Shares of Centene Corporation rose about 14% on Tuesday after the company reported stronger-than-expected first-quarter results, driven by cost controls and steady premium growth.
The St. Louis-based managed-care company posted net earnings of $1.54 billion, or $3.11 per share, up from $1.31 billion, or $2.63 per share, a year earlier.
On an adjusted basis, earnings came in at $3.37 per share, significantly above analyst expectations of $2.23 per share, according to FactSet.
Revenue rose 7.1% year-on-year to $49.94 billion, comfortably exceeding the Wall Street estimate of $47.53 billion.
Premium and service revenue increased 5.1% to $44.66 billion, supported by higher premiums and strength across its Medicaid and Medicare businesses.
Operationally, Medicaid revenue rose 6% to $23.6 billion, while Medicare revenue climbed 18% to $10.3 billion. Commercial revenue, however, declined 6% to $9.6 billion.
Total membership stood at 26.3 million as of March 31, down 6% year-on-year but still above analyst expectations.
Cost controls offset rising medical expenses
Centene’s results come at a time when health insurers are grappling with rising medical costs, driven in part by increased healthcare utilization among an aging US population.
The company’s health-benefits ratio—a key measure of medical costs as a percentage of premiums—came in at 87.3%, below the analyst estimate of 89.1% and slightly improved year-on-year.
This indicates that Centene managed to contain medical expenses more effectively than expected.
Still, total operating expenses rose 6.6% to $48.1 billion, reflecting higher medical costs, selling and administrative expenses, and premium tax costs.
Medical costs alone increased 4.9% from a year earlier.
“We continue to make tangible progress in our margin recovery efforts while strengthening the fundamental operations of each of our businesses,” said Chief Executive Sarah London.
Cash generation also improved significantly, with net cash from operations rising to $4.4 billion from $1.5 billion a year earlier.
The company ended the quarter with $21.3 billion in cash and cash equivalents, up nearly 19% from year-end 2025, while long-term debt declined 6% to $16.3 billion.
Outlook raised amid strong performance
Buoyed by its first-quarter performance, Centene raised its full-year outlook across several key metrics.
The company now expects adjusted earnings per share to exceed $3.40, up from a prior forecast of more than $3.00.
It also lifted its projection for GAAP earnings to more than $2.37 per share, compared with an earlier estimate of $1.98 or higher.
Revenue guidance was also revised upward.
Centene now expects full-year revenue in the range of $187.5 billion to $191.5 billion, compared with a previous forecast of $186.5 billion to $190.5 billion.
Analysts had been expecting revenue of around $188.8 billion.
Premium and service revenue is now projected between $171 billion and $175 billion, slightly higher than the earlier guidance range.
The company maintained its forecast for the health-benefits ratio between 90.9% and 91.7% for the year, broadly in line with analyst expectations of 91.4%.
Despite ongoing cost pressures, Centene’s improved earnings outlook reflects confidence in its ability to manage expenses while sustaining revenue growth, even as industry-wide challenges persist.
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