By Christy Santhosh (Reuters) -Centene shares closed at an eight-year low on Wednesday, marking their largest single-day plunge, after the U.S. health insurer withdrew its 2025 earnings forecast due to an expected revenue slump from commercial plans under Obamacare. The withdrawal underscored the industrywide struggles with changing enrollment patterns and rising medical costs. Industry bellwether […]
Health
Centene shares plunge after health insurer withdraws forecast over Obamacare concerns
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By Christy Santhosh
(Reuters) -Centene shares closed at an eight-year low on Wednesday, marking their largest single-day plunge, after the U.S. health insurer withdrew its 2025 earnings forecast due to an expected revenue slump from commercial plans under Obamacare.
The withdrawal underscored the industrywide struggles with changing enrollment patterns and rising medical costs. Industry bellwether UnitedHealth had also suspended its annual outlook in May.
On Wednesday, Centene lost $11 billion in market value, with shares of the company closing down 40.37% at $33.78.
Shares of peers UnitedHealth and Humana closed down between 3% and 5%, while Elevance dropped 11.5%, and Molina Healthcare slumped 21.9%.
J.P.Morgan analyst Lisa Gill said it may be too early to conclude that other health insurers are exposed to a similar risk as Centene.
“However, we do see this as an indication that the relative health of the ACA Exchange risk pool has deteriorated in 2025,” Gill added.
The company pointed to slower market growth and a rise in higher-risk patients enrolled in its plans under Affordable Care Act, or Obamacare. The plans primarily serve people who don’t get insurance either through an employer, Medicaid for low-income people or Medicare for older adults.
Data from 22 of the 29 U.S. states that offer these plans suggested a $1.8 billion drop in the company’s risk adjustment revenue, equivalent to a $2.75 hit to adjusted earnings per share, the company said late on Tuesday.
It is not “out of the realm of possibility” that Centene’s earlier 2025 profit forecast of at least $7.25 per share is cut in half, said Mizuho analyst Ann Hynes.
The health insurer also reported elevated Medicaid medical costs in states like New York and Florida, and said it expects its second-quarter medical costs to be higher as a result.
Centene’s stock is trading 7.74 times its forward 12-month earnings estimates, compared with a forward price-to-earnings ratio of 16.8 for Humana and 10.62 for Elevance.
(Reporting by Christy Santhosh additional reporting by Sneha S K in Bengaluru; Editing by Leroy Leo and Mohammed Safi Shamsi)