In This Article:
Centene Corporation CNC currently gains from improved premium and service revenues, numerous contract wins, an expanding Marketplace business and a sound financial position.
CNC’s Zacks Rank & Price Performance
Centene currently carries a Zacks Rank #3 (Hold).
The stock has gained 5.1% in the past month against the industry’s 8.3% decline. The Zacks Medical sector declined 6.1% while the S&P 500 composite decreased 1.4% in the same time frame.
Image Source: Zacks Investment Research
Centene’s Robust Growth Prospects
The Zacks Consensus Estimate for Centene’s 2025 earnings per share (EPS) is pegged at $7.02, indicating an improvement of 3.1% from the 2024 estimate. The consensus mark for 2025 revenues is $169 billion, implying 4.7% growth from the 2024 estimate.
CNC’s Decent Earnings Surprise History
CNC’s bottom line outpaced estimates in three of the trailing four quarters and missed the mark once, the average surprise being 7.13%.
Centene’s Key Business Tailwinds
Centene's revenue growth is fueled by a robust and expanding customer base within its Medicaid and Medicare businesses, which drive premium increases. This is significant since premiums are the primary revenue driver for health insurers. The strength of these businesses has led to numerous contract awards and renewals, further supporting membership growth. As of Sept. 30, 2024, total membership was 28.6 million, which improved 2.4% year over year.
Centene’s expertise in specialized services has enabled it to build and enhance relationships with both members and providers. This capability allows it to deliver improved care to individuals enrolled in government-sponsored programs. Additionally, an aging U.S. population continues to favor Medicare plans, ensuring sustained demand for Centene's offerings.
In the first nine months of 2024, Centene reported a 4.2% year-over-year increase in premium and service revenues. Management projects it to range between $154 billion and $156 billion for 2025. Notably, Centene secured Medicaid contracts from state authorities in Ohio, Michigan and New Hampshire in 2024. Its Commercial Marketplace business maintains a strong national footprint, serving 4.5 million members as of Sept. 30, 2024, which advanced 22.3% year over year.
The company actively leverages mergers and acquisitions to enhance its capabilities and broaden its presence across the United States. Concurrently, it divests underperforming businesses to concentrate on its core Managed Care operations. These divestitures often support initiatives such as share buybacks and debt reduction. A reduced debt burden leads to lower interest expenses, which declined 2.2% year over year in the first nine months of 2024.