Centene Corporation CNC reported first-quarter 2025 adjusted earnings per share (EPS) of $2.90, which surpassed the Zacks Consensus Estimate by 22.9%. Moreover, the bottom line climbed 28% year over year. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
Revenues advanced 15.4% year over year to $46.6 billion. The top line beat the consensus mark by 7.2%.
The quarterly results benefited on the back of solid premium growth fueled by expanding membership in the Prescription Drug Plan (PDP) and Commercial Marketplace businesses, along with strong product positioning in the Marketplace business. However, the upside was partly offset by declining service revenues, a drop in investment and other income, and year-over-year membership declines in Medicaid and Medicare businesses.
Centene Corporation Price, Consensus and EPS Surprise
Centene Corporation Price, Consensus and EPS Surprise
Revenues from Medicaid grew 4% year over year to $22.3 billion, while Medicare revenues of $8.8 billion soared 48% year over year in the quarter under review. Meanwhile, commercial revenues improved 31% year over year to $10.1 billion.
Centene's premiums totaled $41.7 billion, which advanced 17.4% year over year on the back of higher premiums and expanding membership base in the PDP business, coupled with strong product positioning and market growth in the Marketplace business. The metric surpassed the Zacks Consensus Estimate of $39.4 billion and our estimate of $39 billion.
Service revenues of $777 million decreased 3.8% year over year in the first quarter. The metric came higher than the consensus mark of $768.5 million but lagged our estimate of $783.8 million. Investment and other income dropped 29.9% year over year to $382 million, which missed the Zacks Consensus Estimate of $413.4 million and our estimate of $399.9 million.
Total membership was 27.9 million as of March 31, 2025, which dipped 1.7% year over year due to membership declines in the Medicaid and Medicare businesses. The metric missed the consensus mark of 29.3 million and our estimate of 28.8 million. Membership in the Commercial business witnessed a significant year-over-year increase of 27.3%.
Centene’s health benefits ratio (HBR) of 87.5% deteriorated 40 basis points year over year in the quarter under review.
Adjusted net earnings improved 18.7% year over year to $1.4 billion.
Operating expenses totaled $45.1 billion, which escalated 14.7% year over year and came higher than our estimate of $42.1 billion. The year-over-year increase was due to higher medical costs and selling, general and administrative expenses. The two expense components witnessed year-over-year increases of 18% and 4.2%, respectively.
Adjusted SG&A expense ratio improved 80 basis points year over year to 7.9%, attributable to ongoing leveraging of costs over increased revenues and an expanding PDP business.
CNC’s Financial Update (As of March 31, 2025)
Centene exited the first quarter with cash and cash equivalents of $14.8 billion, which advanced 5.3% from the figure at 2024-end.
Total assets of $87 billion increased 5.6% from the 2024-end level.
Long-term debt amounted to $18.3 billion, which dipped 0.6% from the figure as of Dec. 31, 2024. The current portion of long-term debt totaled $12 million.
Total stockholders’ equity of $28 billion improved 5.7% from the 2024-end figure.
Centene generated $1.5 million of net cash from operations in the first quarter, while net cash used in operations amounted to $0.5 million in the prior-year comparable period.
Centene’s Share Repurchase Update
Centene bought back common shares worth $41 million in the first quarter of 2025. A leftover capacity of $2.2 billion remained under the company’s share repurchase authorization as of March 31, 2025.
CNC’s 2025 Guidance
Management currently anticipates premium and service revenues within the band of $164-$166 billion for 2025, higher than the earlier view of $158-$160 billion. The midpoint of the updated outlook indicates growth of 13.4% from the 2024 reported figure.
Revenues are estimated between $178.5 billion and $181.5 billion, the midpoint of which implies 10.4% growth from the 2024 figure.
Adjusted EPS is still expected to be greater than $7.25, which indicates a 1.1% rise from the 2024 figure. GAAP EPS is reiterated to remain greater than $6.19.
HBR is estimated to be in the band of 88.9-89.5% for 2025. Adjusted SG&A expense ratio is expected to be 7.7-8.2%. Adjusted effective tax rate is anticipated to be in the range of 22-23%.
Shares outstanding are anticipated to be between 491 million and 494 million.
CNC’s Zacks Rank
Centene currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Medical Sector Releases
Of the Medical sector players that have reported first-quarter 2025 results so far, the bottom-line results of Elevance Health, Inc. ELV, Thermo Fisher Scientific Inc. TMO and Molina Healthcare, Inc. MOH beat the respective Zacks Consensus Estimate.
Elevance Health reported first-quarter 2025 adjusted EPS of $11.97, which surpassed the Zacks Consensus Estimate by 6.8%. The bottom line increased 10.5% year over year. Operating revenues of $48.8 billion rose 15.4% year over year. Moreover, the top line beat the consensus mark by 6%. Medical membership of Elevance Health was around 45.8 million as of March 31, 2025, which slipped 0.5% year over year. Premiums increased 14.5% year over year to $40.9 billion.
Product revenues of $5.8 billion increased 29.1% year over year. Net investment income rose 26.9% year over year to $590 million. The adjusted operating margin deteriorated 70 basis points (bps) year over year to 6.7%. The operating expense ratio improved 70 bps year over year to 10.9%. The benefit expense ratio of 86.4% deteriorated 80 bps year over year. In the Health Benefits segment, operating revenues totaled $41.4 billion, which increased 11.2% year over year. Operating gains declined 3.1% year over year to $2.22 billion.
Thermo Fisher Scientific’s first-quarter 2025 adjusted EPS of $5.15 beat the Zacks Consensus Estimate by 1%. The figure increased 0.8% year over year. GAAP EPS was $3.98, up 15% on a year-over-year basis. Revenues in the quarter increased 0.2% year over year to $10.36 billion. Moreover, the top line surpassed the consensus estimate by 1.1%. Organic revenues in the reported quarter increased 1% year over year.
Revenues in the Life Sciences Solutions segment (22.6% of total revenues) increased 2.4% year over year to $2.34 billion. Revenues in the Analytical Instruments segment (16.6%) rose 1.8% year over year to $1.72 billion. Revenues in the Specialty Diagnostics segment (11.1%) increased 3.5% year over year to $1.15 billion. Gross margin of 41.6% in the first quarter contracted five bps year over year. The adjusted operating margin in the quarter was 21.7%, reflecting a contraction of two bps.
Molina Healthcare reported first-quarter 2025 adjusted EPS of $6.08, which beat the Zacks Consensus Estimate of $5.86. Also, the bottom line grew 6.1% from the year-ago period. Total revenues amounted to $11.15 billion, which improved 12.2% year over year. The top line also marginally beat the consensus mark. Premium revenues of $10.63 billion increased 11.8% year over year in the quarter under review. As of March 31, 2025, total membership improved 0.4% year over year to around 5.8 million.
Investment income remained the same year over year at $108 million. The adjusted general and administrative expense ratio decreased to 6.8% in the first quarter from 7.1% a year ago. The consolidated medical care ratio (medical costs as a percentage of premium revenues), or MCR, was 89.2% in the quarter under review. Molina Healthcare’s adjusted net income decreased 0.3% year over year to $333 million.
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