Centene Reaffirms 2026 EPS Outlook as Medicaid Membership Decline Deepens

Centene reaffirmed its 2026 adjusted EPS outlook of more than $4.80, saying third-quarter performance remains in line with expectations and Medicaid rates support its roughly 5% full-year rate outlook. Centene now expects Medicaid membership to decline 9% by year-end, worse than its prior 6%–8% forecast, as states tighten eligibility ahead of work requirements; the company still targets a 93.5% health benefits ratio in 2026. The company is prioritizing profitability over growth by simplifying its Medicare Advantage portfolio around dual-eligible members, targeting break-even results in 2027, while expecting Part D margins above 3% in 2026.

Centene NYSE: CNC reaffirmed its 2026 adjusted diluted earnings-per-share guidance of more than $4.80 at the Deutsche Bank Healthcare Summit, with Chief Executive Officer Sarah London saying the company’s performance through the first two months of the third quarter was in line with expectations. London said third-quarter trends across Centene’s businesses have remained broadly consistent with the second quarter. The company continues to expect a 4.5% to 5% margin in its marketplace business for 2026, while targeting break-even or better results in Medicare Advantage in 2027 and continued margin improvement thereafter.

In Medicaid, London said state rate developments remain consistent with Centene’s full-year composite rate outlook of roughly 5%. The company continues to target a 93.5% health benefits ratio for 2026, reflecting year-over-year margin improvement. Centene expects Medicaid membership to decline by 9% by year-end, compared with its earlier 6% to 8% expectation. London attributed the change partly to states tightening eligibility processes ahead of work requirements and, in some cases, advancing elements of implementation.

Most states are expected to use monthly eligibility checks for work requirements, which London said should create a more gradual membership impact during 2027 and 2028. Centene is building data interfaces with states to support eligibility determinations and plans to use its employment programs, nonprofit partnerships and member outreach resources to help eligible members maintain coverage. “The goal is to get folks engaged and working and engaged in the community because we know that that actually drives better health outcomes,” London said.

Cost trends in Medicaid have generally remained in line with expectations, according to London. Behavioral health, home and community-based services, and high-cost drugs continue to be areas of focus. She said Centene has seen some year-over-year improvement in behavioral health trends, particularly in applied behavior analysis services, following efforts to steer members toward higher-quality providers and address fraud, waste and abuse.

Chief Financial Officer Drew Asher said Centene can quantify the impact of specific fraud, waste and abuse cases and is using artificial intelligence-supported tools to identify potentially problematic claims more quickly. The company has developed a “trust factor” using roughly 70 data points, he said, allowing it to pend claims for review more rapidly.

Centene is simplifying its Medicare Advantage portfolio for 2027, concentrating on dual-eligible and complex populations in markets where it can leverage its Medicaid footprint and local resources. London said the company is prioritizing sustainable profitability rather.