Centene Stock Crashes 40% After Withdrawing 2025 Guidance

• Centene (CNC) shares dropped 40% to $34.46 after withdrawing its 2025 earnings guidance due to unexpectedly high morbidity and lower market growth in 22 of its 29 Health Insurance Marketplace states, covering 72% of its membership.
• Preliminary analysis shows a $1.8 billion reduction in expected net risk adjustment revenue transfer, resulting in a $2.75 hit to adjusted diluted earnings per share, with further reductions anticipated in the remaining seven states.
• Centene is refiling 2026 Marketplace rates to address higher morbidity, aiming to implement corrective pricing in states representing most of its Marketplace members to stabilize future profitability.

Centene Corporation (CNC) saw its stock plummet 40% to $34.46 in midday trading on Wednesday after the company withdrew its 2025 earnings guidance due to unexpected challenges in the Health Insurance Marketplace. The decision followed an analysis of preliminary 2025 industry data from Wakely, an independent actuarial firm, covering 22 of Centene’s 29 Marketplace states, which account for about 72% of its Marketplace membership. This data, submitted by most Marketplace insurers, revealed lower-than-expected market growth and significantly higher morbidity – meaning a sicker-than-anticipated population – in these states. This mismatch with Centene’s earlier assumptions for risk adjustment revenue, a mechanism that balances costs for insurers covering higher-risk members, led to a substantial financial revision.

Centene’s initial analysis indicates a $1.8 billion reduction in its expected net risk adjustment revenue transfer for 2025, translating to an estimated $2.75 hit to adjusted diluted earnings per share. This estimate, based on paid claims through April 30 for the 22 states, incorporates Centene’s projections for the remaining eight months of 2025 and its membership and morbidity trends. The company said it lacks data for its seven remaining Marketplace states but expects further reductions in risk adjustment revenue due to similar morbidity trends, which could further impact earnings. This unexpected deterioration in the risk pool has raised concerns about profitability, as higher morbidity increases medical costs, squeezing margins for insurers like Centene.

Looking ahead, Centene is taking steps to address these challenges by refiling 2026 Marketplace rates to account for the higher baseline morbidity. The company expects to implement corrective pricing in states covering most of its Marketplace members, aiming to restore financial stability. The sharp stock decline reflects investor concerns about near-term earnings uncertainty, amplified by a holiday-shortened trading week with markets closing early on Thursday and fully on Friday for Independence Day. Centene’s situation highlights the complexities of the Marketplace, where accurate risk assessment is critical. As one of the largest providers of Affordable Care Act plans, Centene’s ability to adapt pricing and manage costs will be crucial for regaining investor confidence and stabilizing its financial outlook in a challenging market environment. The company’s proactive steps for 2026 suggest a focus on long-term resilience despite the immediate setback.

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