Fannie Mae, Freddie Mac shares tumble after conservatorship comments
Investing.com -- Centene Corporation (NYSE:CNC) stock tumbled 20% after the health insurer withdrew its 2025 earnings guidance, citing unexpected challenges in its Health Insurance Marketplace business and rising Medicaid costs.
The company’s decision to pull its previous 2025 GAAP and adjusted diluted earnings per share guidance came after receiving concerning data about its Marketplace business. Centene’s analysis of information from independent actuarial firm Wakely, covering 22 of its 29 Marketplace states, revealed lower-than-expected market growth and significantly higher market morbidity than anticipated.
This preliminary analysis resulted in a reduction to Centene’s previous full-year net risk adjustment revenue transfer expectation by approximately $1.8 billion, corresponding to an adjusted diluted EPS impact of about $2.75. The company warned that the remaining seven Marketplace states could face additional reductions due to similar morbidity trends.
Centene has already begun refiling 2026 Marketplace rates to reflect the higher projected baseline of Marketplace morbidity. The company expects to implement corrective pricing actions for 2026 in states representing a substantial majority of its Marketplace membership.
Adding to the company’s challenges, Centene reported a step-up in medical cost trends in its Medicaid business, particularly in behavioral health, home health, and high-cost drugs. These issues were especially pronounced in specific regions like New York and Florida. As a result, Centene expects the second quarter 2025 Medicaid Health Benefits Ratio to be higher than the first quarter.
On a positive note, the company indicated that its Medicare Advantage and Medicare Prescription Drug Plan businesses are performing better than expected in the second quarter of 2025. Centene also continues to achieve strong selling, general, and administrative expense leverage on its consolidated premium and service revenue growth.
The company plans to report its second quarter 2025 results and provide additional insights on July 25, 2025.