Centene: 2Q26 results largely in line; FY26 guidance improved (even after adjusting for some non-recurring benefits); Maintain Neutral

研报英文原文证据摘录

Centene: 2Q26 results largely in line; FY26 guidance improved (even after adjusting for some non-recurring benefits); Maintain Neutral

on in Marketplace as

eligibility verifications potentially step up in 2H26, consistent with seasonality, and are

actively pricing for risk shifts due to program integrity measures and other changes impacting

eligibility. Consistent with 1Q26, Centene continued to see higher utilization patterns among

Silver metal tier members, albeit moderate compared to expectations. Although the

Commercial segment performed well this quarter, we remain cautious of how state eligibility

verification measures may shift membership numbers and acuity shift. We also await any

insight on 2027 volatility related to premium rate increases.

Medicare: Medicare results were strong, with premium revenue growing 17% YoY, while

HBR grew 460bp sequentially to 89.5%. We note that Medicare PDP recognized a ~$160mm

benefit largely related to favorable PDP 2025 risk adjustment and quality settlements. This

drove roughly 60bps of improvement to the company’s 2026 pre-tax margin target of greater

than 3% from 2% that they guided to from early 2026. Management continues to observe

elevated levels of specialty drug trends, although lower than anticipated for 1H26.

Management noted that MA costs were elevated relative to prior periods but still trending

favorable to their expectations. Centene is aiming to simplify its MA footprint and

increasingly focus on the Duals population (40% of their MA portfolio). CNC ended the

quarter with ~9.8mm members, of which 40% are enrolled in MA. Management reiterated

that it remains focused on accelerated margin improvement and believes the company can

meet its target breakeven or better results in 2027 with margin improvement thereafter.