S&P Global Ratings is considering downgrading Centene’s credit rating to junk status.
In a July 1 news release, the agency cited Centene withdrawing its 2025 earnings guidance as the driver for the potential downgrade. Centene’s Medicare, Medicaid and ACA businesses are underperforming relative to their target margins, according to S&P.
“With the removal of earnings guidance, we have less immediate clarity and confidence on the company’s capital adequacy trajectory, as well as the overall strength of its business and execution capabilities,” S&P said in the release.
On July 1, Centene pulled its earnings guidance for 2025, citing higher morbidity in the ACA market and rising costs in its Medicaid business.
Junk bonds are non-investment grade. A bond is considered junk when it receives a below-investment grade rating from two of the three major rating agencies. Moody’s has rated Centene as Ba1, its highest junk grade, according to Bloomberg.
Junk bonds are considered higher-risk investments, and could lead to higher borrowing costs for Centene, Bloomberg reported.
Becker’s has reached out to Centene for comment and will update this article if more information becomes available.
