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Centene (CNC)
NYSE:CNC
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Centene
(NYSE:CNC)
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Rating:51Neutral
Price Target:
$43.00
▼(-0.56% Downside)
Action:ReiteratedDate:02/07/26
The score is held down primarily by the TTM earnings and margin deterioration and a bearish technical setup (price below key moving averages with negative MACD). These are partially offset by stronger TTM cash flow and a more optimistic 2026 outlook from management (EPS > $3 with targeted HBR/SG&A improvement), though marketplace and medical-cost headwinds keep execution risk elevated.
Positive Factors
Government-focused, capitation-based business model
A capitation model tied to Medicaid and Medicare provides durable, predictable per-member revenue and aligns incentives to manage care and costs. Scale in government programs and diversified services (PBM, specialty) supports steady revenue streams and long-term relevance despite cyclical pressures.
Revenue growth and improving cash generation
Consistent top-line growth plus a TTM rebound to positive free cash flow strengthens Centene's ability to fund operations, pay down debt, and invest in strategic initiatives. Reliable cash generation improves financial flexibility even while earnings recover, a durable operational strength.
Clear 2026 operational plan and cost discipline
Management has laid out specific margin and EPS targets plus HBR and SG&A improvement and AI-driven efficiency programs. Concrete, multi-pronged operational initiatives increase the likelihood of sustainable margin recovery if execution holds, supporting medium-term structural improvement.
Negative Factors
Profitability reversal and margin compression
A swing from sustained profitability to TTM operating losses signals structural margin pressure and execution risk. Compressed margins limit reinvestment and deleveraging capacity and make earnings more sensitive to medical-cost and policy shocks over the coming quarters.
Marketplace membership and material revenue headwind
A multi-million member reduction and an ~$8B marketplace revenue decline driven by policy changes is a lasting structural hit to scale and margins in a material segment. Reduced marketplace scale raises unit costs and lengthens recovery time for consolidated profitability.
Persistent clinical cost trends (behavioral health, drugs)
Ongoing, hard-to-control medical trends—behavioral health, home health, and specialty drug costs—create sustained upward pressure on claims and HBRs. Even with rate negotiations and programs, these clinical drivers are structural and can erode margins for multiple quarters to years.
Centene (CNC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$21.18B
Dividend YieldN/A
Average Volume (3M)6.17M
Price to Earnings (P/E)―
Beta (1Y)0.14
Revenue Growth14.92%
EPS Growth-286.72%
CountryUS
Employees60,400
SectorHealthcare
Sector Strength45
IndustryMedical - Healthcare Plans
Share Statistics
EPS (TTM)-1.19
Shares Outstanding491,771,000
10 Day Avg. Volume6,215,467
30 Day Avg. Volume6,173,322
Financial Highlights & Ratios
PEG Ratio<0.01
Price to Book (P/B)1.01
Price to Sales (P/S)0.10
P/FCF Ratio4.68
Enterprise Value/Market Cap1.05
Enterprise Value/Revenue0.11
Enterprise Value/Gross Profit0.93
Enterprise Value/Ebitda-4.31
Forecast
1Y Price Target
$43.92Price Target Upside1.56% Upside
Rating ConsensusHold
Number of Analyst Covering13
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Centene Business Overview & Revenue Model
Company DescriptionCentene Corporation operates as a multi-national healthcare enterprise that provides programs and services to under-insured and uninsured individuals in the United States. Its Managed Care segment offers health plan coverage to individuals through government subsidized programs, including Medicaid, the State children's health insurance program, long-term services and support, foster care, and medicare-medicaid plans, which cover dually eligible individuals, as well as aged, blind, or disabled programs. Its health plans include primary and specialty physician care, inpatient and outpatient hospital care, emergency and urgent care, prenatal care, laboratory and X-ray, home-based primary care, transportation assistance, vision care, dental care, telehealth, immunization, specialty pharmacy, therapy, social work, nurse advisory, and care coordination services, as well as prescriptions and limited over-the-counter drugs, medical equipment, and behavioral health and abuse services. This segment also offers various individual, small group, and large group commercial healthcare products to employers and directly to members. The company's Specialty Services segment provides pharmacy benefits management services; nurse advice line and after-hours support services; vision and dental services, as well as staffing services to correctional systems and other government agencies; and services to Military Health System eligible beneficiaries. This segment offers its services and products to state programs, correctional facilities, healthcare organizations, employer groups, and other commercial organizations. The company provides its services through primary and specialty care physicians, hospitals, and ancillary providers. Centene Corporation was founded in 1984 and is headquartered in St. Louis, Missouri.
How the Company Makes MoneyCentene generates revenue primarily through its health insurance plans, where it receives government funding for providing healthcare services to members enrolled in Medicaid and Medicare programs. The company operates on a capitation model, where it is paid a fixed amount per member per month (PMPM) by state and federal government programs to cover the health services for its members. Key revenue streams include premium revenue from Medicaid and Medicare, and supplemental services such as pharmacy benefits management. Additionally, Centene has formed strategic partnerships and collaborations with other healthcare providers and organizations, enhancing its service offerings and expanding its market reach, which contributes significantly to its overall earnings.
Centene Key Performance Indicators (KPIs)
Any
Revenue by Product
Details income from each product line, offering insight into which offerings are most successful and where there might be opportunities for growth.
Details income from each product line, offering insight into which offerings are most successful and where there might be opportunities for growth.
Data provided by:
The Fly
The FlyCentene Earnings Call Summary
Earnings Call Date:Feb 06, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 28, 2026
Earnings Call Sentiment Positive
The call acknowledged a difficult 2025 but highlighted tangible operational progress (Medicaid HBR improvement, Medicare strength, SG&A savings, deleveraging, and AI-driven initiatives) and set an optimistic 2026 financial target (adjusted EPS > $3, >40% YoY growth). Material near-term headwinds remain—marketplace membership/revenue pressure, NSA-related accruals, persistent behavioral health and high-cost drug trend, and Medicaid membership attrition—creating execution risk. On balance, management presented credible actions, improving trends, and a constructive outlook that suggests momentum toward margin recovery in 2026 and beyond.Q4-2025 Updates
Positive Updates
2026 EPS Outlook
Company expects full year 2026 adjusted diluted EPS > $3, representing >40% year-over-year growth from 2025 adjusted diluted EPS of $2.08, signaling a planned meaningful margin recovery.
Medicaid Health Benefits Ratio Improvement
Medicaid Q4 health benefits ratio (HBR) improved to 93, a 40 basis point sequential improvement and ~190 basis points improvement versus Q2 2025, with management targeting Medicaid HBR stability in 2026 supported by assumed net rates in the mid-4% range (≈4.5%).
Medicare and PDP Strength
Medicare segment delivered strong 2025 results; Medicare PDP revenue and enrollment growth drove Medicare premium revenue guidance +$7.5 billion for 2026 and Part D enrollment tracking to high single-digit percentage growth; PDP pretax margin assumed ~2% in 2026 (down from high-threes in 2025) while MA is progressing toward breakeven by 2027.
Consolidated HBR and Cost Discipline
Company guides to a consolidated HBR of 90.9%–91.7% for 2026 (midpoint down ~60 basis points vs. 2025) and reported full year adjusted SG&A ratio of 7.4% (110 basis points improvement vs. 2024), demonstrating operating leverage and expense discipline.
Balance Sheet and Liquidity Actions
Ended year with ~$400 million cash available for general corporate use, reduced debt by $189 million in Q4, and finished with a debt-to-capital ratio of 46.5%, indicating active deleveraging and improved balance sheet positioning.
Operational & Data/AI Progress
Built data/AI capabilities to accelerate operations (e.g., faster prior authorization approvals, improved call center operations, advanced payment integrity analytics scoring claims against 75 algorithms) expected to drive future automation, efficiency, and medical economics improvements.
Negative Updates
2025 Earnings and Q4 Adjusted Loss
2025 was a challenging year: Q4 adjusted diluted loss per share was $1.19 and full year 2025 adjusted diluted EPS was $2.08; Q4 GAAP diluted loss per share was $2.24 driven in part by a $389 million net loss related to a definitive agreement to divest the remaining Magellan business.
Marketplace Membership and Revenue Pressure
Ambetter paid membership dropped from ~5,000,000 in December to an expected ~3,500,000 by end of Q1 2026 (post-EAPTC environment); company expects marketplace revenue to be down about $8 billion in 2026 due to policy and market impacts (expiration of enhanced APTCs) and pricing changes.
No Surprises Act (NSA) Costs and Accruals
Two out-of-period items (a 2023 CMS reconciliation and NSA dispute costs) prompted accruals that increased marketplace segment HBR by ~100 basis points in Q4 versus original expectations; management expects continued NSA-related volatility and is pursuing litigation and advocacy for reform.
Persistent Clinical Cost Drivers
Behavioral health, home health, and high-cost drugs remained primary pressure points driving excess trend throughout 2025 (behavioral health roughly half of excess trend), requiring aggressive program and network interventions and rate engagement with states.
Membership Attrition & Medicaid Headwinds
Company expects Medicaid member months to decline ~5%–6% in 2026 (continued attrition from eligibility reverification and known program roll-offs) which, combined with acuity shifts, remains a headwind to achieving full-margin recovery quickly.
Seasonality and 2026 Earnings Profile
Guidance projects earnings seasonality with majority of 2026 adjusted EPS in Q1, stepping down in Q2 and near breakeven in Q3 with a loss in Q4—indicating front-loaded profitability and potential quarterly volatility across the year.
Company Guidance
Centene's 2026 guidance calls for premium and service revenue of $170–$174 billion, consolidated health benefits ratio (HBR) of 90.9%–91.7% (midpoint ~91.3%, down ~60 bps versus 2025), and adjusted diluted EPS greater than $3 (over 40% YoY growth vs. 2025 adjusted EPS of $2.08); seasonality is expected to concentrate earnings in Q1 with step‑downs in Q2, roughly breakeven in Q3 and a loss in Q4. By segment, Medicaid assumes a mid‑fours net rate impact (~4.5%) and mid‑fours net trend with a stable HBR versus 2025 (2025 Medicaid HBR ~93.7%, Q4 = 93%), member months down 5–6% (year‑end membership ~12.5M); Marketplace revenue is expected to be down about $8B with Q1 paid Ambetter membership ~3.5M (Dec = 5.0M), bronze >30% of mix, and marketplace pretax margin recovering to roughly ~4% (vs. ~‑1% in 2025); the Medicare segment is expected to grow premium revenue by ~ $7.5B, finish open enrollment at ~8.7M members, have a ~41% MA/59% PDP revenue split, PDP pretax margin assumed ~2% (with direct subsidy rising from ~$143 to ~$200), and Medicare Advantage continuing toward breakeven in 2027 (not yet breakeven in 2026, no PDR booked). Other guidance assumptions include consolidated adjusted SG&A ~7.4% (Q4 = 7.5%), medical claims liability $20.5B (~46 days), available cash ~ $400M, $189M of debt reduction in Q4 (debt‑to‑cap ~46.5%), an adjusted tax rate of 26%–27%, reduced investment income from anticipated Fed cuts, and no share buybacks reflected in guidance.Centene Financial Statement Overview
Summary
Revenue has continued to grow, and TTM cash flow rebounded to solid operating and free cash flow. However, the key negative is the sharp TTM profitability reversal (negative operating income and sizable net loss) after several profitable years, with meaningfully compressed margins; balance sheet leverage appears moderate but is currently supporting a loss-making earnings profile.Income Statement
Revenue has grown steadily over time (2020–2024) and is up again in TTM (Trailing-Twelve-Months), but profitability has deteriorated sharply: TTM shows negative operating profit and a sizable net loss after being profitable in 2021–2024. Margins have compressed meaningfully versus prior years, turning net and operating margins negative in TTM, which raises concerns around cost pressure and earnings volatility despite continued top-line expansion.42
Neutral
Balance Sheet
Leverage looks manageable for the sector with debt-to-equity generally in the ~0.7–0.9 range, and equity remains substantial relative to assets. However, profitability on equity has swung from positive in 2020–2024 to materially negative in TTM (Trailing-Twelve-Months), implying the balance sheet is currently supporting a loss-making earnings profile, which weakens overall balance-sheet quality despite moderate leverage.56
Neutral
Cash Flow
Cash generation improved markedly in TTM (Trailing-Twelve-Months), with solid operating cash flow and strong free cash flow that rebounded from weak/negative free cash flow in 2024. Free cash flow is positive and growing in TTM, but cash-flow reliability is a watch item given the sharp swing from 2023 strength to 2024 weakness, and the fact that TTM cash flow does not fully offset the reported net loss.63
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 194.78B | 163.07B | 154.00B | 144.55B | 125.98B |
| Gross Profit | 23.83B | 16.83B | 17.32B | 16.66B | 14.20B |
| EBITDA | -5.14B | 6.20B | 5.62B | 4.06B | 3.81B |
| Net Income | -6.67B | 3.31B | 2.70B | 1.20B | 1.35B |
Balance Sheet | |||||
| Total Assets | 77.66B | 82.44B | 84.64B | 76.87B | 78.38B |
| Cash, Cash Equivalents and Short-Term Investments | 17.89B | 16.68B | 19.65B | 14.39B | 14.66B |
| Total Debt | 18.78B | 19.43B | 18.88B | 21.33B | 22.66B |
| Total Liabilities | 57.60B | 55.94B | 58.69B | 52.63B | 51.35B |
| Stockholders Equity | 19.95B | 26.41B | 25.84B | 24.06B | 26.80B |
Cash Flow | |||||
| Free Cash Flow | 4.32B | -490.00M | 7.25B | 5.26B | 3.29B |
| Operating Cash Flow | 5.09B | 154.00M | 8.05B | 6.26B | 4.21B |
| Investing Cash Flow | 453.00M | -1.05B | -1.28B | -2.92B | -3.30B |
| Financing Cash Flow | -1.60B | -2.41B | -1.57B | -4.20B | 1.36B |
Centene Technical Analysis
Positive
43.24
Price Trends
42.27
Positive
39.42
Positive
39.88
Positive
Market Momentum
-0.20
Negative
54.93
Neutral
96.21
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CNC, the sentiment is Positive. The current price of 43.24 is above the 20-day moving average (MA) of 41.82, above the 50-day MA of 42.27, and above the 200-day MA of 39.88, indicating a bullish trend. The MACD of -0.20 indicates Negative momentum. The RSI at 54.93 is Neutral, neither overbought nor oversold. The STOCH value of 96.21 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $77.50B | 13.08 | 14.40% | 2.21% | 16.75% | 113.48% | |
65 Neutral | $76.42B | 13.73 | 13.29% | 1.99% | 11.96% | -11.11% | |
59 Neutral | $4.08B | ― | -44.51% | ― | 37.38% | -912.18% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% | |
51 Neutral | $21.18B | -3.21 | -28.79% | ― | 14.92% | -286.72% | |
48 Neutral | $7.34B | 17.33 | 11.02% | ― | 13.71% | -18.02% | |
46 Neutral | $22.51B | 19.02 | 6.98% | 1.38% | 9.87% | -5.58% |
* Healthcare Sector Average
CNC
Centene
43.24
-15.69
-26.62%
CI
Cigna
280.31
-14.65
-4.97%
HUM
Humana
189.83
-61.65
-24.51%
MOH
Molina Healthcare
151.00
-136.42
-47.46%
ELV
Elevance Health
342.93
-35.02
-9.26%
OSCR
Oscar Health
13.23
-2.04
-13.36%
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.