Centene, a US health insurer, raised its annual profit and revenue forecasts after reporting quarterly earnings that exceeded expectations. The company's shares rose following the announcement.
The health insurance industry has faced sustained pressure from high costs over the past three years. Centene's second-quarter medical loss ratio — a measure of claims paid relative to premiums — fell to 89.6%, down from 93% a year earlier and below the consensus estimate of 91.30%.
The company attributed the lower costs to improved pricing of its Affordable Care Act (ACA) exchange plans and a boost from risk-adjustment payments. However, Americans are dropping off Marketplace plans as members struggle to make payments after the expiration of extra subsidies that were implemented during the COVID-19 pandemic.
Centene raised its 2026 adjusted profit forecast to more than $4.80 per share, up from above $3.40 per share, while analysts had expected $3.52 per share. The company also increased its full-year revenue forecast to a range of $193.5 billion to $197.5 billion, from a previous range of $187.5 billion to $191.5 billion.
This was a solid quarter of progress in margin recovery.
Analyst Lance Wilkes commented that the guidance raise should shift investor focus to the pace and conviction of recovery in Medicaid and Marketplace segments for 2027 and beyond.