Editor’s Note: The story has been updated with executive comment and stock price change
Healthcare insurance giant Centene Corporation (NYSE:CNC) saw its stock tumble significantly on Friday after reporting a surprising second-quarter 2025 adjusted loss of 16 cents per share.
This stark reversal from an adjusted income of $2.42 per share in the prior year quarter sharply contrasted with analyst expectations of a $1.26 per share profit, marking the company’s first quarterly loss since the second quarter of 2012, according to data from Benzinga Pro.
Despite the earnings shortfall, Centene demonstrated strong top-line growth, with sales surging 22% year-over-year to $48.74 billion, comfortably exceeding the consensus estimate of $44.48 billion. However, this revenue performance was overshadowed by substantial increases in medical costs.
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“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,” stated Sarah London, Chief Executive Officer of Centene, acknowledging the challenging quarter.
The company’s premium and service revenues climbed 18% to $42.5 billion from $36.0 billion a year ago. This growth was primarily fueled by expanding premium and membership in the Prescription Drug Plan (PDP) business, overall market growth in the Marketplace business, and rate increases within the Medicaid segment.
These gains, however, were partially offset by a decline in Medicaid membership due due to ongoing redeterminations and reduced net risk adjustment revenue in the Marketplace.
A critical factor in the earnings miss was the deterioration of Centene’s Health Benefits Ratio (HBR), which climbed to 93.0% in the second quarter of 2025, up from 87.6% in the corresponding period last year.
This increase primarily stemmed from a reduction in the company’s estimated net 2025 Marketplace risk adjustment revenue transfer, escalating medical costs within the Marketplace, higher Medicaid medical costs driven by behavioral health services, home health, and high-cost drugs, and an increase in the 2025 Medicare Advantage premium deficiency reserve as earnings progressed through the year.
Total membership across Centene’s diverse portfolio declined to 28 million from 28.48 million a year ago, predominantly due to a reduction in Medicaid membership from 13.14 million to 12.82 million.
Conversely, the company experienced strong membership growth in other key areas, with Marketplace enrollment increasing 33% to 5.86 million and Medicare PDP expanding 19% to 7.85 million compared to the second quarter of 2024.
