01—Abstract
Summary
Summary of the 10-Q filed April 28, 2026. Cited figures are marked; the original filing is the authoritative source.
Centene Corporation (CNC) reported a strong first quarter for 2026, demonstrating significant growth in total revenues, up 7% year-over-year to $49.9 billiona.
This revenue increase was primarily driven by growth in its Medicare Prescription Drug Plan (PDP) business and rate increases in its Medicaid segment, despite a slight overall decrease in managed care membership. The company's profitability also saw a notable improvement, with net earnings attributable to Centene Corporation increasing by 18% to $1.54 billion, and diluted EPS rising to $3.11b. Key to this performance was effective cost management, reflected in a slight improvement in the Health Benefits Ratio (HBR) to 87.3% and a decrease in the Selling, General, and Administrative (SG&A) expense ratio to 7.6%.
The company also generated substantial operating cash flow of $4.4 billionc, indicating strong operational liquidity. Centene's strategic initiatives, including the partial sale of its Part D risk-sharing program receivables and continued focus on integrated care through Dual Eligible Special Needs Plans (D-SNPs), position it well for future growth. However, investors should note the ongoing regulatory changes impacting the healthcare landscape, particularly in the Medicaid and Marketplace segments, which continue to influence membership trends and market dynamics.
02—Key points
Key Highlights
- Total revenues grew 7% year-over-year to $49.9 billion, driven by Medicare PDP and Medicaid segment performance.
- Net earnings attributable to Centene Corporation increased 18% to $1.54 billion, with diluted EPS rising to $3.11.
- Health Benefits Ratio (HBR) improved slightly to 87.3%, and the SG&A expense ratio decreased to 7.6%, indicating effective cost management.
- Operating cash flow was robust, generating $4.4 billion in the quarter.
- Managed care membership decreased by 1.7 million (6%) year-over-year, primarily due to Medicaid eligibility redeterminations and Marketplace dynamics.
- The company actively managed its debt, repurchasing $1.0 billion of Senior Notes due 2027.
- Centene is strategically positioning for growth in Dual Eligible Special Needs Plans (D-SNPs) and continues to advocate for policies supporting healthcare affordability and coverage.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Centene Corp kept $0.03.
- Revenue$49.94B100.0%
- Cost of revenue−$44.29B88.7%
- Gross profit$5.65B11.3%
- Operating costs−$3.79B7.6%
- Operating income$1.86B3.7%
- Interest, other & tax−$320.0M0.6%
- Net income$1.54B3.1%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed April 28, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $49.94B$46.62B | +7.1% |
| Cost of Revenue | $702.00M$698.00M | +0.6% |
| Gross Profit | $5.65B$5.29B | +6.8% |
| SG&A Expenses | $3.40B$3.35B | +1.3% |
| Operating Expenses | $48.08B$45.09B | +6.6% |
| Operating Income | $1.86B$1.53B | +21.3% |
| Net Income | $1.54B$1.31B | +17.5% |
| EPS (Basic) | $3.13$2.64 | +18.6% |
| EPS (Diluted) | $3.11$2.63 | +18.3% |
| Shares Outstanding (Basic) | 492.07M496.21M | −0.8% |
| Shares Outstanding (Diluted) | 495.59M498.18M | −0.5% |
05—Questions
Frequently Asked Questions
What were the main drivers of Centene's revenue growth in Q1 2026?
Centene's total revenues grew by 7% to $49.9 billion in the first quarter of 2026, primarily driven by premium yield and membership growth in its Medicare Prescription Drug Plan (PDP) business, state-directed payments, and rate increases in the Medicaid segment to address medical trends. Increased premium tax revenue also contributed, partially offset by lower Marketplace and Medicaid membership.
How did Centene manage its expenses, and what was the impact on profitability?
Centene demonstrated effective cost management. The Health Benefits Ratio (HBR) slightly improved to 87.3% from 87.5% in the prior year, driven by rate increases and medical cost management in Medicaid, and no premium deficiency reserve for Medicare Advantage in 2026 compared to 2025. The SG&A expense ratio decreased to 7.6% from 7.9%, attributed to strong cost management, operational leverage, and a shift in membership mix towards the lower-SG&A PDP business. These efficiencies contributed to an 18% increase in net earnings attributable to Centene Corporation to $1.54 billion.
What is the status of Centene's membership across its key segments?
Overall managed care membership decreased by 1.7 million (6%) year-over-year to 26.3 million as of March 31, 2026. This decline was primarily concentrated in the Medicaid segment, impacted by ongoing eligibility redeterminations post-COVID-19 PHE, and the Commercial segment, influenced by the expiration of enhanced Marketplace subsidies and regulatory changes. The Medicare segment saw a slight decrease in Medicare Advantage membership but growth in Medicare PDP membership.
What actions has Centene taken regarding its debt, and what is its liquidity position?
Centene repurchased $1.0 billion of its Senior Notes due 2027 during the quarter, as part of its debt management strategy. The company generated strong operating cash flow of $4.4 billion and ended the quarter with cash and cash equivalents of $21.3 billion. Its debt-to-capital ratio improved to 43.2% from 46.5% at year-end 2025, indicating a deleveraging trend and a solid liquidity position.
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