Centene (NYSE:CNC) Stock Volatility Aligns with Earnings Growth

Centene Corporation (NYSE:CNC), a leading healthcare enterprise, has witnessed a 3.4% decline in its stock price this week, bringing its yearly returns more in line with its earnings growth. This article explores the factors contributing to this alignment and the company's overall financial performance in 2024.

Centene's earnings growth has been driven by several primary factors. Firstly, the company's membership growth across different lines of business has significantly contributed to its revenue growth in 2024. As of March 31, 2024, Centene's total at-risk membership stood at 25,654,800, a slight decrease from the previous year but still indicative of a robust member base. The company's Traditional Medicaid and Commercial Marketplace segments have shown notable growth, with increases of 41% and 40%, respectively, compared to the first quarter of 2023.

Strategic acquisitions and divestments have also played a crucial role in Centene's earnings growth this year. The company completed the divestiture of Circle Health and Operose Health in January 2024, allowing it to focus on its core businesses and reduce complexity. Additionally, Centene's subsidiaries have secured several new contracts, such as the selection of NH Healthy Families for New Hampshire's Medicaid managed care program and the selection of Arizona Complete Health for the Arizona Long Term Care System.

Changes in healthcare policies and regulations have had a mixed impact on Centene's financial performance in 2024. While the company has benefited from increased premium and service revenues, the healthcare landscape remains dynamic, with potential challenges and opportunities on the horizon.

Cost management and operational efficiency have been key drivers of Centene's earnings growth in 2024. The company has successfully executed on capital deployment, with $1.6 billion of share repurchases in 2023. Additionally, Centene has maintained a consistent health benefits ratio of 87.7% and has reduced its SG&A expense ratio to 9.0% in 2023.

Analysts' expectations for Centene's earnings growth have played a significant role in the company's stock performance. As of April 26, 2024, Centene reported adjusted diluted EPS of $2.26, up over 7% from $2.11 in the first quarter of 2023. The company also increased its 2024 full-year adjusted diluted EPS guidance by $0.10 to greater than $6.80. These positive earnings results have contributed to the alignment of Centene's stock price volatility with its earnings growth.

In conclusion, Centene's stock price decline this week reflects a more balanced relationship between its stock performance and earnings growth. The company's membership growth, strategic acquisitions and divestments, and cost management efforts have all contributed to its strong financial performance in 2024. As Centene continues to navigate the dynamic healthcare landscape, investors should remain focused on the company's earnings growth and its ability to create shareholder value.