Editor’s Note: The story has been updated with executive comment and stock price change
Healthcare insurance giant Centene Corporation (NYSE:CNC) saw its stock tumble significantly on Friday after reporting a surprising second-quarter 2025 adjusted loss of 16 cents per share.
This stark reversal from an adjusted income of $2.42 per share in the prior year quarter sharply contrasted with analyst expectations of a $1.26 per share profit, marking the company’s first quarterly loss since the second quarter of 2012, according to data from Benzinga Pro.
Despite the earnings shortfall, Centene demonstrated strong top-line growth, with sales surging 22% year-over-year to $48.74 billion, comfortably exceeding the consensus estimate of $44.48 billion. However, this revenue performance was overshadowed by substantial increases in medical costs.
Also Read: Centene, Cigna, Others Drop As Molina’s Results Rattle Sector
“We are disappointed by our second-quarter results, but we have a clear understanding of the trends that have impacted our performance, and are working with urgency and focus to restore our earnings trajectory,” stated Sarah London, Chief Executive Officer of Centene, acknowledging the challenging quarter.
The company’s premium and service revenues climbed 18% to $42.5 billion from $36.0 billion a year ago. This growth was primarily fueled by expanding premium and membership in the Prescription Drug Plan (PDP) business, overall market growth in the Marketplace business, and rate increases within the Medicaid segment.
These gains, however, were partially offset by a decline in Medicaid membership due due to ongoing redeterminations and reduced net risk adjustment revenue in the Marketplace.
A critical factor in the earnings miss was the deterioration of Centene’s Health Benefits Ratio (HBR), which climbed to 93.0% in the second quarter of 2025, up from 87.6% in the corresponding period last year.
This increase primarily stemmed from a reduction in the company’s estimated net 2025 Marketplace risk adjustment revenue transfer, escalating medical costs within the Marketplace, higher Medicaid medical costs driven by behavioral health services, home health, and high-cost drugs, and an increase in the 2025 Medicare Advantage premium deficiency reserve as earnings progressed through the year.
Total membership across Centene’s diverse portfolio declined to 28 million from 28.48 million a year ago, predominantly due to a reduction in Medicaid membership from 13.14 million to 12.82 million.
Conversely, the company experienced strong membership growth in other key areas, with Marketplace enrollment increasing 33% to 5.86 million and Medicare PDP expanding 19% to 7.85 million compared to the second quarter of 2024.
Earlier in July, Centene had already signaled potential headwinds by withdrawing its 2025 GAAP and adjusted diluted EPS guidance, following an initial review of 2025 industry data from Wakely, an independent actuarial firm. The company announced that it would provide updated guidance during its earnings conference call.
Centene’s stock performance this quarter mirrors a broader trend within the healthcare insurance sector, as evidenced by the recent decline in shares of competitors like Elevance Health Inc. (NYSE:ELV) and Cigna following their own earnings reports. Elevance Health notably saw its stock plummet after missing analyst expectations for its second-quarter 2025 adjusted earnings and significantly lowering its full-year guidance, despite strong revenue growth.
In premarket trading on Friday, Centene’s stock plummeted 14.5% to $22.89, falling below its previous 52-week low of $26.66. The continued downward pressure underscores significant investor concern over the unexpected quarterly loss and the challenging operational environment impacting the healthcare insurance industry.
However, a reversal in investor sentiment occurred during the subsequent earnings conference call. Centene’s shares, which had initially been down by as much as 14.5% in premarket trading, rallied strongly, erasing earlier losses and ultimately trading as high as 4%.
This significant rebound was spurred by commentary from a Centene executive, who indicated that the company now expects an adjusted profit of approximately $1.75 per share for the full year 2025, according to Reuters. Furthermore, the executive projected that Centene anticipates delivering margin improvement across all three of its core lines of business in 2026.
Price Action: CNC stock traded higher by 2.35% to $27.39 at last check Friday. (Updated)
Read Next:
Image via Shutterstock
