Centene stock crashes 40% as enrollments drop and costs surge, 2025 outlook pulled

Time of India

2 days ago

Centene stock crashes as company pulls 2025 outlook and warns of rising costs-
Centene stock plunged to its lowest point since 2017 after the healthcare giant pulled its 2025 earnings guidance and revealed unexpected enrollment trends and rising patient costs. The managed-care company, which primarily provides Medicaid and Affordable Care Act (ACA) plans, now expects 2025 adjusted earnings to be
$2.75 per share
lower than previously forecasted—wiping out about
$1.8 billion
from its outlook. This sudden shift triggered panic on Wall Street, causing Centene (CNC) shares to lose nearly a third of their value in early trading, making it the worst-performing stock in the S&P 500 on Wednesday.
Why did Centene pull its 2025 outlook?
Centene's decision to scrap its full-year guidance was driven by new internal data from 22 of its 29 ACA marketplaces. The data showed that membership growth was slower than expected, and more critically, the health status of new enrollees was significantly worse than anticipated.
This mismatch impacted the company's risk adjustment revenue assumptions—a key factor in calculating federal reimbursements under ACA programs. As a result, Centene warned that these unexpected shifts would have a
$1.8 billion
negative impact on next year's earnings.
How much will Centene earnings drop in 2025?
Back in April, Centene had forecast 2025 adjusted earnings per share (EPS) of over $7.25. But after analyzing the new risk pool data, the company slashed its forecast by
$2.75 per share
, bringing the revised estimate closer to
$4.50 EPS
.
This is a massive revision for a company that has been a dominant player in Medicaid and ACA coverage. It also reflects deeper structural challenges in the healthcare insurance sector—especially around pricing plans to cover sicker-than-expected patients.
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What's happening with Centene's enrollments and federal reimbursements?
Centene reported that enrollment growth has slowed sharply. Meanwhile, the health profile—or morbidity rate—of many of its newly enrolled members is far worse than anticipated. This means patients are using more care, which increases costs, while risk adjustment payments from the federal government may not be enough to offset that spending.
To adapt, Centene is now refiling its 2026 rate proposals, adjusting for a 'higher projected baseline of Marketplace morbidity,' a clear signal that this trend isn't just temporary.
How are analysts reacting to Centene's surprise guidance withdrawal?
The market's reaction was swift and brutal. Centene stock sank to levels not seen since 2017, and several analysts quickly downgraded the stock. Both Jefferies and UBS lowered their price targets, citing concerns over earnings visibility, growing uncertainty in ACA margins, and potential further deterioration in enrollment quality.
This isn't the first time a major healthcare provider has run into trouble this year. Earlier in 2025, UnitedHealth Group (UNH) also trimmed its forecast due to higher-than-expected medical costs.
Centene stock sees sharpest fall in years
Centene Corp. (CNC) is currently trading around
$34.42
, marking a massive drop of nearly
39% in a single day
. This crash came after the company pulled its 2025 earnings guidance due to rising costs and slower enrollment growth. Earlier in the day, the stock hit an intraday low of
$33.97
, its
lowest level in over eight years
.
Recent performance snapshot:
Metric
Value
Latest Price
$34.42
Day's High
$43.14
Day's Low
$33.97
Opening Price
$37.44
Volume
~53.8 million shares
YTD Performance
Approx. -15%
52-Week Range
$33.97 – $80.59
Forward P/E Ratio
Around 4.7
Why is Centene stock falling so fast?
Outlook withdrawn
: Centene pulled its full-year 2025 earnings forecast, citing higher-than-expected patient illness and a sharp slowdown in ACA enrollment growth.
Earnings cut
: The company warned of a
$2.75 per share cut
, translating to a
$1.8 billion impact
on its 2025 results.
Downgrades
: Analysts reacted quickly, downgrading the stock and lowering price targets due to rising uncertainty in ACA-related margins and risk pool assumptions.
What does this mean for the healthcare insurance industry?
Centene's situation reflects a broader challenge facing companies in the Affordable Care Act and Medicaid markets. As patient health trends shift and federal reimbursement models lag behind, insurers are struggling to balance premium pricing, risk pool assumptions, and real-world costs.
The company's move to re-price its 2026 plans shows it's taking corrective action, but it also underlines how volatile the business can be when market assumptions break down.
Can Centene bounce back?
Centene's leadership didn't offer a revised full-year forecast but made it clear that the 2025 results will fall short. Investors will now be watching closely to see how the company adjusts its future pricing and risk models—and whether it can restore confidence.
For now, though, the sharp drop in Centene stock reflects deeper anxiety across the healthcare insurance sector, particularly among those who rely heavily on ACA marketplaces. With policy changes and patient trends evolving quickly, this may not be the last shake-up we see in the industry.
FAQs:
What caused Centene stock to drop in 2025?
Centene stock dropped after it pulled its 2025 earnings forecast due to lower enrollments and higher patient costs.
How much earnings did Centene cut from its 2025 outlook?
Centene slashed its 2025 EPS by $2.75, wiping out $1.8 billion in projected earnings.