Centene Corp

Centene was the top contributor during the quarter. Shares of the U.S.-headquartered managed care company rallied sharply after it reported better than expected first-quarter results. Managed care industry profitability has been under pressure over the last 2 years amidst an unprecedented spike in medical cost trend. However, there are signs that cost trend is now stabilizing or even decelerating in certain utilization categories. We expect easing medical costs combined with improving reimbursement rates and Centene’s own expense initiatives to drive a meaningful earnings recovery in the coming years. Beyond this cyclical recovery, we believe Centene remains well positioned for growth as a leader in government managed care.

Centene Corp. (CNC) is a managed care organization focused on the Medicaid market, with approximately 28 million at-risk enrollees and the largest Medicaid market share among publicly traded peers. We own it as the clear scale leader in a capital-light business well positioned to benefit as the U.S. continues shifting healthcare toward government-funded, cost-controlled programs. Centene outperformed sharply this quarter as adjusted EPS beat consensus by 48%, management raised full-year guidance, and investors gained confidence that the Medicaid margin recovery and ACA membership reset were both tracking ahead of plan.

Centene was another significant contributor. In our fourth quarter letter we wrote that Centene faced dual pressure from higher medical costs and lower government reimbursement rates on its large Medicaid book, which is why the shares were cheap. Since then the backdrop for managed care has improved. The cost trends that had been a headwind for the industry are beginning to subside, and rate resets have largely caught up to them. Centene’s health benefits ratio improved to 89.6% from 93.0%, and the company raised its full-year revenue guidance.

Centene Corp. (CNC) is a Medicaid and Medicare managed-care organization (MCO) that has faced challenges from higher patient-utilization costs and government reimbursement rates. However, the company raised guidance and posted first-quarter earnings that significantly beat expectations, driven by improved revenues and a modestly lower medical loss ratio. Additionally, sentiment regarding the stock was bolstered by the U.S. government's proposed increase in 2027 Medicare Advantage payments, indicating a positive outlook for future growth.

Centene was a contributor during the quarter. Shares of the U.S.-headquartered managed care company rallied sharply after it reported better than expected first-quarter results. We expect easing medical costs combined with improving reimbursement rates and Centene’s own expense initiatives to drive a meaningful earnings recovery in the coming years. Beyond this cyclical recovery, we believe Centene remains well positioned for growth as a leader in government managed care.

Centene Corp has shown strong performance with a total return of 98.8%, contributing 0.7% to total Fund returns. The company is positioned well within the managed care sector, reflecting robust growth potential. The Fund has taken advantage of price strength to trim its position in Centene, indicating confidence in its continued performance while managing exposure. This strategic adjustment aligns with Kopernik's focus on risk-adjusted intrinsic value.

Centene Corp, a U.S.-based managed care organization specializing in government-sponsored healthcare programs, had a total return of -20.2%. Despite this decline, we added to the Fund’s position in Centene on weakness, indicating our belief in its long-term value and potential recovery. The company operates in a critical sector, providing essential services that are likely to remain in demand, which supports our positive outlook.

We purchased shares in Centene after its share price collapsed due to rising healthcare costs squeezing its profits. However, we believe that longer term, profits should recover as the company reprices its policies. Centene is one of America’s largest health insurers, and its AI-driven spending has not only lifted stock markets but has become a core driver of the US economy, accounting for at least half of the nation’s growth in 2025.

In the managed care space, Centene has faced margin pressure as its utilization has risen faster than expected, which has quickly fueled a narrative about structural risk in Medicaid and the exchanges. In our analysis, the company’s fundamentals suggest something less dramatic: Centene remains the market leader, has repriced the majority of its Medicaid contracts, and is preparing for meaningfully higher exchange pricing in 2026. Membership will decline as pricing resets, but we believe those losses are already priced in. Over time, we expect Centene to revert to mid-single-digit margins with strong cash generation — a profile that aligns with investment-grade credit.

Centene Corporation is a large managed care organization specializing in government-sponsored healthcare programs in the United States. The Fund initiated a position in Centene during the third quarter, recognizing its potential for growth in a sector that is increasingly important. The company had a total return of 10.3% during the quarter, contributing 0.2% to total Fund returns. The Fund's strategy focuses on identifying companies like Centene that are trading at significant discounts to their intrinsic values, indicating a strong belief in its future performance.