Centene posts $6.6 billion net loss despite strong Q3 performance

Centene saw a net loss of $6.6 billion in Q3 despite slightly outperforming in the quarter, with the loss linked to a $6.7 billion non-cash goodwill impairment charge recorded in the quarter.

The insurer would have posted a small profit were it not for the charge, as it has no effect on cash or operations, officials said during an earnings call this week.

The change was triggered by a combination of the company's declining stock price and anticipated cuts to federal health programs from the One Big Beautiful Bill Act. Because the charge was non-cash, it didn't involve an outflow of actual money, but was still a significant accounting adjustment.

“[In] our GAAP results, you can see a reduction or write-down of about 38% of our goodwill during Q3,” said Centene Chief Financial Officer Andrew Asher on the earnings call.

WHAT'S THE IMPACT 

Other markers of performance were positive in the quarter, with the company reporting a third quarter adjusted EPS of $0.50, ahead of its previous expectation.

“The marketplace experienced additional medical cost pressure in the last month of the quarter, but the segment still produced an on-track result for the period,” said CEO and Director Sarah London. “And our Medicare segment, including MA and PDP, performed in line with expectations we shared on our second quarter call.”

With three quarters of the year now complete, Centene is increasing its adjusted EPS forecast to at least $2, up from the previous forecast of $1.75 per share.

“We believe there may be opportunity to take some investment losses in the fourth quarter to improve the trajectory of investment income in 2026, and we are providing flexibility in the guidance to do so if the opportunity arises,” said London.

Revenues increased 18.2% in the third quarter relative to Q3 2024, and while the medical loss ratio rose slightly to 92.7%, it was generally in line with expectations, affected by steeper Affordable Care Act medical costs, lower estimated risk adjustment revenue from its exchange business, and higher Medicaid costs driven by behavioral and home health.

Centene’s total membership clocked in at about 28 million by the end of the quarter. Medicaid membership was down to 12.7 million, a 2.8% YOY decrease, and the Medicare population was down to 1 million, a 10.3% decrease. 

THE LARGER TREND 

In June, a Centene subsidiary was sued by the mother of a deceased member in Arizona for allegedly failing to provide adequate access to mental health coverage.

The lawsuit centers around the death of Ravy Coutinho, who died allegedly because Centene subsidiary Health Net of Arizona failed to adhere to a law requiring appropriate access to mental healthcare. 

This, the lawsuit claims, is a result of ghost networks – inaccurate and misleading provider directories that falsely list providers as in-network and available when they're not.

The suit accuses Centene of wrongful death, as well as negligence and negligent misrepresentation for allegedly falsely representing its provider network and failing to disclose material facts. It also accuses Centene of consumer fraud and insurance fraud, for allegedly misrepresenting coverage benefits, directory accuracy and plan adequacy – a felony under Arizona law.

The suit seeks wrongful death and punitive damages.