Centene Corporation (CNC, Financial) has reported first-quarter revenue of $46.62 billion, exceeding market expectations which were set at $43.25 billion. This significant financial performance highlights the company's resilience and the effectiveness of its strategic initiatives amid a changing policy environment.
Centene's leadership, under CEO Sarah London, is confident in maintaining a positive trajectory. The company has reiterated its commitment to achieving its 2025 goal, projecting adjusted diluted earnings per share to surpass $7.25 for the full year. This outlook reflects the firm's belief in the continued strength and expansion opportunities within its core business sectors.
As Centene navigates the complexities of the healthcare industry, these robust financial results underscore its capability to adapt and thrive, ensuring sustained growth and value creation for its stakeholders.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 16 analysts, the average target price for Centene Corp (CNC, Financial) is $79.00 with a high estimate of $93.00 and a low estimate of $64.00. The average target implies an upside of 28.29% from the current price of $61.58. More detailed estimate data can be found on the Centene Corp (CNC) Forecast page.
Based on the consensus recommendation from 20 brokerage firms, Centene Corp's (CNC, Financial) average brokerage recommendation is currently 2.4, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Centene Corp (CNC, Financial) in one year is $94.19, suggesting a upside of 52.96% from the current price of $61.58. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Centene Corp (CNC) Summary page.
CNC Key Business Developments
Release Date: February 04, 2025
- Fourth-Quarter Adjusted Diluted EPS: $0.80
- Full-Year 2024 Adjusted Diluted EPS: $7.17
- Fourth-Quarter Premium and Service Revenue: $36.3 billion
- Full-Year 2025 Revenue Guidance Increase: $4 billion
- Full-Year 2025 Adjusted Diluted EPS Guidance: Greater than $7.25
- Medicaid Membership: 13 million Americans
- Medicaid HBR (Health Benefits Ratio) Q4 2024: 93.4%
- Full-Year 2024 Medicaid HBR: 92.5%
- Medicare Enrollment Expectation for 2025: Low to mid-900,000
- Medicare Part D 2025 Revenue Expectation: Approximately $16 billion
- Marketplace Membership Peak Q1 2025: Slightly above 5 million members
- Adjusted SG&A Expense Ratio Q4 2024: 8.9%
- Cash Flow Provided by Operations Full-Year 2024: $154 million
- Share Repurchase Full-Year 2024: 42 million shares for $3 billion
- Debt to Adjusted EBITDA Year-End 2024: 2.9 times
- Medical Claims Liability Year-End 2024: $18.3 billion
- Days in Claims Payable Year-End 2024: 53 days
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Centene Corp (CNC, Financial) reported strong fourth-quarter adjusted diluted EPS of $0.80 and full-year 2024 adjusted diluted EPS of $7.17, demonstrating the durability of its earnings power.
- The company increased its full-year 2025 revenue guidance by $4 billion, driven by better-than-expected results during the Medicare annual enrollment period and a program expansion in Medicaid.
- Centene Corp (CNC) achieved a mid-4% composite rate adjustment for Medicaid, with expectations for a full-year 2025 composite rate adjustment of 3% to 4%, indicating strong negotiation with state partners.
- The Medicare segment showed significant improvement, with 55% of members associated with 3.5-star plans or better, up from 23% last year, reflecting enhanced operational precision.
- The Marketplace segment demonstrated strong performance, with January effectuated enrollment slightly stronger than expected, positioning the company for a peak membership above five million members in the first quarter of 2025.
Negative Points
- Centene Corp (CNC) faced challenges with Medicaid redeterminations, which temporarily increased the Medicaid HBR to 92.5% for the full year 2024, impacting earnings power.
- Operating cash flow for the full year was only $154 million, affected by the timing of pharmacy rebate collections and the buildup of state premium payments receivable.
- The company is cautious about the potential impact of program integrity changes, such as failure-to-report processes, which could affect effectuated enrollment in the Marketplace segment.
- Centene Corp (CNC) is still navigating the appeals process for Medicaid contracts in Texas and Georgia, which could impact future revenue and growth opportunities.
- Despite strong revenue growth, the company's EPS guidance for 2025 remains unchanged, indicating potential conservatism or challenges in translating revenue growth into earnings.
