Centene (CNC) Stock: Q125 Sales Beat Forecasts, EPS Outlook Mixed
TLDR
Q1 2025 Revenue: $46.62 billion, beating estimates by 8.3%.
Adjusted EPS: $2.90, 15.3% above analyst forecasts.
Stock Price: Closed at $57.69 on April 25, down 6.32%.
Full-Year 2025 Guidance: Premium and service revenue outlook raised, EPS expectations unchanged.
Key Challenges: Flu season impact, policy risks, and specialty drug pressures.
Centene Corporation (NYSE: CNC) reported a strong start to 2025, with Q1 sales rising 15.4% year over year to $46.62 billion. This result surpassed Wall Street’s $43.03 billion estimate by 8.3%. Despite the beat, CNC stock closed at $57.69 on April 25, down 6.32%. The company’s earnings date for the next quarter is set between July 24 and July 28, 2025.
Adjusted earnings per share (EPS) came in at $2.90, topping analyst expectations of $2.52 by 15.3%. Management reaffirmed its full-year adjusted EPS target of greater than $7.25, though this was slightly short of Wall Street’s consensus at $7.74.
Free cash flow was strong at $1.38 billion, reversing last year’s outflow. Centene’s operating margin held steady at 3.3% compared to Q1 2024.
Revenue and Customer Trends
Centene raised its full-year 2025 premium and service revenue guidance to a midpoint of $165 billion, up from $159 billion. Including other streams, total revenue guidance is now around $180 billion, 4.2% above consensus expectations.
However, customer numbers fell to 27.94 million from 28.6 million in the previous quarter. Despite fewer members, higher per-customer revenue helped offset declines. Medicaid membership remained stable between 12.9 million and 13 million, while Medicare Advantage and PDP membership exceeded internal expectations, adding $1 billion to the full-year revenue outlook.
Risks Weighing on Sentiment
Despite Centene’s revenue success, several headwinds remain:
A more active flu season led to $130 million in unexpected medical expenses.
Medicaid reimbursement rates remain inadequate in some areas, such as long-term care and specialty drugs.
Policy uncertainty around premium tax credits and marketplace integrity rules could impact future earnings.
Specialty drug costs in the Medicare PDP segment are pressuring margins.
Centene’s Medicare HBR is projected to deteriorate later this year due to changes under the Inflation Reduction Act, potentially affecting profitability.
Long-Term Growth Perspective
Over the past five years, Centene grew sales at a solid 15.5% compounded annual rate. EPS growth was even stronger at 14.8% per year. However, over the past two years, revenue growth decelerated to an annualized 7.6%, and analysts now forecast only 2.4% growth over the next 12 months.
Centene’s market capitalization stands at $30.55 billion. Though its stock performance has lagged the S&P 500 in recent years, its strong foundation in government healthcare programs remains a key advantage.
Investors may want to monitor upcoming policy changes and customer trends closely before making new commitments.
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Filed under: News - @ April 28, 2025 9:23 pm