Centene Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenues for the third quarter ended September 30, 2026, were $50.647 billion, compared to $49.690 billion in the same period in 2025.
• Premium and service revenues were $45.105 billion, a 0.5% increase from $44.898 billion in the third quarter of 2025.
• GAAP diluted loss per share was $(0.14) for the third quarter of 2026, compared to a loss of $(13.50) in the same period in 2025.
• Adjusted diluted earnings per share (EPS) were $0.58 for the third quarter of 2026, compared to $0.50 in the third quarter of 2025.
• Health benefits ratio (HBR) was 92.7% for the third quarter of 2026, unchanged from 92.7% in the third quarter of 2025.
• SG&A expense ratio was 7.2% for the third quarter of 2026, compared to 7.0% in the third quarter of 2025.
• Adjusted SG&A expense ratio was 6.5% for the third quarter of 2026, compared to 7.0% in the third quarter of 2025.
• Cash flow used in operations was $3.669 billion for the third quarter of 2026.
• Medical claims liabilities totaled $21.5 billion at September 30, 2026.
• Days in claims payable (DCP) was 48 days at September 30, 2026, an increase of one day from the second quarter of 2026.
• Total debt was $15.5 billion at September 30, 2026, following the repurchase of $558 million of senior notes during the quarter.
• The Company held $39.9 billion in cash, investments, and restricted deposits at September 30, 2026.

Guidance and Future Outlook:

• Increased 2026 GAAP diluted EPS guidance floor to greater than $3.46.
• Increased 2026 adjusted diluted EPS guidance floor to greater than $5.20.
• Decreased 2026 HBR guidance range to 90.4% to 91.1%.
• Decreased 2026 interest expense guidance range to $600 million to $620 million.
• Full-year 2026 total revenues guidance range is $196.5 billion to $200.5 billion.
• Full-year 2026 premium and service revenues guidance range is $173.0 billion to $177.0 billion.
• Full-year 2026 SG&A expense ratio guidance range is 7.2% to 7.8%.
• Full-year 2026 adjusted SG&A expense ratio guidance range is 6.9% to 7.5%.
• Full-year 2026 effective tax rate guidance range is 26.5% to 27.5%.
• Full-year 2026 adjusted effective tax rate guidance range is 25.5% to 26.5%.
• Full-year 2026 diluted shares outstanding guidance range is 497.0 million to 500.0 million.
• Full-year 2026 HBR mid-point expectation improved by 15 basis points to 90.75%.

Business Segments and Product Lines:

• Medicaid premium and service revenues were $24.039 billion for the third quarter of 2026, a 4% increase from $23.171 billion in the third quarter of 2025.
• Commercial premium and service revenues were $8.700 billion for the third quarter of 2026, a 21% decrease from $10.992 billion in the third quarter of 2025.
• Medicare premium and service revenues were $11.263 billion for the third quarter of 2026, a 20% increase from $9.391 billion in the third quarter of 2025.
• Other premium and service revenues were $1.103 billion for the third quarter of 2026, an 18% decrease from $1.344 billion in the third quarter of 2025.
• Total at-risk membership was 25,698,200 at September 30, 2026, compared to 27,968,100 at September 30, 2025.
• Medicaid membership was 11,895,900 at September 30, 2026, compared to 12,706,400 at September 30, 2025.
• Marketplace membership was 3,403,300 at September 30, 2026, compared to 5,828,100 at September 30, 2025.
• Medicare membership was 954,400 at September 30, 2026, compared to 1,013,200 at September 30, 2025.
• Medicare Prescription Drug Plan (PDP) membership was 8,947,200 at September 30, 2026, compared to 7,972,500 at September 30, 2025.
• Commercial membership (Marketplace plus Individual and Commercial Group) was 3,900,700 at September 30, 2026, compared to 6,276,000 at September 30, 2025.
• The Company operated Medicare-Medicaid Plans (MMPs) through December 31, 2025; in 2026, these members are included in Medicare as a result of the CMS transition to Dual Eligible Special Needs Plans (D-SNP) based integration.
• Medicare membership includes Medicare Advantage, Medicare Supplement, and Applicable Integrated Plans (AIPs) as a result of the CMS transition to D-SNP based integration in 2026.
• The increase in total revenues was driven by premium yield and membership growth in the PDP business, rate increases in Marketplace and Medicaid to address medical trend, Marketplace risk adjustment revenue transfer for the 2026 benefit year, and state directed payments.
• The increase in revenues was partially offset by lower Marketplace and Medicaid membership.
• The decrease in adjusted SG&A expense ratio was driven by strong cost management, leveraging of expenses over higher revenues, reduced Marketplace membership, and growth in the PDP business.

Market and Competitive Landscape:

• The consolidated HBR benefited from a lower Marketplace HBR resulting from improved pricing and risk transfer reflecting the acuity of the Marketplace membership, as well as strong fundamental performance in both the Medicare Advantage and PDP businesses.
• The HBR in 2025 was positively impacted by a decrease to the premium deficiency reserve versus no premium deficiency reserve in 2026 for the Medicare Advantage business as a result of progression towards profitability.
• The Company serves more than 1 in 15 individuals across the nation, including Medicaid, Medicare members (including Medicare Prescription Drug Plans), and individuals and families served by the Health Insurance Marketplace.

Risks and Challenges:

• The effective tax rate for the third quarter of 2026 was 46.7%, compared to 0.6% in the third quarter of 2025.
• The increase in the SG&A expense ratio was primarily driven by enterprise optimization severance and vendor costs.
• The Company faces risks related to rate cuts, insufficient rate changes, or payment reductions/delays by government payors.
• Risks include changes in federal or state laws or regulations, including the ACA and tax reform.
• Risks include unanticipated increased healthcare costs due to inflation, tariffs, and changes in consumer/provider behaviors.
• Risks include the ability to successfully execute on enterprise optimization initiatives, including separation programs.
• Risks include the ability to maintain or improve CMS Star ratings and other quality scores.
• Risks include competition for providers, broker distribution networks, and contract reprocurements.
• Risks include cyber-attacks, data security incidents, and failure to comply with privacy laws.
• Risks include impairments to real estate, investments, goodwill, and intangible assets.
• Risks include changes in senior management or loss of key personnel.
• Risks include membership and revenue declines or unexpected trends.
• Risks include disruptions from business transactions, including acquisitions, divestitures, and vendor relationship changes.
• Risks include restrictions and limitations in connection with indebtedness and potential credit rating downgrades.

Management Commentary and Tone:

• CEO Sarah M. London stated, "Solid underlying fundamentals within our core businesses have powered a faster recovery to our earnings trajectory than previously anticipated."
• Management expressed pleasure with the progress made in delivering increased margin to power the mission of transforming the health of the communities served.
• Management remains focused on a strong finish to 2026 and building on this progress in 2027.
• The tone of the release is positive regarding the recovery of earnings trajectory and the improvement in guidance.

Other Key Points:

• Debt was reduced by $1.1 billion since June 30, 2026, including the full redemption of 2027 Senior Notes in October.
• During the third quarter of 2026, the Company repurchased $558 million of the Company's par value senior notes due 2027 and 2028.
• In October 2026, the debt repurchase program was increased by $2.0 billion, and the Company repurchased the remaining $569 million of its par value Senior Notes due 2027.
• As of October 27, 2026, there was $1.9 billion available under the senior note debt repurchase program.
• Total debt was $15.5 billion at September 30, 2026, with no borrowings on the $4.0 billion Revolving Credit Facility at quarter end.
• The Company has 53,900 employees as of September 30, 2026.
• The Company will host a conference call on Tuesday, October 27, 2026, at 8:30 a.m. ET to review the financial results.
• Non-GAAP financial measures used include adjusted diluted EPS, adjusted SG&A expense ratio, and adjusted effective tax rate, which exclude amortization of acquired intangible assets, acquisition and divestiture related expenses, and other items.
• Adjusted net earnings for the three months ended September 30, 2026, were $290 million, compared to $245 million in the same period in 2025.
• Adjusted net earnings for the nine months ended September 30, 2026, were $3,210 million, compared to $1,611 million in the same period in 2025.
• Other adjustments for the three months ended September 30, 2026, included severance costs due to enterprise optimization and contract exits of $276 million, enterprise optimization third-party vendor costs of $35 million, a net gain on real estate transactions of $18 million, an additional loss associated with a prior divestiture of $15 million, and a net gain on debt extinguishment of $1 million.
• Other adjustments for the nine months ended September 30, 2026, included severance costs due to enterprise optimization and contract exits of $294 million, enterprise optimization third-party vendor costs of $85 million, a net gain on real estate transactions of $22 million, an additional loss associated with a prior divestiture of $15 million, a gain on sale of a provider network in the Other segment of $10 million, and a net gain on debt extinguishment of $2 million.
• The effective tax rate on adjusted earnings for the third quarter of 2026 was 14.5%, compared to 2.5% in the third quarter of 2025.