Health insurer Centene beats profit targets on commercial plan strength
Adds background on rivals in paragraphs 3 and 4, details on membership in paragraph 8
Oct 25 (Reuters) -Centene CNC.N beat Wall Street estimates for third-quarter profit on Friday, as strength in its commercial insurance business outweighed the impact of high costs related to its government-backed Medicaid plans for low-income people.
Shares of the health insurer jumped 11.65% to $68.80 in premarket trading after the company also maintained its annual profit forecast of greater than $6.80 per share, above analysts' expectation of $6.73, according to data compiled by LSEG.
Wall Street expectations have been subdued after peers UnitedHealth and Elevance ELV.N, which also offer Medicaid plans, warned of a hit from high demand for healthcare services, bringing down the sentiment for the health insurance industry.
UnitedHealth also expects pressure across its government-supported health insurance businesses in 2025.
Centene reported a medical loss ratio — the percentage of premiums spent on medical care — of 89.2% for the quarter ended Sept. 30, compared with analysts' estimate of 88.03%, according to data compiled by LSEG.
The higher costs also stemmed from a reassessment that has led to an increase in the number of sick patients in insurers' Medicaid membership profile.
States have been re-determining Medicaid eligibility after a federal policy that required insurers to keep low-income Americans enrolled in health plans during the COVID-19 pandemic ended last year.
For the third quarter, Centene's total Medicaid memberships fell 14% to 13.07 million members from a year earlier, whereas commercial plan memberships grew 20% to 4.93 million.
On an adjusted basis, the health insurer earned $1.62 per share, compared with analysts' average estimate of $1.33 per share.
Reporting by Amina Niasse in New York City, Sriparna Roy and Unnamalai L in Bengaluru; Editing by Shilpi Majumdar and Shinjini Ganguli
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