Centene has pulled its earnings guidance for 2025, citing higher aggregate ACA market morbidity.
In a July 1 regulatory filing, Centene said it received data from consulting firm Wakely indicating overall marketplace growth in 22 of its 29 marketplace states is lower than expected, and market morbidity is significantly higher than Centene’s assumptions.
Centene expects to receive $1.8 billion less in risk-adjustment revenue for its exchange business in 2025.
Here are five things to know:
- ACA risk-adjustment payments are designed to stabilize premiums and eliminate incentives for insurers to avoid enrolling members with higher health needs.
- Centene expects the decline in risk-adjustment revenue to hurt earnings by $2.75 per share. The company previously projected earnings of at least $7.25 per share in 2025.
- The company also reported that costs in its Medicaid business are increasing, especially in New York and Florida. Behavioral health, home health and high-cost drugs are driving the increase, according to the regulatory filing.
- Centene’s Medicare Advantage and Medicare prescription drug plans are performing better than expected, the company said.
- Centene’s shares fell 26% after the disclosure, Bloomberg reported. Share prices for Elevance Health and Oscar Health also declined. Centene is the second major insurer to suspend its earnings guidance in 2025. In May, UnitedHealth Group pulled its projections for the year, citing accelerating care costs.
