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Centene (CNC)
NYSE:CNC
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Centene (CNC) AI Stock Analysis

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CNC

Centene

(NYSE:CNC)

Rating:72Outperform
Price Target:
$30.00
▲(5.67%Upside)
Centene's strong financial performance with robust revenue growth and operational efficiency is a significant positive factor. The undervalued P/E ratio further supports a favorable valuation outlook. However, bearish technical indicators and challenges highlighted in the earnings call, such as increased medical expenses and high drug costs, temper the overall score.
Positive Factors
Exchange Subsidies
Extension of the enhanced subsidies may improve the outlook for HIX beyond 2025, and state rate updates may prove more positive than expected.
Medical Utilization
Potential upside surprise if medical utilization improves.
Negative Factors
Guidance Withdrawal
Centene announced the withdrawal of 2025 guidance, primarily driven by the Marketplace business.
Legislative Reforms
Legislative reforms weigh down growth in Medicaid and ACA exchanges.
Revenue Headwind
CNC cited a first look at 2025 Wakely data that indicated market morbidity data on the Exchanges was significantly higher than CNC’s assumptions.

Centene (CNC) vs. SPDR S&P 500 ETF (SPY)

Centene Business Overview & Revenue Model

Company DescriptionCentene Corporation is a leading multi-national healthcare enterprise that provides a portfolio of services to government-sponsored and commercial healthcare programs. The company operates primarily in the United States and is dedicated to improving the health of its members through innovative programs and services. Centene specializes in providing managed care solutions to individuals receiving benefits under Medicaid, Medicare, and the Health Insurance Marketplace. The company's core services include health insurance plans, pharmacy benefits management, behavioral health services, and other related healthcare solutions.
How the Company Makes MoneyCentene Corporation generates revenue primarily through the provision of managed healthcare services to government-sponsored programs such as Medicaid, Medicare, and the Health Insurance Marketplace. The company receives capitated payments from the government, which are fixed amounts per member, per month, to cover the cost of providing healthcare services to enrolled members. Additionally, Centene earns revenue from premiums paid by individual and group members who purchase health insurance plans. The company also benefits from its pharmacy benefits management services, which involve negotiating drug prices and managing prescription drug benefits for its members. Key partnerships with state and federal governments, healthcare providers, and pharmaceutical companies play a significant role in Centene's ability to offer comprehensive and cost-effective healthcare solutions, thereby contributing to its overall earnings.

Centene Earnings Call Summary

Earnings Call Date:Jul 25, 2025
(Q1-2025)
|
% Change Since: 6.09%|
Next Earnings Date:Oct 28, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a strong start to 2025, with significant revenue growth and membership retention. However, challenges such as increased medical expenses due to the flu season and high specialty drug costs pose ongoing risks. The overall sentiment is balanced by these positive and negative aspects.
Q1-2025 Updates
Positive Updates
Strong Premium and Service Revenue Growth
Centene reported first quarter 2025 premium and service revenue of $42.5 billion, contributing to an increase in full-year guidance to a midpoint of $165 billion, up from $159 billion.
Adjusted EPS Consistent with Expectations
First quarter adjusted diluted EPS was reported at $2.90, aligning with prior expectations and supporting a full-year 2025 adjusted EPS outlook of greater than $7.25.
Membership Growth in Medicare Advantage and Commercial Segments
Medicare Advantage membership showed better-than-expected retention, contributing to a $1 billion increase in revenue outlook for 2025. Commercial segment experienced strong enrollment, adding $5 billion to premium revenue guidance.
Medicaid Contract Wins
Centene secured key Medicaid contracts in Illinois and Nevada, demonstrating strength in its service model and expanding its footprint in rural areas.
Negative Updates
Impact of Flu Season on Medical Expenses
The company faced $130 million in incremental medical expenses due to a more active flu season, impacting Medicaid results in Q1.
High Specialty Drug Costs
Specialty drug costs, particularly in non-low-income PDP members, pressured margins. This was partly driven by pharmaceutical industry behavior and will need to be addressed in future pricing.
Challenges in Medicaid MLR Improvement
Despite progress, the full impact of improved Medicaid rates was offset by the flu season, and high-cost drugs continue to present challenges.
Company Guidance
In Centene Corporation's first quarter 2025 conference call, the company reported an adjusted diluted EPS of $2.90, aligning with prior expectations, and maintained its full-year 2025 adjusted EPS outlook at greater than $7.25. The company saw strong premium and service revenue growth, increasing its full-year revenue forecast by $6 billion due to better-than-expected membership retention in Medicare Advantage and the commercial segment. Medicaid membership remained stable, with a focus on improving the Health Benefit Ratio (HBR) through rate adjustments and managing medical expense drivers like flu-related costs, which added $130 million to medical expenses this quarter. The Medicare segment performed as expected, with the Medicare Advantage business aiming for breakeven by 2027. The company highlighted the impact of policy changes, such as the expiration of enhanced premium tax credits and the potential for Medicaid work requirements, on future operations. Centene anticipates a full-year composite Medicaid rate increase of over 4% and is actively engaging with states to align rates with member acuity. Adjusted SG&A expenses decreased, leveraged by higher revenues, and the company ended the quarter with a debt to adjusted EBITDA ratio of 2.8 times.

Centene Financial Statement Overview

Summary
Centene exhibits strong revenue growth with a 10.53% increase, solid operational efficiency with a 3.41% EBITDA margin, and stable profit margins. The balance sheet shows moderate leverage with a debt-to-equity ratio of 0.66 and effective equity utilization with a ROE of 12.37%. However, cash flow management has room for improvement despite a significant recovery in free cash flow growth.
Income Statement
85
Very Positive
Centene's income statement shows robust revenue growth with a 10.53% increase from 2023 to TTM (Trailing-Twelve-Months). The gross profit margin stands at 15.47%, while the net profit margin is 2.04%. Although the EBIT margin is 2.13%, it is complemented by a healthy EBITDA margin of 3.41%, indicating strong operational efficiency. Overall, the company demonstrates solid revenue growth and stable profitability.
Balance Sheet
78
Positive
The balance sheet reflects a solid equity base with a debt-to-equity ratio of 0.66, indicating moderate leverage. The return on equity (ROE) is 12.37%, showcasing effective utilization of equity. The equity ratio is 32.06%, highlighting a strong capital structure. While the company's leverage is manageable, there is room for improvement in equity utilization.
Cash Flow
72
Positive
Operating cash flow to net income ratio is 0.61, suggesting moderate cash generation relative to net income. The free cash flow to net income ratio is 0.43, indicating room for improvement in free cash flow generation. The free cash flow growth rate of 405% from 2024 to TTM shows significant recovery, yet overall cash flow management can be enhanced.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue163.07B154.00B144.55B125.98B111.11B
Gross Profit16.83B17.32B16.66B14.20B15.22B
EBITDA6.20B5.62B4.06B3.81B4.76B
Net Income3.31B2.70B1.20B1.35B1.81B
Balance Sheet
Total Assets82.44B84.64B76.87B78.38B68.72B
Cash, Cash Equivalents and Short-Term Investments16.68B19.65B14.39B14.66B12.38B
Total Debt19.43B18.88B21.33B22.66B16.78B
Total Liabilities55.94B58.69B52.63B51.35B42.76B
Stockholders Equity26.41B25.84B24.06B26.80B25.77B
Cash Flow
Free Cash Flow-490.00M7.25B5.26B3.29B4.63B
Operating Cash Flow154.00M8.05B6.26B4.21B5.50B
Investing Cash Flow-1.05B-1.19B-2.92B-3.30B-6.96B
Financing Cash Flow-2.41B-1.66B-4.20B1.36B260.00M

Centene Technical Analysis

Technical Analysis Sentiment
Negative
Last Price28.39
Price Trends
50DMA
47.51
Negative
100DMA
53.96
Negative
200DMA
57.68
Negative
Market Momentum
MACD
-6.20
Negative
RSI
26.60
Positive
STOCH
29.46
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CNC, the sentiment is Negative. The current price of 28.39 is below the 20-day moving average (MA) of 34.14, below the 50-day MA of 47.51, and below the 200-day MA of 57.68, indicating a bearish trend. The MACD of -6.20 indicates Negative momentum. The RSI at 26.60 is Positive, neither overbought nor oversold. The STOCH value of 29.46 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CNC.

Centene Risk Analysis

Centene disclosed 35 risk factors in its most recent earnings report. Centene reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Centene Peers Comparison

Overall Rating
UnderperformOutperform
Sector (52)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
75
Outperform
$27.66B16.2110.09%1.49%10.09%-12.18%
72
Outperform
$13.32B7.027.50%12.96%-23.25%
72
Outperform
$78.24B14.777.00%4.38%4.84%-26.54%
68
Neutral
$78.52B16.8612.37%1.96%24.65%48.38%
67
Neutral
$63.15B12.6212.48%2.31%10.21%-17.79%
65
Neutral
$10.31B9.3823.93%16.12%10.99%
52
Neutral
$7.60B0.11-62.95%2.07%16.16%0.31%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CNC
Centene
28.39
-44.71
-61.16%
CI
Cigna
296.37
-41.23
-12.21%
CVS
CVS Health
60.70
2.37
4.06%
HUM
Humana
237.98
-149.49
-38.58%
MOH
Molina Healthcare
165.02
-170.34
-50.79%
ELV
Elevance Health
289.10
-230.20
-44.33%

Centene Corporate Events

Executive/Board ChangesShareholder MeetingsBusiness Operations and Strategy
Centene Holds Annual Meeting, Elects New Directors
Neutral
May 14, 2025

On May 13, 2025, Centene held its Annual Meeting where key decisions were made regarding the company’s governance and strategic plans. The meeting saw the election of eleven directors for a one-year term, approval of executive compensation, ratification of KPMG LLP as the accounting firm for 2025, and the approval of the 2025 Stock Incentive Plan. However, shareholder proposals related to climate change and climate risk reporting were not approved.

The most recent analyst rating on (CNC) stock is a Hold with a $64.00 price target. To see the full list of analyst forecasts on Centene stock, see the CNC Stock Forecast page.

Financial Disclosures
Centene Reaffirms 2025 Earnings Guidance to Investors
Neutral
May 6, 2025

On May 6, 2025, Centene Corporation’s senior management will meet with investors to reaffirm their 2025 earnings guidance, maintaining a GAAP diluted EPS floor of greater than $6.19 and an adjusted diluted EPS floor of greater than $7.25. The company emphasizes the use of non-GAAP financial measures to provide a clearer picture of its core operations, cautioning that these metrics may differ from those of other companies, and encourages a comprehensive review of its financial statements.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 25, 2025