By Sriparna Roy and Sneha S K
April 28 (Reuters) – Centene on Tuesday raised its annual forecast for adjusted profit and revenue after a quarterly results beat, as the health insurer expects to have better control over medical costs, sending its shares up more than 6% in morning trading.
The forecast raise follows similar moves from larger peers UnitedHealth and Elevance, adding to investors’ relief after more than two years of the industry’s struggle with higher medical costs that pressured margins at health insurers.
“We are taking a prudent outlook for the balance of 2026 as we continue to gain visibility into key factors that will influence the remainder of the year,” said Chief Executive Officer Sarah London.
CONTROLLED MEDICAL COSTS
Centene said better management and moderate flu costs helped it keep costs in check.
Its medical loss ratio, the percentage of premiums spent on medical care, stood at 87.3% in the first quarter, compared with analysts’ expectation of 89.42%, according to data compiled by LSEG.
“We think this is a positive start to the year, with several key checkpoints over the next two quarters that will swing 2026 guidance,” said J.P. Morgan analyst John Stansel.
However, a higher number of sick patients in the silver metal tier in Obamacare plans pushed first-quarter costs in the segment slightly above the company’s expectations.
The company had previously warned of higher demand in specialty pharmacy from silver members, who pay higher premiums for lower out-of-pocket expenses, driven by categories such as anti-inflammatory, gastrointestinal, and dermatological conditions.
Centene, however, expects to receive higher payments from the government to match its sicker mix of patients, CEO London said in a call with analysts.
The company has also opted for the Medicare agency’s short-term program, starting July 1, in which the agency negotiates to lower the costs of some GLP-1 weight-loss drugs.
Centene raised its 2026 adjusted profit per share to be above $3.40 from its prior expectation of more than $3 and higher than analysts’ average estimate of $3.02.
It raised its full-year revenue forecast to $187.5 billion to $191.5 billion from $186.5 billion to $190.5 billion previously.
The company reported adjusted profit per share of $3.37, surpassing analysts’ average estimate of $2.13.
(Reporting by Sriparna Roy and Sneha S K in Bengaluru; Editing by Shinjini Ganguli)
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