It has been about a month since the last earnings report for Centene (CNC). Shares have lost about 2.9% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Centene due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Centene Q4 Earnings Beat Estimates on Membership Growth, 2025 View Up

Centene reported fourth-quarter 2024 adjusted earnings per share (EPS) of 80 cents, which outpaced the Zacks Consensus Estimate by 63.3%. Moreover, the bottom line rose 77.8% year over year.

Revenues were $40.8 billion, which increased 3.4% year over year. The top line surpassed the consensus mark by 4.8%.

The quarterly performance benefited from strong Commercial revenue growth, Medicaid rate increases and expansion of the Marketplace business. However, the upside was partly offset by elevated operating expenses, a decline in Medicaid and Medicare membership and a deteriorating Health Benefits Ratio (HBR).

Quarterly Operational Update of Centene

Revenues from Medicaid dipped 1% year over year to $20.8 billion, while Medicare revenues grew 4% year over year to $5.5 billion. Additionally, commercial revenues of $8.7 billion climbed 18% year over year.

Centene's premiums amounted to $35.5 billion, rising 3.8% year over year due to Medicaid rate increases and higher membership in the Marketplace business, supported by strong product positioning and overall market expansion. The metric beat the Zacks Consensus Estimate of $34.7 billion and our estimate of $34.5 billion.  

Service revenues decreased 29.7% year over year to $777 million, lower than the consensus mark of $782.2 million and our estimate of $783.1 million. Investment and other income of $344 million dipped 14.2% year over year, missing the consensus mark of $396.8 million and falling short of our estimate of $378.7 million.

As of Dec. 31, 2024, total membership was 28.6 million, which grew 4.1% year over year and beat the Zacks Consensus Estimate and our estimate by a whisker. Membership in the Commercial Marketplace business witnessed a significant year-over-year increase, partly offset by declines in the Medicaid and Medicare businesses. 

Centene’s HBR deteriorated 10 basis points year over year to 89.6%.

Adjusted net earnings of $404 million rose 68.3% year over year. 

Total operating expenses increased 2.5% year over year to $40.6 billion, surpassing our estimate of $38.3 billion. The uptick was mainly due to higher medical costs and premium tax expenses, which rose 3.8% and 9.1%, respectively, on a year-over-year basis.

Adjusted SG&A expense ratio of 8.9% improved 80 basis points year over year, attributable to the divestiture of Circle Health Group, which had a higher SG&A expense ratio, along with ongoing leveraging of costs over increased revenues and lower Medicare SG&A.

Centene’s Financial Update (As of Dec. 31, 2024)

Centene exited the fourth quarter with cash and cash equivalents of $14.1 billion, which declined 18.2% from the 2023-end level. 

Total assets of $82.4 billion slipped 2.6% from the figure at 2023-end.

Long-term debt amounted to $18.4 billion, up 4% from the figure as of Dec. 31, 2023. The current portion of long-term debt totaled $110 million.

Total stockholders’ equity of $26.5 billion rose 2.2% from the 2023-end figure.

Centene generated $154 million of net cash from operations in 2024, which declined significantly from the prior-year period.

Full-Year Update

Total revenues of $163.1 billion jumped 5.9% from 2023 levels, while adjusted EPS of $7.17 rose 7.3% year over year. Total operating expenses rose 5.8% in 2024 to $159.9 billion.

Centene’s Share Repurchase Update

Centene bought back common shares worth $3 billion in 2024. A leftover capacity of $2.2 billion remained under the company’s share repurchase authorization as of Feb. 4, 2025.

Centene’s 2025 Guidance

Management projects premium and service revenues of $158-$160 billion. The midpoint of the updated outlook indicates growth of 9.3% from the 2024 figure.  

Adjusted EPS is expected to be greater than $7.25, which indicates a 1.1% rise from the 2024 reported figure. GAAP EPS is expected to remain greater than $6.19.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -11.09% due to these changes.

VGM Scores

Currently, Centene has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Centene has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Centene belongs to the Zacks Medical - HMOs industry. Another stock from the same industry, Cigna (CI), has gained 5.6% over the past month. More than a month has passed since the company reported results for the quarter ended December 2024.

Cigna reported revenues of $65.68 billion in the last reported quarter, representing a year-over-year change of +28.4%. EPS of $6.64 for the same period compares with $6.79 a year ago.

For the current quarter, Cigna is expected to post earnings of $6.41 per share, indicating a change of -0.9% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.8% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Cigna. Also, the stock has a VGM Score of C.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Centene Corporation (CNC) : Free Stock Analysis Report

Cigna Group (CI) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research