Bengaluru: Centene beat Wall Street estimates for fourth-quarter profit on Tuesday, helped by strength in its commercial health insurance plans.
Enrollments in private plans for individuals and families have risen, while the company saw a drop in memberships in Medicaid plans for lower-income groups after the end of a pandemic-era federal policy that offered protection to a wider section of the society.
As states redetermined the eligibility for members in government-backed Medicaid plans, healthier members were dropped from the rolls, leaving behind those who require more medical services, and driving up costs for health insurers.
Centene saw an 11per cent increase in total commercial memberships in the reported quarter, which stood at 4,81,3500 members, while Medicaid memberships declined 10per cent.
The health insurance industry has been grappling with high medical costs in government-sponsored plans due to a mix of factors including high demand for care among older adults and an influx of sicker patients for Medicaid plans.
The company increased its 2025 premium and service revenue range by $4 billion to a range of $158 billion to $160 billion, as it expects an increase in enrollment in certain plans.
Shares of the company rose 1.45per cent to $65.76 before the bell.
It also expects additional premium revenue of $1 billion from enrollment in its Medicare Advantage plans and $1.5 billion due to a program change adding behavioral health coverage in one of its state contracts.
For the quarter, Centene reported a medical loss ratio – the percentage of premiums spent on medical care – of 89.6per cent, compared with 89.5per cent a year ago. Analysts on average had estimated a ratio of 89.95per cent, according to data compiled by LSEG.
On an adjusted basis, the health insurer reported a profit of 80 cents per share, above analysts’ average estimate of 49 cents. (Reporting by Sriparna Roy and Sneha S K in Bengaluru; Editing by Shinjini Ganguli)
