Centene Reports $253 Million Loss Amid Health Insurer Cost Struggles
Health insurer Centene reported a $253 million loss in its second quarter as the provider of government-subsidized benefits struggles to manage costs of its health plan members.
The $253 million loss, or 51 cents a share, compares to a $1.1 billion in net income, or $2.16 a share, in the second quarter of last year, Centene disclosed Friday in its quarterly earnings report. Centene said premium and service revenues increased 18% to $42.5 billion from $36 billion in the year ago period.
Centene, which has 28 million health plan subscribers, is seeing rising costs among health plan members in all three government-subsidized benefits it helps manage: Medicaid, Medicare Advantage and individual coverage under the Affordable Care Act, also known as Obamacare.
"We are disappointed by our second quarter results, but we have a clear understanding of the trends that have impacted our performance and are working with urgency and focus to restore our earnings trajectory," Centene Chief Executive Officer Sarah M. London said in a statement accompanying the company's earnings report. "Despite the shifting landscape, we believe that the staying power of Medicaid, Medicare and the Individual Marketplace is as strong as it has ever been. Centene has significantly fortified our platform in service of these programs over the last three years, and as we move forward, we are focused on continuing to adapt with the market to deliver meaningful value to our members, our stakeholders and our shareholders over the long term."
Centene, which planned to reveal its 2025 profit forecast during a call with analysts Friday morning, pulled its financial guidance earlier this month, citing an independent firm's analysis showing patients it provides health benefits for were sicker and needed more healthcare services than anticipated.
On Friday, Centene said its health benefits ratio, which is the percentage of premium revenue that goes toward medical costs, jumped to 93% for the second quarter of 2025, compared to 87.6% in the comparable period in 2024.
'The (health benefits ratio) increase was primarily driven by a reduction in the company's net 2025 Marketplace risk adjustment revenue transfer estimate, increased Marketplace medical costs, higher medical costs in Medicaid driven primarily by behavioral health, home health and high-cost drugs, and an increase to the 2025 Medicare Advantage premium deficiency reserve based on the progression of earnings during the year (with higher earnings at the beginning of the year and lower at the end of the year, given cost sharing progression),' Centene said in its second quarter earnings report.
Centene's cost struggles are only the latest among a parade of health insurance companies that have struggled in the last two years to control costs of subscribers in plans subsidized by the government.
Just last week, Elevance Health, which sells Blue Cross and Blue Shield plans in 14 states, lower its profit forecast for the rest of 2025 due to rising costs in its Medicaid plans and individual policies it sells under the Affordable Care Act. In addition, Molina Healthcare lowered its earnings guidance for the rest of the year in the face of cost pressures in all three of the government-subsidized health insurance programs it helps manage: Medicaid, Medicare Advantage and individual coverage under the ACA, also known as Obamacare.
And in May, UnitedHealth suspended its financial outlook for the rest of the year and replaced its top executive as the parent of UnitedHealthcare grapples with rising healthcare costs in its Medicare Advantage business. Medicare Advantage plans contract with the federal government to provide health benefits to seniors.
Medicare Advantage plans also contributed to struggles last year for Humana and CVS Health, which elevated a new chief executive in part to help gain control of its struggling Aetna health insurance business. CVS is also exiting the individual health insurance business, leaving about 1 million Aetna members in 17 states looking for new coverage in 2026.
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