Centene Earnings Fall Short of Expectations as Woes Mount
Shares dropped 11% before markets opened in New York. They had fallen 56% since the start of the year. Centene said it would provide updated guidance on a conference call with analysts, which starts at 8 a.m. New York time.
The insurer chalked up the second-quarter loss to a miscalculation in its Affordable Care Act business — the same reason it pulled guidance earlier this year. Insurers receive compensation for taking on sicker patients in that program and Centene said it would receive less of that money than it had previously expected.
For the second quarter, Centene announced an adjusted loss per share of 16 cents. Wall Street analysts expected a profit of 55 cents per share.
'We are disappointed by our second quarter results, but we have a clear understanding of the trends that have impacted our performance, and are working with urgency and focus to restore our earnings trajectory,' Sarah London, chief executive officer of Centene, said in the company's earnings statement.
In the second quarter, the company spent 93% of premium revenues of medical costs, higher than the average analyst expectation of 91.6%. Investors prefer a lower number.
The company said its health benefits ratio, the percentage of premium revenues spent on medical costs, rose from last year, largely because of the ACA revenue issue. Centene said it also saw higher medical costs in ACA plans, as well as increased costs in Medicaid, which mostly came from behavioral health, home health, and expensive drugs.
--With assistance from John Tozzi.
(Updates with new information throughout.)
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