Centene reports surprise loss as medical costs rise; shares fall 14%
Centene Corp. posted an unexpected quarterly loss on Friday, citing increased medical costs across government-backed insurance plans. The announcement triggered a sharp decline in healthcare stocks, with Centene shares dropping 14.5% in premarket trading.
The results also impacted peers Elevance Health and Molina Healthcare, which saw share prices fall 5.45% and 16.84%, respectively, amid broader concerns over surging costs in the sector, News.Az reports, citing Reuters.
Centene’s medical cost ratio (MCR) — the share of premium revenue spent on medical claims — rose to 93% in Q2, well above Wall Street’s expectation of 89.3%. The company said the cost pressures were broad-based, affecting all major lines of business, with the individual exchange segment likely being the most affected.
Analyst Julie Utterback of Morningstar noted the unexpectedly high MCR “appeared related to all major lines of business,” suggesting systemic issues within Centene’s operations.
The loss was largely driven by a downward revision in 2025 risk adjustment revenue, a component of the Affordable Care Act’s cost-balancing system, as well as rising Medicaid expenditures. Centene reported a second-quarter adjusted loss of $0.16 per share, compared with analysts’ expectations of an $0.86 profit, according to LSEG data.
CEO Sarah London acknowledged the disappointing performance but said the company is actively addressing the trends impacting results. “We have a clear understanding of the trends that have impacted performance and are working with urgency and focus to restore our earnings trajectory,” London said in a statement.
Centene plans to provide 2025 earnings guidance during its investor call and is seeking premium increases for its 2026 Obamacare plans to reflect a higher proportion of high-needs enrollees. The company expects to implement corrective pricing in states that cover the majority of its exchange plan members.
The insurance sector has faced sustained pressure due to post-pandemic shifts in enrollment, expiration of Medicaid protections, and rising utilization of behavioral health, home care, and high-cost medications.
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