By Sriparna Roy and Sneha S K
April 28 (Reuters) – Centene on Tuesday raised its annual forecast for adjusted profit and revenue after a quarterly results beat, as it expects to gain from its efforts to rein in elevated costs.
The forecast raise from Centene follows similar moves from larger peers UnitedHealth and Elevance, adding to investors’ relief. The sector has been struggling with higher medical costs for more than two years due to increased demand for healthcare across government-backed plans.
“We continue to make tangible progress in our margin recovery efforts,” said Chief Executive Officer Sarah London.
Shares of the company rose 2.5% before the bell.
Centene’s medical loss ratio, the percentage of premiums spent on medical care, was 87.3% in the first quarter. Analysts had expected the company to report a ratio of 89.42%, according to LSEG data.
The quarter was “moderately better than expectations, with core medical costs under control”, said Bernstein analyst Lance Wilkes.
This was helped by progress in managing medical costs and moderate flu costs, Centene said.
However, a higher number of sick patients in the silver metal tier in Obamacare plans pushed up costs in the segment slightly above the company’s expectations in the first quarter.
Centene had previously warned of higher demand in specialty pharmacy from silver members, who pay higher premiums for lower out-of-pocket expenses, driven by categories such as anti-inflammatory, gastrointestinal, and dermatological conditions.
The Trump administration’s new work requirements and decreased funding for Medicaid plans for low-income Americans have also affected health insurers.
Centene now sees 2026 adjusted profit above $3.40, compared with its previous expectation of more than $3. Analysts were expecting $3.02 per share.
The company also raised its full-year revenue forecast to $187.5 billion to $191.5 billion from $186.5 billion to $190.5 billion previously.
It earned an adjusted profit per share of $3.37, surpassing analysts’ average estimate of $2.13.
(Reporting by Sriparna Roy and Sneha S K in Bengaluru; Editing by Shinjini Ganguli)
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