Centene raises annual profit outlook on health insurance premium growth
By Mariam Sunny
(Reuters) -Centene Corp on Friday raised its full-year earnings forecast on expectations that premium collections will be higher this year from its government-backed Medicaid plans and commercial health insurance business.
The company also beat Wall Street estimates for second-quarter profit, helped by strong membership growth in its commercial marketplace business even as redeterminations in Medicaid memberships hurt.
Medicaid memberships were expected to be hit by the removal of pandemic-related relief measures, as several members who had signed up for the government-aided plans under the relief measures became ineligible from April 1.
Centene (NYSE:CNC)'s commercial plans saw a 62% jump in memberships to 3.73 million as of June 30, while total memberships for Medicaid insurance plans rose nearly 4% year-on-year to 16 million.
The company's quarterly health benefits ratio, or the percentage of premiums paid out for medical services, rose to 87.0% from 86.7% last year and slightly higher than Refinitiv estimates of 86.93%.
«We don't believe earnings quality or the slight guidance increase will materially change investor sentiment on (Centene),» J.P.Morgan analyst Calvin Sternick said.
The brokerage has a «neutral» rating on the company's stock.
Missouri-based Centene increased its 2023 premium and services revenue forecast by $1.8 billion to between $137 billion and $139 billion, and its full-year adjusted profit forecast by 5 cents to at least $6.45 per share.
On an adjusted basis, the company earned $2.10 per share in the second quarter, above estimates of $2.03.
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