10-QPeriod: Q2 FY2026

CENTENE CORP Quarterly Report for Q2 Ended Jun 30, 2026

Filed July 28, 2026For Securities:CNC

Summary

Centene Corporation (CNC) reported strong financial results for the second quarter and first half of 2026, demonstrating significant year-over-year improvements. Total revenues grew 10% to $53.6 billion for the quarter and 9% to $103.5 billion for the first half, driven by increased premium tax revenue, higher premium yields, and rate adjustments across its Medicaid and Marketplace segments. The company also saw substantial growth in its Medicare Prescription Drug Plan (PDP) business. Profitability improved markedly, with net earnings of $1.09 billion ($2.19 diluted EPS) in Q2 2026, a significant turnaround from a loss in the prior year. For the first half, net earnings were $2.63 billion ($5.30 diluted EPS). This improvement is attributed to a lower Health Benefits Ratio (HBR) of 89.6% in Q2 2026 (down from 93.0% in Q2 2025) and a stable Selling, General, and Administrative (SG&A) expense ratio. The company also managed its debt effectively, repurchasing over $1.3 billion in senior notes during the first half of the year. Overall, Centene appears to be successfully navigating industry challenges and executing its strategic initiatives.

Key Highlights

  • 1Total revenues increased 10% year-over-year to $53.6 billion in Q2 2026, with first-half revenues up 9% to $103.5 billion.
  • 2Net earnings for Q2 2026 were $1.09 billion, or $2.19 per diluted share, a significant improvement from a net loss in Q2 2025.
  • 3The Health Benefits Ratio (HBR) improved to 89.6% in Q2 2026 from 93.0% in Q2 2025, indicating better cost management.
  • 4Selling, General, and Administrative (SG&A) expense ratio remained stable at 7.0% in Q2 2026, demonstrating cost control.
  • 5Operating cash flows were strong, providing $7.96 billion in the first half of 2026, up significantly from $3.30 billion in the prior year.
  • 6Centene actively managed its debt, repurchasing $1.3 billion of senior notes in the first half of 2026.
  • 7Managed care membership decreased by 2.1 million (8%) year-over-year to 25.9 million as of June 30, 2026, primarily due to Medicaid eligibility redeterminations.

Frequently Asked Questions

Centene's revenue growth in the second quarter and first half of 2026 was primarily driven by increased premium tax revenue (due to state pass-through payments), premium yield improvements, membership growth in the Medicare Prescription Drug Plan (PDP) business, rate increases in the Marketplace and Medicaid segments to address medical trends, and favorable risk adjustment revenue transfers for the 2025 and 2026 benefit years. State-directed payments also contributed positively.

Centene's profitability has substantially improved, evidenced by a net earning of $1.09 billion ($2.19 EPS) in Q2 2026, compared to a net loss in Q2 2025. This is largely due to a lower Health Benefits Ratio (HBR) of 89.6% (down from 93.0% in Q2 2025), improved pricing and risk transfer in the Marketplace, effective medical cost management in Medicaid, and a favorable resolution of programmatic elements in Medicare. The company expects these positive trends, combined with disciplined SG&A management, to continue.

Centene's Medicaid membership decreased by 2.1 million members year-over-year as of June 30, 2026, primarily due to ongoing state eligibility redeterminations post-pandemic. While this has reduced overall membership, the company is focusing on matching rates to the acuity of the remaining population and has secured new contract wins in states like Nevada and California for Medicaid services. The company is also navigating regulatory changes like the One Big Beautiful Bill Act (OBBBA) which could impact future Medicaid eligibility and program design.

Centene has actively managed its debt by repurchasing $1.3 billion of its senior notes in the first half of 2026. The company's debt-to-capital ratio decreased to 41.6% as of June 30, 2026, from 46.5% at year-end 2025, indicating a deleveraging trend. They also maintain strong liquidity, with $5.9 billion in working capital at the end of Q2 2026 and significant available cash, cash equivalents, and credit facilities.