10-QPeriod: Q2 FY2025

CENTENE CORP Quarterly Report for Q2 Ended Jun 30, 2025

Filed July 25, 2025For Securities:CNC

Summary

Centene Corporation (CNC) reported a net loss of $0.51 per diluted share for the second quarter of 2025, a significant decline from the $2.16 earnings per share in the same period last year. This downturn was primarily attributed to a reduction in the estimated net 2025 Marketplace risk adjustment revenue transfer, alongside increased medical costs in both the Marketplace and Medicaid segments. Total revenues saw a substantial 22% year-over-year increase to $48.7 billion, driven by strong performance in the Medicare Prescription Drug Plan (PDP) business and growth in the Health Insurance Marketplace, alongside rate increases in Medicaid. Despite revenue growth, the company's Health Benefits Ratio (HBR) rose to 93.0% from 87.6% in the prior year's second quarter, indicating higher medical costs relative to premium revenues. This was partially offset by an improvement in the Selling, General & Administrative (SG&A) expense ratio to 7.1% from 8.0%, reflecting better cost leverage over increased revenues. The company's liquidity remains solid, with cash flows from operations providing $3.3 billion for the first six months of 2025, and a substantial $1.8 billion remaining under its stock repurchase authorization.

Financial Highlights

53 data points
Beta

Revenue

$48.74B

6.2% Gross Margin

Net Income

-$253.00M

-0.5% Net Margin

EPS (Diluted)

$-0.51

Total Assets

$86.39B

Cash & Equivalents

$14.51B

Free Cash Flow

$1.58B

Financial Statements
Beta
Revenue$48.74B
Cost of Revenue$641.00M
Gross Profit$3.02B
SG&A Expenses$3.04B
Operating Expenses$49.20B
Operating Income-$458.00M
Net Income-$253.00M
EPS (Basic)$-0.51
EPS (Diluted)$-0.51
Shares Outstanding (Basic)493.55M
Shares Outstanding (Diluted)493.55M

Key Highlights

  • 1Reported a GAAP diluted loss per share of $(0.51) for Q2 2025, down from $2.16 earnings per share in Q2 2024.
  • 2Total revenues increased 22% year-over-year to $48.7 billion, driven by strong growth in Medicare PDP and Marketplace segments.
  • 3Health Benefits Ratio (HBR) increased to 93.0% in Q2 2025 from 87.6% in Q2 2024, primarily due to a reduction in Marketplace risk adjustment revenue and higher medical costs.
  • 4Selling, General & Administrative (SG&A) expense ratio improved to 7.1% in Q2 2025 from 8.0% in Q2 2024.
  • 5Managed care membership stood at 28.0 million as of June 30, 2025, a slight decrease of 2% year-over-year.
  • 6The company reported $3.3 billion in cash flow from operating activities for the first six months of 2025.
  • 7A new federal securities class action lawsuit was filed against the company on July 9, 2025, alleging false and misleading statements regarding 2025 earnings guidance.

Frequently Asked Questions

The decrease in earnings per share from $2.16 in Q2 2024 to a loss of $(0.51) in Q2 2025 was primarily driven by a reduction in Centene's estimated net 2025 Marketplace risk adjustment revenue transfer. Additionally, higher medical costs were incurred in both the Marketplace and Medicaid segments, including increased costs for behavioral health, home health, and high-cost drugs.

Total revenues increased significantly by 22% year-over-year to $48.7 billion for the second quarter of 2025. This growth was fueled by strong performance in the Medicare Prescription Drug Plan (PDP) business, overall market growth in the Health Insurance Marketplace, and rate increases in the Medicaid business. Increased premium tax revenue also contributed to the rise.

Centene operates heavily within government-sponsored programs like Medicaid and Medicare, making it sensitive to regulatory changes. Key upcoming regulatory impacts include the expiration of enhanced Advance Premium Tax Credits (APTCs) for Marketplace enrollees at the end of 2025, potential changes due to the One Big Beautiful Bill Act (OBBBA) affecting Medicaid eligibility and funding, and shifts in Medicare Prescription Drug Plans (PDPs) due to the Inflation Reduction Act (IRA). The company is actively adjusting its pricing and strategy to navigate these evolving landscapes.

Centene has an ongoing stock repurchase program with a remaining authorization of $1.8 billion as of June 30, 2025. During the second quarter of 2025, the company repurchased 6.7 million shares for $400 million under this program. The program has no set duration and can be discontinued at any time.