Centene Corporation (CNC) stunned investors as its stock plunged nearly 30% in pre-market trading, marking one of its steepest selloffs in recent history. The sharp decline came after the healthcare company withdrew its 2025 outlook, pointing to unexpected shifts in the insurance market that could put $1.8 billion in revenue at risk.
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Centene Cuts Guidance Amid Sluggish Marketplace Revenue
Centene offers health insurance plans, mainly through government programs like Medicaid, Medicare, and the Health Insurance Marketplace. Recently, it received new data from its marketplace business showing that fewer people are signing up and those who did are less healthy than expected. As a result, the company now expects to receive less money from a government program that helps balance out risk among insurers.
Due to this development, the company estimated that the shortfall would cost around $1.8 billion, reducing its adjusted earnings per share by $2.75 this year.
However, the company said its forecast is based on data from only 22 out of the 29 states and warned that it might have to lower its earnings estimates even more once it gets the remaining data. It also mentioned that medical costs are rising in its Medicaid business, especially in areas like mental health care and expensive medications.
On a positive note, Centene said its Medicare Advantage and Medicare Prescription Drug Plan businesses are doing better than expected in the second quarter of 2025.
Is Centene Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on CNC stock, based on seven Buys and five Holds assigned in the last three months. The average Centene share price target is $73.60, which implies a potential upside of 30% from current levels.
