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1. Company Snapshot

1.a. Company Description

Centene Corporation operates as a multi-national healthcare enterprise that provides programs and services to under-insured and uninsured individuals in the United States.Its Managed Care segment offers health plan coverage to individuals through government subsidized programs, including Medicaid, the State children's health insurance program, long-term services and support, foster care, and medicare-medicaid plans, which cover dually eligible individuals, as well as aged, blind, or disabled programs.Its health plans include primary and specialty physician care, inpatient and outpatient hospital care, emergency and urgent care, prenatal care, laboratory and X-ray, home-based primary care, transportation assistance, vision care, dental care, telehealth, immunization, specialty pharmacy, therapy, social work, nurse advisory, and care coordination services, as well as prescriptions and limited over-the-counter drugs, medical equipment, and behavioral health and abuse services.


This segment also offers various individual, small group, and large group commercial healthcare products to employers and directly to members.The company's Specialty Services segment provides pharmacy benefits management services; nurse advice line and after-hours support services; vision and dental services, as well as staffing services to correctional systems and other government agencies; and services to Military Health System eligible beneficiaries.This segment offers its services and products to state programs, correctional facilities, healthcare organizations, employer groups, and other commercial organizations.


The company provides its services through primary and specialty care physicians, hospitals, and ancillary providers.Centene Corporation was founded in 1984 and is headquartered in St. Louis, Missouri.

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1.b. Last Insights on CNC

Centene Corporation's recent performance was driven by strong revenue growth, primarily due to the success of its Pharmacy and Disease Management (PDP) business, which saw a nearly 22% year-over-year increase. Additionally, the company's aggressive premium hikes of mid +30% and increased vigilance against fraud contributed to its margin recovery. Furthermore, Centene's stable Health Benefit Ratio (HBR) performance over the past few quarters and lower guidance in FY2026 suggest improved performance metrics in the coming year.

1.c. Company Highlights

2. Centene's 2025 Earnings: A Turning Point

Centene Corporation reported a fourth-quarter adjusted diluted loss per share of $1.19, beating analyst estimates of -$1.22007. The company's full-year 2025 adjusted diluted EPS came in at $2.08, with premium and service revenue of $174.6 billion. The health benefits ratio (HBR) for Medicaid improved to 93 in the fourth quarter, a 190 basis point improvement from Q2 levels, indicating a positive trend in Medicaid profitability.

Publication Date: Feb -08

📋 Highlights
  • 2026 EPS Growth:: Expected full-year adjusted EPS >$3 (40%+ YoY growth from 2025’s $2.08).
  • Medicaid Margin Stability:: Q4 health benefits ratio (HBR) 93, improved 190 bps from Q2 2025; 2026 HBR expected flat at 93.7%.
  • Marketplace Margin Recovery:: Anticipated 2026 pretax margin of ~4% (vs. -1% in 2025) driven by pricing actions and trend moderation.
  • Medicare Advantage Progress:: Expected breakeven by 2027, with PDP segment targeting 2% pretax margin in 2026 (vs. 3% in 2025).
  • Financial Position:: $400M cash available for corporate use and $189M debt reduction in Q4 2025, with debt-to-cap at 46.5%.

Segment Performance

Centene's Medicaid segment showed signs of stability, with the company anticipating Medicaid margin stability in 2026. The Marketplace business also showed improvement, with fundamental medical cost trend coming in slightly better than expectations. Medicare Advantage delivered strong results, with fourth-quarter performance in line with expectations, and the company aims to achieve breakeven Medicare Advantage results in 2027.

2026 Outlook

The company expects significant margin recovery within its marketplace business in 2026, driven by pricing actions. Centene anticipates a pretax margin around 2% in its Prescription Drug Plan (PDP) business and a consolidated HBR of 90.9%-91.7% in 2026. The company's 2026 guidance implies a stable HBR year over year for Medicaid, while the commercial segment is expected to improve to around 4% pretax margin.

Valuation

Centene's current valuation metrics indicate a 'P/E Ratio' of -2.83, a 'P/B Ratio' of 0.95, and a 'P/S Ratio' of 0.1. The 'EV/EBITDA' ratio stands at -3.58, suggesting that the company's valuation is largely dependent on its future earnings growth. With analysts estimating next year's revenue growth at 0.2%, the company's valuation appears to be pricing in a moderate growth outlook.

Operational Highlights

Centene's management highlighted the company's efforts to improve its Health Benefit Ratio (HBR) and reduce costs. As Sarah London noted, "despite 2025 challenges, we entered 2026 with increased visibility and momentum, well-positioned to drive margin improvement while ensuring access to high-quality, affordable healthcare." The company's focus on shortening the period between trends and rate adjustments is expected to drive margin improvement.

3. NewsRoom

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More than 900 California Families to Find Housing Stability in 2026 Thanks to $31.25 Million Investment by Health Net

Mar -03

Source: prnewswire.com

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Superior HealthPlan Accepting Applications for $100,000 in Grants Through Annual Program

Mar -03

Source: prnewswire.com

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KENTUCKY STUDENTS CREATE A CULTURE OF BELONGING ON NATIONAL NO ONE EATS ALONE® DAY

Feb -26

Source: prnewswire.com

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More At-Risk Californians Find Housing and Get Access to Medical and Other Care thanks to More Than $284 Million in Investments This Decade by Health Net

Feb -24

Source: prnewswire.com

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Canada Nickel and the University of Texas Successfully Complete Carbon Sequestration Pilot at the Crawford Nickel Project

Feb -19

Source: prnewswire.com

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Larry Robbins Exits Universal Health Services Inc, Impacting Portfolio by -2.19%

Feb -17

Source: gurufocus.com

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Superior HealthPlan Publishes 2025 Community Investment Report

Feb -17

Source: prnewswire.com

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Ambetter Health Celebrates Completion of New Playground at Southeast Park

Feb -12

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.79%)

6. Segments

Medicaid

Expected Growth: 4.2%

Centene Corporation's Medicaid growth of 4.2% is driven by increased government funding, expanded eligibility, and rising healthcare demand. Additionally, Centene's strategic acquisitions and effective management of healthcare services contribute to its growth. Strong performance in managed care services and Medicaid expansion under the Affordable Care Act also fuel the growth.

Commercial

Expected Growth: 5.5%

Centene's commercial segment growth of 5.5% is driven by increased enrollment, higher premium rates, and expanded product offerings. Additionally, the company's strategic acquisitions and partnerships have contributed to its growth, enabling it to capitalize on emerging market trends and increase its market share.

Medicare

Expected Growth: 6.1%

Centene Corporation's Medicare segment growth of 6.1% is driven by increased enrollment, higher reimbursement rates, and expanded services. The company's strong performance in Medicare Advantage and Part D plans, as well as its growing presence in rural areas, contribute to this growth. Additionally, Centene's focus on value-based care and cost management also supports the segment's expansion.

Other/Eliminations

Expected Growth: 3.9%

Centene's Other/Eliminations segment growth of 3.9% is driven by intersegment eliminations, reinsurance, and investment income. The growth is also influenced by the company's effort to optimize its business operations and eliminate redundant costs. Additionally, Centene's expansion into new markets and product offerings contribute to the segment's growth.

7. Detailed Products

Medicaid

Government-sponsored health insurance program for low-income individuals and families

Medicare

Federal health insurance program for people 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant)

Health Insurance Marketplace

Health insurance plans sold through the Affordable Care Act (ACA) marketplace

TRICARE

Health insurance program for military personnel, veterans, and their families

Long-Term Services and Supports (LTSS)

Home and community-based services for individuals with disabilities or chronic conditions

Correctional Healthcare

Healthcare services for correctional facilities and inmates

Health and Wellness

Preventive health services and wellness programs

8. Centene Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Centene Corporation operates in a highly regulated industry, and the threat of substitutes is moderate. While there are alternative healthcare providers, Centene's government-sponsored healthcare services and diversified product offerings reduce the threat of substitutes.

Bargaining Power Of Customers

Centene Corporation's customers are primarily government agencies and individuals, who have limited bargaining power. The company's large customer base and diversified revenue streams reduce the bargaining power of customers.

Bargaining Power Of Suppliers

Centene Corporation relies on a network of healthcare providers, who have some bargaining power. However, the company's scale and diversified supplier base reduce the bargaining power of suppliers.

Threat Of New Entrants

The healthcare industry has high barriers to entry, including regulatory hurdles and significant capital requirements. This reduces the threat of new entrants and provides a competitive advantage to established players like Centene Corporation.

Intensity Of Rivalry

The healthcare industry is highly competitive, with several large players competing for market share. Centene Corporation faces intense rivalry from competitors, which can lead to pricing pressure and reduced margins.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 40.83%
Debt Cost 3.95%
Equity Weight 59.17%
Equity Cost 6.00%
WACC 5.16%
Leverage 69.00%

11. Quality Control: Centene Corporation passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
McKesson

A-Score: 6.1/10

Value: 5.4

Growth: 8.3

Quality: 4.5

Yield: 0.0

Momentum: 9.5

Volatility: 8.7

1-Year Total Return ->

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CVS Health

A-Score: 5.6/10

Value: 5.0

Growth: 3.9

Quality: 2.6

Yield: 6.0

Momentum: 9.0

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
Elevance Health

A-Score: 5.0/10

Value: 6.4

Growth: 5.7

Quality: 6.8

Yield: 3.0

Momentum: 2.0

Volatility: 6.3

1-Year Total Return ->

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Stock-Card
UnitedHealth

A-Score: 4.3/10

Value: 5.3

Growth: 6.1

Quality: 5.2

Yield: 4.0

Momentum: 0.5

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
Humana

A-Score: 3.9/10

Value: 5.3

Growth: 5.2

Quality: 4.1

Yield: 2.0

Momentum: 2.0

Volatility: 4.7

1-Year Total Return ->

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Stock-Card
Centene

A-Score: 3.8/10

Value: 9.5

Growth: 5.6

Quality: 3.3

Yield: 0.0

Momentum: 0.5

Volatility: 4.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

43.82$

Current Price

43.82$

Potential

-0.00%

Expected Cash-Flows