10-Q · July 27, 2026
Centene delivered a strong year-over-year recovery in Q2 2026: revenue increased 10% to $53.579 billion, GAAP EPS improved to $2.19 from a $(0.51) loss, and operating income reached $1.198 billion versus a $458 million…
Earnings analysis · 10-Q
CNC earnings analysis
Filed October 26, 2026 · Our reading of the company's report
The latest report
Centene delivered a mixed third quarter: revenue rose 2% year-over-year to $50.647B and adjusted EPS improved to $0.58, but GAAP EPS was a $(0.14) loss and revenue declined from $54.01B sequentially. Medicare…
Read full summary
Centene delivered a mixed third quarter: revenue rose 2% year-over-year to $50.647B and adjusted EPS improved to $0.58, but GAAP EPS was a $(0.14) loss and revenue declined from $54.01B sequentially. Medicare performance and nine-month cash generation were strong, while Commercial revenue and gross margin contracted sharply and membership fell 8% year-over-year. Management highlighted elevated medical-cost, regulatory and membership pressures, including a projected 175,000-member California Medicaid transition and weaker Medicare Advantage Star Ratings. Leverage and working capital improved, but quarterly cash usage and future membership risks temper the recovery outlook.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $-0.14
What stood out
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Revenue grew 2% year-over-year
Third-quarter total revenue increased 2% year-over-year to $50.647B, led by Medicaid revenue growth of 6% to $29.581B and Medicare revenue growth of 20% to $11.263B. Revenue declined sequentially from $54.01B in the second quarter of 2026.
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GAAP loss substantially narrowed
GAAP diluted loss per share improved to $(0.14) from $(13.50) in the prior-year quarter, which included a $6.7B goodwill impairment. Adjusted diluted EPS increased to $0.58 from $0.50.
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Underlying expense efficiency improved
The quarterly health benefits ratio was stable at 92.7% versus 92.7% a year earlier, while adjusted SG&A improved to 6.5% from 7.0%. Management attributed the adjusted SG&A improvement to cost management, operating leverage, lower Marketplace membership and PDP growth.
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Strong nine-month cash generation
Nine-month operating cash flow was $4.287B, while capital expenditures were $568M, implying approximately $3.719B of nine-month cash flow after capital expenditures. Capital spending was primarily for system enhancements and computer hardware.
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Medicare profitability strengthened
Medicare gross margin rose 30% to $699M in the quarter, and nine-month Medicare gross margin increased 31% to $3.418B. Management cited rate increases, favorable resolution of 2025 programmatic items and PDP membership growth.
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Leverage and working capital improved
The debt-to-capital ratio improved to 41.1% from 46.5% at December 31, 2025, following $1.8B of senior-note repurchases and net earnings. Working capital increased to $6.4B from $3.7B.
What to watch
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Membership contraction
Managed-care membership fell 2.3M, or 8%, year-over-year to 25.7M, including Marketplace membership declining to 3.403M from 5.828M. Management expects continued pressure from Medicaid redeterminations and Marketplace subsidy and regulatory changes.
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California Medicaid transition
Beginning January 1, 2027, approximately 175,000 Health Net Medi-Cal UIS members are expected to transition from managed care to fee-for-service, reducing California Medicaid membership and premium revenue.
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Medicare Star Ratings declined
Medicare Advantage quality ratings deteriorated: approximately 42% of membership was in plans rated 3.5 stars or higher for 2027, including 10% in 4-star plans, versus 60% and 20%, respectively, for the prior year. The ratings will affect 2028 plan-year revenues.
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Commercial business remains pressured
Commercial revenue decreased 21% to $8.700B and commercial gross margin fell 14% to $958M, primarily because of reduced Marketplace membership. Health Net also plans to discontinue commercial group offerings in 2027.
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Quarterly cash-flow volatility
Third-quarter operating cash flow used $3.7B, driven by the timing of pass-through payments, despite nine-month operating cash flow of $4.287B. CMS Part D risk-sharing receivables totaled $2.7B at September 30, 2026, and delayed settlement could materially affect cash flow.
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Investment and debt sensitivity
A hypothetical immediate 1% increase in market interest rates would reduce the fair value of fixed-income investments by approximately $578M. The company had $13.6B of senior notes outstanding and $2.0B of Term Loan borrowings at September 30, 2026.
Management's outlook
No explicit numeric revenue or EPS guidance was provided. Management expects approximately $200M of additional capital expenditures and approximately $20M of net dividends from insurance subsidiaries during the remainder of 2026, and expects available liquidity to fund operations and capital expenditures for at least 12 months.
Earlier filings 4
10-Q · April 28, 2026
Centene reported a strong Q1 2026: total revenues of $49,944 million (+7% YoY) and GAAP diluted EPS of $3.11 (+18% YoY). Medical cost trends remained elevated but margins ticked modestly better (HBR 87.3% vs 87.5%)…
10-K · February 17, 2026
Centene reported full-year 2025 revenues of $194.8 billion and membership of 27.6 million, reflecting continued scale as the nation's largest Medicaid and Marketplace insurer. However, GAAP results were materially…
10-Q · July 25, 2025
Centene reported strong top-line growth with total revenues of $48,742 million for Q2 2025, up $8,906 million versus Q2 2024 ($39,836 million), but profitability deteriorated: operating loss was $(458) million and GAAP…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.