Centene Corporation
Health Care · Managed Health Care
1M). Earnings = premiums minus medical costs; MLR is the entire P&L lever. State rebid cycles (TX, CA, NY, FL renewals 2026-2027) determine multi-year revenue base. Redeterminations unwind (post-2026 cliff) compressed Medicaid margins; ACA enhanced subsidies expire end-2026 absent Congressional extension.
ACA marketplace 50%+ enrollment growth 2024-2025; Medicare Advantage Stars recovery underway (HEDIS investments paying off in 2027 bonus year); Medicaid acuity normalizing as post-COVID redeterminations complete; share buybacks at ~6-7x fwd P/E with $2B+ annual FCF; divested non-core (Magellan Rx, Circle Health, Apixio) cleans up the story; SG&A ratio compressing toward 8% target.
ACA subsidy cliff end-2026 = potential 30-40% Ambetter enrollment hit if not extended; Medicare Advantage Stars cut hits 2026 bonus payments (already guided down); Medicaid MLR running hot (~89-90%) as redeterminations leave higher-acuity book; state rate inadequacy in CA + NY pressures 2026 margins; binary political risk (Medicaid block grants, ACA repeal narrative).
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