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Centene shares plunge after health insurer pulls forecast on Obamacare woes
By Christy Santhosh - 7/2/2025
By Christy Santhosh
(Reuters) -Centene shares tumbled 38% on Wednesday, on track for their largest single-day plunge, after the U.S. health insurer pulled its 2025 earnings forecast due to an expected slump in revenue from commercial plans under Obamacare.
The withdrawal underscored the industrywide struggles with changing enrollment patterns and rising medical costs. Industry bellwether UnitedHealth had also suspended its annual outlook in May.
Centene was set to lose more than $10 billion in market value, if losses hold.
Shares of peers UnitedHealth and Humana fell about 2% each, while Elevance dropped 7% and Molina Healthcare slumped 16% in morning trade.
J.P. Morgan analyst Lisa Gill said it may be too early to conclude that other health insurers are exposed to a similar risk as Centene.
"However, we do see this as an indication that the relative health of the ACA Exchange risk pool has deteriorated in 2025," Gill added.
The company pointed to slower market growth and a rise in higher-risk patients enrolled in its plans under Affordable Care Act, or Obamacare. The plans primarily serve people who don't get insurance either through an employer, Medicaid for low-income people or Medicare for older adults.
Data from 22 of the 29 U.S. states that offer these plans suggested a $1.8 billion drop in the company's risk adjustment revenue, equivalent to a $2.75 hit to adjusted earnings per share, the company said late on Tuesday.
It is not "out of the realm of possibility" that Centene's earlier 2025 profit forecast of at least $7.25 per share is cut in half, said Mizuho analyst Ann Hynes.
The health insurer also reported elevated Medicaid medical costs in states like New York and Florida, and said it expects its second-quarter medical costs to be higher as a result.
Centene's stock is trading 7.74 times its forward 12-month earnings estimates, compared with a forward price-to-earnings ratio of 16.8 for Humana and 10.62 for Elevance.
(Reporting by Christy Santhosh in Bengaluru; Editing by Leroy Leo)