Centene's Financial Update: Losses Amid Revenue Growth in 2025
Centene Corporation, a prominent entity in the U.S. health insurance industry, faced a GAAP loss for 2025 despite notable revenue growth. This unexpected result stemmed primarily from significant non-cash charges, which overshadowed the company's robust operating efficiency and strong cash flow generation capabilities.
In contrast, major competitors like UnitedHealth Group, Elevance Health, and CVS Health’s Aetna remained profitable. Centene's deep involvement in Medicaid, ACA marketplace, and Medicare prescription drug plans has introduced increased earnings volatility. In 2025, Centene’s revenues surged to $194.8 billion, reflecting a 20% increase from the previous year, primarily driven by a rise in premium and service revenues across Medicaid, commercial, and Medicare sectors.
While Centene’s revenue growth surpassed the more modest increases of competitors such as UnitedHealth and CVS/Aetna, this expansion was fueled by higher-risk segments like the ACA marketplace and Medicare PDP. These areas bring considerable regulatory and earnings risks compared to more stable employer-based plans and Medicare Advantage offerings.
Financial Challenges and Goodwill Impairments
Centene reported a diluted loss per share of $13.53 for the year, largely due to a $6.7 billion goodwill impairment in the third quarter, coupled with $513 million in additional non-cash impairment charges related to the planned divestiture of its Magellan Health businesses. Unlike its national peers, who have not faced goodwill impairments of similar magnitude, Centene's financial results suffered significantly.
On an adjusted basis, Centene posted an annual diluted EPS of $2.08 despite recording an adjusted diluted loss per share of $1.19 in the fourth quarter. Nevertheless, the company achieved strong cash flow from operations, totaling $5.1 billion for 2025, in line with industry competitors who maintained robust cash flows despite challenging underwriting conditions.
Health Benefits Ratio and Membership Growth
The health benefits ratio (HBR) for Centene deteriorated to 91.9% in 2025, up from 88.3% the previous year, worsened by marketplace risk-adjustment revenue reductions and increasing marketplace medical costs. Other factors included Medicare PDP adjustments under the Inflation Reduction Act and rising Medicaid expenditures. While competitors like Humana and CVS/Aetna encountered similar hurdles, their diverse services mitigated margin impacts more effectively than Centene’s focus on government programs.
Centene's SG&A expense ratio improved to 7.4% from 8.5% in 2024 due to effective cost management and operational efficiencies; however, increased activity in marketplace segments posed challenges. At-risk membership rose to 27.6 million, with significant gains in ACA marketplace and Medicare PDP memberships, underscoring the company’s growth ambition beyond the pricing discipline seen among other carriers.
Future Outlook and Strategic Guidance
Centene’s CEO, Sarah London, expressed optimism as the company emerges from a "challenging year" with a focus on restoring marketplace profitability and stabilizing Medicaid operations. For 2026, Centene forecasts GAAP diluted EPS of over $1.98 and adjusted diluted EPS exceeding $3.00, with an HBR anticipated between 90.9% and 91.7%, alongside an SG&A ratio of 7.1% to 7.7%. This guidance suggests a positive trajectory towards margin recovery, though success will heavily depend on improvements within its government and exchange sectors.