July 28 (Reuters) – Centene on Tuesday raised its annual profit and revenue forecasts after beating estimates for quarterly earnings, as the health insurer kept control of its costs.
The upbeat results and forecast, which sent the company’s shares up more than 2% before the bell, come as a relief for investors after high costs have pressured the health insurance industry for three years.
“Our second-quarter results and improved full-year outlook represent meaningful milestones on our path to restoring profitability and increasing shareholder value,” said CEO Sarah London.
Centene in April said it has better control over its medical costs and that it is taking a prudent outlook for the rest of the year.
Second-quarter medical loss ratio, the percentage of premiums spent on medical care, was 89.6%, lower than 93% last year and below analysts’ estimates of 91.30%, as per data compiled by LSEG.
The company said the lower costs were due to improved pricing of its Obamacare plans, as well as a boost from risk-adjustment payments that reimburse insurers who cover a disproportionate share of sicker members.
Americans this year are dropping off Obamacare plans, established under former President Barack Obama’s Affordable Care Act, as many who are facing the end of extra subsidies created during the COVID-19 pandemic struggle to make payments.
Centene had previously flagged a higher number of sick patients in the silver metal tier in Obamacare plans, who pay higher premiums for lower out-of-pocket expenses.
The company raised its 2026 adjusted profit forecast to more than $4.80 per share, from above $3.40. Analysts were expecting a profit of $3.52 per share.
The health insurer also raised its full-year revenue forecast to a range of $193.5 billion to $197.5 billion. It was previously in the range of $187.5 billion to $191.5 billion.
Centene’s quarterly adjusted profit per share was $2.51, surpassing estimates of $1.09.
(Reporting by Sneha S K and Sriparna Roy in Bengaluru; Editing by Maju Samuel)
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