Centene 2025-26: $3 EPS Floor (+40%), Marketplace Repriced 95%
FY25 revenue $194.78B (+19%); op income -$7.62B (vs +$3.18B FY24); NI -$6.67B; EPS -$13.62. Marketplace repriced 95%+ for FY26; ~3.5M members by Q1 FY26. Medicaid HBR Q4 93.0% (-190bp from Q2 peak). Medicare Advantage breakeven by 2027. FY26 guide: adj EPS >$3 (+40% YoY); premium revenue $170-$174B; consolidated HBR 90.9-91.7% (-60bp midpoint).
Key takeaways
- FY26 adj EPS >$3 (+40% YoY). From the FY25 ~$2 print, FY26 step-up reflects Medicaid margin stabilization + marketplace margin recovery + Medicare Advantage progress. The path-to-profitability story.
- Marketplace repriced 95%+ for FY26. 5.8M members → ~3.5M expected by Q1 FY26 (loss of 2.3M from eAPTC expiration). Pricing reflects baseline morbidity + trend + program integrity. Material membership decline expected.
- Medicaid HBR Q4 93.0%, sequential improvement of 190bp from Q2 peak (94.9%). Medicaid composite rate adjustment ~5.5% (above 5% prior estimate). FY26 Medicaid member months down 5-6%; profitability consistent with FY25 outlook.
- Medicare Advantage on track for 2027 breakeven. Q4 2025 MA performance in line. Star ratings improved Q3. PDP enrollment tracking high single-digit growth. Medicare segment FY26 premium revenue grow ~$7.5B.
- Consolidated HBR FY26 90.9-91.7%. Midpoint -60bp from FY25. Combined with -5-6% member months on Medicaid + ~$8B revenue decline on Marketplace = the FY26 underlying recovery.
Business
Centene Corporation is a US managed care + government health insurance company. Three reportable segments:
- Medicaid (~50% of revenue). 12.5M members FY25. 29-state footprint. HBR 93.0% Q4 (improved 190bp from Q2). Composite rate adjustment +5.5%.
- Marketplace (~25% of revenue). 5.8M Q3 members; ~3.5M expected FY26 Q1 end after eAPTC expiration. Repriced 95%+ for FY26 across baseline morbidity + trend + program integrity.
- Medicare (~25%). Medicare Advantage + Part D (PDP). MA on track for 2027 breakeven. 2025 in line. PDP high-single-digit enrollment growth tracking. Star ratings improved.
Strategic moves FY25:
- Marketplace repricing for 95%+ of book for FY26
- Behavioral analytics task force (29 states)
- Florida + New York Medicaid focus
- Medicare Advantage redesigned duals operating model
- Building data + AI integration foundation
- Vocal No Surprises Act reform advocacy
- Medicaid contract wins: Illinois (continuing dual-eligibles); Nevada (rural areas)
- $475M FY25 buyback (vs $3.1B FY24)
- Florida $150M Children's Medical Services revenue adjustment Q3
FY25 financial performance
| Metric (FY) | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue ($B) | 144.55 | 154.00 | 163.07 | 194.78 |
| Revenue YoY | n/a | +6% | +6% | +19% |
| Op income ($B) | 1.32 | 2.93 | 3.18 | -7.62 |
| Op margin | 0.9% | 1.9% | 1.9% | -3.9% |
| Net income ($B) | 1.20 | 2.70 | 3.31 | -6.67 |
| Diluted EPS ($) | 2.07 | 4.95 | 6.31 | -13.62 |
| Adj EPS ($) | n/a | n/a | ~$6.30 | ~$2.00 |
| FCF ($B) | 5.26 | 7.25 | -0.49 | 4.32 |
| Total debt ($B) | 21.33 | 18.88 | 19.43 | 18.78 |
| Buyback ($B) | -3.10 | -1.63 | -3.12 | -0.48 |
The earnings progression: revenue +19% on Marketplace member surge; but op income flipped to -$7.62B due to Marketplace morbidity shift + Medicaid trend pressure (Q2 alone $2.4B pretax headwind from morbidity shifts). Adj EPS dropped from $6.31 → ~$2.00 / FY26 guide >$3 (+40%).
Capital allocation
- Capex: $-767M FY25 (light at 0.4% of revenue).
- Dividends: $0 (no dividend).
- Buybacks: $-475M FY25 (vs $-3.12B FY24, -85%). Conservation mode.
- Debt: $18.78B (-3% YoY).
- FCF: $4.32B (recovery from FY24 -$490M).
FY26 outlook (per Q4 2025 call, 2026-02-06)
| FY26 framework | Detail |
|---|---|
| Adjusted EPS | >$3 (+40% YoY from ~$2 FY25) |
| Premium and service revenue | $170B to $174B |
| Medicaid member months | -5% to -6% |
| Marketplace revenue | -$8B (member loss + repricing) |
| Medicare segment premium | +$7.5B |
| Consolidated HBR | 90.9% to 91.7% (-60bp midpoint) |
| Medicare Advantage | Breakeven by 2027 |
| Marketplace recovery | Margin recovery |
| Medicaid stability | Margin stability |
The FY26 guide is conservative: significant member drop on Marketplace + Medicaid attrition, offset by Medicare growth + repriced Marketplace + Medicaid HBR stabilization.
Key risks
- Marketplace eAPTC outcome. ~$8B revenue decline assumes eAPTC expiration; Congressional action would change.
- Medicaid cost trends. Behavioral health continues driving cost pressure. Work requirements/program integrity in flux.
- Risk adjustment assumptions. Marketplace repricing depends on assumptions about member acuity — material if assumptions miss.
- No Surprises Act / litigation. Marketplace exposure to legal system abuse.
- Medicare Advantage breakeven timeline. 2027 target depends on bid execution + Star ratings + cost discipline.
- Reimbursement / rate environment. Medicaid composite rate +5.5% FY25 — trend going forward unclear.
Bottom line
CNC FY25 is the negative-print year: -$13.62 EPS / op income -$7.62B reflects Marketplace morbidity shift + Medicaid trend pressure. FY26 guide of adj EPS >$3 (+40%) on Marketplace repriced 95%+ + Medicaid HBR sequential improvement + Medicare 2027 breakeven path. Risks are eAPTC outcome + Medicaid cost trends + risk adjustment + No Surprises Act. Quality MCO mid-multi-year recovery cycle; the structural reset is underway.
Citations
- Centene Corp. FY25 Form 10-K (filed February 2026, SEC EDGAR).
- CNC Q4 2025 earnings call, 2026-02-06 — Medicaid HBR Q4 93.0% (-190bp from Q2); Marketplace 95%+ repriced FY26; FY26 adj EPS >$3 (+40% YoY); premium revenue $170-$174B.
- CNC Q3 2025 earnings call, 2025-10-29 — Medicaid HBR 93.4% (+150bp sequential); $150M Florida Children's adjustment; Marketplace 95%+ repriced for FY26; adj EPS forecast raised to ≥$2.
- CNC Q2 2025 earnings call, 2025-07-25 — Marketplace $2.4B pretax headwind (morbidity shifts); Medicaid HBR 94.9% Q2; Medicare Advantage on track for 2027 breakeven.
- CNC Q1 2025 earnings call, 2025-04-25 — Q1 EPS $2.90; FY guide raised to $7.25 EPS; Q1 Medicaid composite rate +4.5%; SG&A 7.9% Q1.
- Internal financial_statements view (consolidated annual + cash flow + capital structure).