Healthcare plan provider Centene Corporation CNC is set to report fourth-quarter 2024 results on Feb. 4, 2025, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at 49 cents per share on revenues of $38.96 billion. 

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The fourth-quarter earnings estimate remained stable over the past 30 days. The bottom-line projection indicates year-over-year growth of 8.9%. However, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year decline of 1.3%.

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For 2024, the Zacks Consensus Estimate for Centene’s revenues is pegged at $161.41 billion, implying a rise of 4.8% year over year. The consensus mark for 2024 EPS is pegged at $6.81, implying an increase of 2%, year over year.

Centenebeat the earnings estimates in three of the last four quarters and missed once, with the average surprise being 7.1%. This is depicted in the figure below.

Q4 Earnings Whispers for Centene

Our proven model does not conclusively predict an earnings beat for the company this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. That’s not the case here.

CNC has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

What’s Shaping Centene’s Q4 Results?

Centene's fourth-quarter performance is expected to have benefited from enhanced contributions from its Commercial business. The positives are expected to have been amplified by the launch of new programs across different states and growth in memberships. However, a decline in service revenues and rising medical costs are likely to have partially offset the positives.

Both the Zacks Consensus Estimate and our model estimate for the company’s total commercial memberships indicate a more than 14% year-over-year increase, primarily due to growth in the commercial marketplace. Both the consensus estimate and our model estimate for Medicare PDP memberships signal nearly 47% growth from the year-ago quarter.

As such, the Zacks Consensus Estimate and our model estimate for total membership growth is pegged at 3.9%. This is expected to have been partially offset by a decline in Medicaid and Medicare memberships. Both the consensus estimate and our model estimate for the company’s total Medicaid memberships indicate a more than 10% decline from a year ago. This is likely to have affected the premium growth level. The Zacks Consensus Estimate projects the company’s premium growth at about 1% year over year, while our model forecasts a 0.7% increase, both trailing behind the growth seen in earlier quarters of 2024.

The consensus estimate for service revenues indicates a more than 29% fall from the year-ago quarter’s $1.1 billion. This is likely to have led to lower revenues in the fourth quarter. Also, the Zacks Consensus Estimate for the company’s investment and other income indicates a 1% year-over-year decline from $401 million.

Moreover, with seniors continuing the resumption of elective procedures CNC’s medical costs are expected to have remained elevated in the fourth quarter. The Zacks Consensus Estimate for the total health benefits ratio is pegged at 90.02%, up from 89.50% in the year-ago period, meaning a reduced portion of premiums remaining in hand after paying claims.

This is expected to have affected margin growth, making an earnings beat uncertain. Nevertheless, the falling cost of services and some other expenses in the quarter under review are likely to have provided some respite.

Stocks That Warrant a Look

While an earnings beat looks uncertain for Centene, here are some companies from the broader Medical space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:

Rhythm Pharmaceuticals, Inc. RYTM has an Earnings ESP of +11.60% and is a Zacks #2 Ranked player.

The Zacks Consensus Estimate for Rhythm Pharmaceuticals’ bottom line for the to-be-reported quarter has witnessed two upward estimate revisions in the past 60 days against no opposite movement. The consensus estimate for RYTM’s revenues is pegged at $36.23 million, a 49.5% increase from a year ago.

Tarsus Pharmaceuticals, Inc. TARS has an Earnings ESP of +32.92% and a Zacks Rank of 2.

The Zacks Consensus Estimate for Tarsus Pharmaceuticals’ bottom line for the to-be-reported quarter indicates a 48.1% year-over-year improvement. TARS beat earnings estimates in each of the past four quarters, with an average surprise of 14.7%.

Natera, Inc. NTRA has an Earnings ESP of +61.91% and a Zacks Rank of 3.

The Zacks Consensus Estimate for Natera’s bottom line for the to-be-reported quarter signals a 34.4% improvement from a year ago. NTRA beat earnings estimates in all the past four quarters, with an average surprise of 36.4%.

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Centene Corporation (CNC) : Free Stock Analysis Report

Rhythm Pharmaceuticals, Inc. (RYTM) : Free Stock Analysis Report

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Tarsus Pharmaceuticals, Inc. (TARS) : Free Stock Analysis Report

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