A month has gone by since the last earnings report for Centene (CNC). Shares have added about 5.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Centene due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Centene Q2 Earnings Beat Estimates on Increasing Premiums
Centene reported second-quarter 2026 adjusted earnings per share (EPS) of $2.51, which surpassed the Zacks Consensus Estimate of 89 cents. Moreover, the bottom line climbed from a loss of 16 cents per share a year ago.
Revenues totaled $53.6 billion, which rose 9.9% year over year. The top line beat the consensus mark by 12.7%.
The strong quarterly results benefited from strong premium and services revenues in Medicaid and Medicare businesses, fueled by increased premium yield, expanding membership in the Prescription Drug Plan (PDP) business and rate hikes in Marketplace and Medicaid businesses. However, the upside was partly offset by a decline in total membership and an increase in medical costs.
Quarterly Operational Update of CNC
Revenues from Medicare advanced 17% year over year to $11.1 billion, and Medicaid revenues of $22.8 billion rose 5% in the quarter under review. Meanwhile, commercial revenues came in at $9.4 billion, down 7% year over year.
Centene's premium of $43.6 billion grew 4.4% year over year on the back of higher premiums yield, increased membership in the PDP business and strength in the Medicaid and Marketplace rate hikes. The metric beat the Zacks Consensus Estimate of $42.5 billion.
Service revenues rose 9.1% year over year to $793 million in the second quarter and surpassed the consensus mark of $723 million. Investment and other income of $435 million improved 17.3% year over year and topped the Zacks Consensus Estimate of $359 million.
Total membership was 25.9 million as of June 30, 2026, which decreased 7.6% year over year due to membership declines in the Medicaid, Marketplace and Medicare businesses. However, the metric marginally beat the consensus mark.
Centene’s health benefits ratio improved 340 basis points year over year to 89.6% in the quarter under review. Operating expenses totaled $52.4 billion, which increased 6.5% year over year due to higher medical costs, selling, general and administrative expenses, cost of services and premium tax expense. Medical costs escalated 0.6% year over year.
Adjusted net earnings were recorded at $1.2 billion against the year-ago loss of $79 million.
CNC’s Q2 Financial Update (As of June 30, 2026)
Centene exited the second quarter with cash and cash equivalents of $24.2 billion, which rose 35% from the 2025-end level. Total assets of $83 billion grew 8.2% from the figure at 2025-end.
Long-term debt amounted to $16 billion, down 7.6% from the figure as of Dec. 31, 2025. The current portion of long-term debt totaled $75 million.
Total stockholders’ equity of $22.6 billion increased 13% from the 2025-end figure.
Centene generated $8 billion of net cash from operations in the first half of 2026, which increased from the prior-year comparable period’s $3.3 billion.
CNC’s Revised 2026 Guidance
Management now expects premium and service revenues within the band of $173-$177 billion for 2026, up from the previous guidance range of $171-$175 billion. The midpoint of which indicates growth of 0.2% from the 2025 reported figure.
Revenues are now estimated between $193.5 billion and $197.5 billion, up from the previously projected band of $187.5 billion-$191.5 billion, the midpoint of which implies a 0.4% increase from the 2025 figure.
Adjusted EPS is now expected to be greater than $4.80, higher than the previously projected figure of $3.40, which indicates a surge of more than 130.8% from the 2025 figure. GAAP EPS is now forecasted to remain greater than $3.11.
Health benefits ratio is now estimated to be in the band of 90.5-91.3% for 2026, while the adjusted SG&A expense ratio is now anticipated to be 6.9-7.5%. The adjusted effective tax rate is now expected to be in the range of 25.5-26.5%.
Shares outstanding are now projected to be between 497 million and 500 million.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted 22.57% due to these changes.
VGM Scores
Currently, Centene has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock has a score of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Centene has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Centene is part of the Zacks Medical - HMOs industry. Over the past month, Molina (MOH), a stock from the same industry, has gained 1.7%. The company reported its results for the quarter ended June 2026 more than a month ago.
Molina reported revenues of $10.87 billion in the last reported quarter, representing a year-over-year change of -4.8%. EPS of $1.51 for the same period compares with $5.48 a year ago.
For the current quarter, Molina is expected to post earnings of $0.73 per share, indicating a change of -60.3% from the year-ago quarter. The Zacks Consensus Estimate has changed -17.4% over the last 30 days.
Molina has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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This article originally published on Zacks Investment Research (zacks.com).