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Centene Corp (NYSE: CNC) Cuts 2024 Adjusted Profit View after Medicaid, Drug Pricing Cuts

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Centene Corp
Centene Corp

Shares of Centene Corp (NYSE: CNC) surge over 4.2% in pre session on Tuesday as the company reduced its adjusted profit prediction for 2024 because legislative changes are expected to reduce Medicaid enrollment and put pressure on Medicare Advantage (MA) operations.

According to the corporation, the MA business is predicted to decrease as a result of changes that would reduce government reimbursements beginning next year, while Medicaid memberships are expected to suffer as a result of the withdrawal of pandemic-related relief measures.

Chief Executive Officer of Centene, Sarah M. London stated that Centene’s first-quarter results were solid, reflecting the company’s sustained good operating momentum and the start of another year of diligent execution against our strategy framework. Their revised 2024 adjusted EPS target reflects a careful rebalancing of multiple elements, including an updated assessment of Medicaid redeterminations, a 2024 Medicare bid strategy, and high-impact company investments. They remain confident in their capacity to achieve 12-15% long-term adjusted profits compound annual growth in the second part of the decade based on this foundation.

After the Centers for Medicare and Medicaid Services (CMS) lowered star ratings for the plans in October, the firm warned in February that it projected temporary negative profit margins in its MA business in 2024.

Despite meeting first-quarter profit projections, shares of larger competitors UnitedHealth and Elevance fell earlier this month on investor concerns about rising future medical expenses.

Centene’s quarterly health benefits ratio, which compares medical costs to premiums collected, was 87% in the first quarter, compared to 87.26% predicted by Refinitiv IBES.

Excluding adjustments, Centene earned $2.11 per share, compared to projections of $2.09.

The firm increased its earnings prediction for this year to at least $6.40 per share, up from a prior forecast of between $6.25 and $6.40, anticipating growth in its sector that provides private health insurance policies to individuals and families.