared with analysts’ estimate of 88.03%, according to data compiled by LSEG.

The higher costs also stemmed from a reassessment that has led to an increase in the number of sick patients in insurers’ Medicaid membership profile.

States have been re-determining Medicaid eligibility after a federal policy that required insurers to keep low-income Americans enrolled in health plans during the COVID-19 pandemic ended last year.

© Reuters. FILE PHOTO: A sign for Fidelis Care, part of the Centene Corporation, is seen in Queens, New York, U.S., November 16, 2021. REUTERS/Andrew Kelly/File Photo

For the third quarter, Centene’s total Medicaid memberships fell 14% to 13.07 million members from a year earlier, whereas commercial plan memberships grew 20% to 4.93 million.

On an adjusted basis, the health insurer earned $1.62 per share, compared with analysts’ average estimate of $1.33 per share.



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