2Q26 Recap: 1H26 Margin Recovery Ahead of Schedule; Medicaid & PDP Still Anchor Multi-Year Turnaround Risks

研报英文原文证据摘录

2Q26 Recap: 1H26 Margin Recovery Ahead of Schedule; Medicaid & PDP Still Anchor Multi-Year Turnaround Risks

Goldman Sachs Centene Corp. (CNC)

from improved rates in guidance given the risk of potentially higher medical costs from

adverse selection within a progressively shrinking Medicaid enrollment base.

In an additional notable development after the market close on 7/28/26, CMS

announced its plans to terminate the Medicare Part D premium stabilization subsidy

scheme after 2026; this program is expected to infuse $3.6 billion of federal subsidies

this year to offset PDP carrier underwriting losses and help shield beneficiaries from a

sharper acceleration in PDP premiums, absent the federal government funding a large

portion of the true underlying economic losses facing PDP carriers (link). Recall, the risk

of the CMS terminating this subsidy program was a key element driving our thesis

when we initiated coverage on CNC with a Sell rating in conjunction with our

Managed Care sector coverage in October 2025 (link).

Indeed, beginning with our Managed Care sector initiation, we have consistently

reaffirmed in our published research that the Part D redesign included in the Inflation

Reduction Act (IRA) created a significantly less attractive economic framework for

standalone PDP carriers, by requiring PDP plans to absorb a much larger share of

catastrophic drug spending while simultaneously confronting rapidly rising utilization of

high-cost drug therapies. We argued that the subsidy stabilization program only

temporarily masked these financial pressures from investors but did nothing to eliminate

them from the underlying PDP market structure. With CNC’s rapid growth in stand-alone

PDP membership since the IRA went into effect, we expect the termination of the