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- **Revenue Beat**: Q3 2025 adjusted EPS $0.50 vs. $1.75 prior guidance, driven by Florida CMS retroactive revenue and cost control. Full year EPS updated to $2.00+.
- **Marketplace 2026 Strategy**: Rates +30% YoY, pricing for eAPTC expiration and program integrity shifts. 2026 margin recovery assumes eAPTCs expire as current law.
- **Medicaid Stability**: 2026 HBR expected flat at 93.7%, with levers like high-cost drug carve-outs and state rate advocacy. 2027 margin normalization path with CMS Star rating improvements.
- **Risk Factors**: eAPTC policy uncertainty, 15-30% 2026 Marketplace contraction, and state work requirement implementation delays.
- **Liquidity Strength**: $357M unregulated cash, $1.4B Q3 cash flow. 2026 guidance: flat Medicaid, breakeven Medicare, and 2026 PDP positioning within risk corridors.


**【CEO Summary Section】**
- **Revenue Growth**: Q3 2025 revenue grew 15% YoY, driven by Medicaid HBR improvement (93.4%) and a $150 million Florida CMS retroactive revenue adjustment. Full year adjusted EPS updated to at least $2.00, up from $1.75.
- **Medicaid Margin Strategy**: Focused on rate advocacy, clinical policy changes (e.g., high-cost drug carve-outs), and fraud reduction. 2026 Medicaid profitability expected to remain stable at 2025 levels, with potential upside from state program reforms.
- **Marketplace 2026 Outlook**: Rates increased mid-30s YoY, pricing for eAPTC expiration and program integrity shifts. 2026 margin expansion expected, assuming eAPTCs expire as current law.
- **Medicare Progress**: Star ratings improved, with 60% of members in 3.5+ star plans. Medicare Advantage on track for breakeven in 2027, PDP performance within risk corridors.

**【CFO Financial Commentary】**
- **Q3 Financials**: GAAP net loss $13.50/share (due to $6.7B non-cash goodwill charge), adjusted EPS $0.50. Medicaid HBR 93.4%, Marketplace HBR 89.9%, Medicare HBR 94.3%.
- **Cost Control**: SG&A ratio 7.0%, down 130bps YoY. Investment income $79M, driven by unrealized gains; may harvest losses in Q4 for 2026 reinvestment.
- **2026 Guidance**: Flat Medicaid profitability, Marketplace margin recovery, Medicare breakeven. Full year 2025 cash flow $1.4B, unregulated cash $357M.

**【Q&A Highlights】**
- **eAPTC Uncertainty**: Open enrollment begins with eAPTCs as current law; potential 15-30% market contraction. 2026 rates priced for expiration, but Congress action could trigger special enrollment periods.
- **Competitor Exit Risk**: Marketplace stable with 95%+ membership repriced. No material impact from small competitor exits; focus on member retention through digital tools.
- **Work Requirements**: 2027 implementation likely; states delaying start dates due to CMS guidance delays. Minimal 2026 impact, but long-term margin risk if states tighten eligibility.
- **Florida CMS Sustainability**: Q4 2025 rates +5.5% YoY, with 30% of 2026 premium tied to 1/1/26 rate adjustments. State collaboration on ABA service definitions reducing outlier payments by 45%.
- **PDP Risk Corridors**: Q3 PDP performance within risk corridors, limiting downside. 2026 PDP positioning against subsidy benchmarks, with focus on high-cost drug management (e.g., GLP-1 carve-outs) and member engagement tools.


Centene Corporation (CNC) Q3 2025 Earnings Call Transcript

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