What Happened?
Shares of health coverage company Centene (NYSE: CNC) fell 39.4% in the afternoon session after the company unexpectedly withdrew its full-year 2025 financial guidance, citing significantly higher-than-anticipated costs in its insurance marketplace and Medicaid businesses.
The healthcare giant shocked investors by announcing that preliminary data showed a much higher rate of members making claims than was built into its financial assumptions.
Specifically, Centene anticipates a $1.8 billion reduction in expected revenue from its Affordable Care Act (ACA) marketplace plans, which translates to a hit of approximately $2.75 to its adjusted earnings per share. The company had previously forecast adjusted earnings of over $7.25 per share for the year.
Adding to the pressure, Centene also experienced rising medical cost trends in its Medicaid business, particularly for behavioral health, home health, and high-cost drugs in key states like New York and Florida. The combination of lower revenue and higher costs forced the company to pull its forecast, creating significant uncertainty. Following the news, several Wall Street analysts downgraded the stock and cut their price targets, including UBS and JP Morgan.
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What The Market Is Telling Us
Centene’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. But moves this big are rare even for Centene and indicate this news significantly impacted the market’s perception of the business.
Centene is down 43.5% since the beginning of the year, and at $34.19 per share, it is trading 57.4% below its 52-week high of $80.23 from September 2024. Investors who bought $1,000 worth of Centene’s shares 5 years ago would now be looking at an investment worth $514.05.
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