How did CNC's Q1 2025 EPS forecast compare to past trends?

Centene's Q1 2025 EPS forecast reflects both challenges and opportunities. Here's a detailed analysis:

1. Elevated Flu Costs Impact: The Q1 2025 EPS forecast was initially expected to be in the mid to high $2 range, which is above the consensus of around $2.20. However, due to elevated flu costs, which were $130 million more than anticipated, particularly in Medicaid, the EPS is likely to be slightly lower. This indicates that despite positive growth expectations, external factors such as public health crises can affect profitability.
2. Long-Term Growth Outlook: Centene's strategic focus on Medicaid reform, ACA subsidy expiration, and Medicare Advantage strategies suggests a forward-looking approach to mitigate potential challenges and capitalize on opportunities. The company aims to break even in Medicare Advantage by 2027, indicating a long-term growth trajectory that could positively influence EPS in subsequent quarters.
3. Recent Analyst Estimates: Prior to the announcement of elevated flu costs, analysts at Zacks Research had reduced their Q1 2025 earnings estimates for Centene, forecasting $2.22 per share, down from $2.37. This reduction reflects a more cautious outlook due to short-term factors like flu costs. However, the consensus for full-year EPS remains at $6.86 per share, suggesting that while Q1 may be slightly affected, the overall year's earnings are still robust.
4. Historical Performance Context: Over the past five years, Centene's EPS has shown a compound annual growth rate (CAGR) of 5-year EPS CAGR. The Q1 2025 forecast, despite the flu cost impact, is expected to be above the recent past trend due to the company's strategic initiatives and overall growth projections.

In conclusion, while Centene's Q1 2025 EPS may be slightly lower due to one-time factors like elevated flu costs, the company's long-term growth strategies and historical EPS trends suggest that the EPS is expected to recover and grow in the coming quarters.