01—Abstract
Summary
Summary of the 10-Q filed July 28, 2026. Cited figures are marked; the original filing is the authoritative source.
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 billiona 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 billionb ($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 billionc in senior notes during the first half of the year. Overall, Centene appears to be successfully navigating industry challenges and executing its strategic initiatives.
02—Key points
Key Highlights
- Total revenues increased 10% year-over-year to $53.6 billion in Q2 2026, with first-half revenues up 9% to $103.5 billion.
- Net earnings for Q2 2026 were $1.09 billion, or $2.19 per diluted share, a significant improvement from a net loss in Q2 2025.
- The Health Benefits Ratio (HBR) improved to 89.6% in Q2 2026 from 93.0% in Q2 2025, indicating better cost management.
- Selling, General, and Administrative (SG&A) expense ratio remained stable at 7.0% in Q2 2026, demonstrating cost control.
- Operating cash flows were strong, providing $7.96 billion in the first half of 2026, up significantly from $3.30 billion in the prior year.
- Centene actively managed its debt, repurchasing $1.3 billion of senior notes in the first half of 2026.
- Managed 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.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Centene Corp kept $0.02.
- Revenue$53.58B100.0%
- Cost of revenue−$48.96B91.4%
- Gross profit$4.62B8.6%
- Operating costs−$3.42B6.4%
- Operating income$1.20B2.2%
- Interest, other & tax−$107.0M0.2%
- Net income$1.09B2.0%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed July 28, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $53.58B$48.74B | +9.9% |
| Cost of Revenue | $729.00M$641.00M | +13.7% |
| Gross Profit | $4.62B$3.02B | +53.0% |
| SG&A Expenses | $3.10B$3.04B | +2.2% |
| Operating Expenses | $52.38B$49.20B | +6.5% |
| Operating Income | $1.20B-$458.00M | +361.6% |
| Net Income | $1.09B-$253.00M | +531.2% |
| EPS (Basic) | $2.21$-0.51 | +533.3% |
| EPS (Diluted) | $2.19$-0.51 | +529.4% |
| Shares Outstanding (Basic) | 493.82M493.55M | +0.1% |
| Shares Outstanding (Diluted) | 497.64M493.55M | +0.8% |
05—Questions
Frequently Asked Questions
What drove the significant increase in revenues for Centene?
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.
How has Centene's profitability improved, and what is the outlook?
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.
What is the impact of declining Medicaid membership, and how is Centene managing it?
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.
How is Centene managing its debt and capital structure?
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.
06—Continue