Centene Corporation has closed the books on a difficult 2025, a period marked by elevated medical costs and significant one-time charges. However, the managed care provider’s latest quarterly results, released today, offered a glimmer of hope by surpassing subdued market expectations. The central question now is whether the company can deliver on its pledge to restore profitability in the current fiscal year.
A Year of Significant Headwinds
The past fiscal year presented substantial challenges for the healthcare giant. While the company successfully grew its top line, with revenue climbing 20% year-over-year to $194.8 billion, its bottom line told a different story. Centene reported a substantial GAAP loss of $13.53 per share for the full year.
This result was primarily driven by a massive, non-cash goodwill impairment charge of $6.7 billion, which was recorded in the third quarter. When adjusting for such special items, the company’s underlying performance was stronger, yielding an adjusted profit of $2.08 per share for 2025. A key pressure point was the medical cost ratio, known as the Health Benefits Ratio (HBR), which increased to 91.9% from 88.3% in the prior year. This rise was attributed to higher medical utilization and program adjustments within its Medicare plans.
Fourth-Quarter Performance Exceeds Forecasts
The final quarter of the year provided some positive momentum. Centene’s Q4 2025 revenue reached $49.73 billion, exceeding analyst consensus estimates of approximately $48.3 billion. Furthermore, the adjusted loss per share of $1.19 was slightly better than the anticipated $1.22 loss.
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Segment performance was mixed. The commercial segment’s HBR of 95.4% exceeded internal targets due to retrospective cost adjustments. In contrast, the Medicaid business showed signs of stabilization, with its ratio improving slightly from the previous quarter to 93.0%. The Marketplace segment also demonstrated a positive trend, with membership growing to 5.5 million insured individuals.
Management Sets Sights on a Profitable 2026
Looking ahead, Centene’s leadership has expressed confidence in a turnaround. The company issued guidance for the new fiscal year that projects a significant rebound in earnings. Centene is targeting an adjusted profit exceeding $3.00 per share for 2026, with revenue expected to land between $186.5 billion and $190.5 billion.
A central component of the recovery plan is margin improvement. Management aims to reduce the consolidated HBR to a range of 90.9% to 91.7%. Strategic actions are already underway to sharpen the company’s focus, including the agreed-upon sale in December 2025 of its remaining Magellan Health operations. According to CEO Sarah London, the steps taken to stabilize the Medicaid division have positioned the company to drive sustainable profitability growth throughout the coming year.
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