Centene announced its first quarterly loss in 13 years on Friday.
Investors lost an adjusted 16 cents a share in Q2, a huge fall from last quarter’s adjusted gain of $2.90 per share. The company also gave a new projection for earnings per share in 2025: $1.75. The Wall Street Journal reported this is far less than the previously projected $7.25+.
Centene, which focuses on government subsidized plans, pulled its revenue guidance on July 1 following a report from actuarial firm Wakely suggesting fewer people would get marketplace coverage than expected, and those who did would need more expensive care.
Centene CEO Sarah London said the company is adjusting 2026 pricing for its marketplace plans, which have nearly 5.9 million members as of the end of Q2.
“We continue to believe that we will be able to reprice the 2026 portfolio to account for a substantial majority of our marketplace membership, and our goal is to reprice 100% of the book,” London said.
Though marketplace plans have been getting most of the attention, Friday’s call also shed light on another major pressure point: the company’s 12.8 million Medicaid members.
Centene’s overall health benefits ratio—the percent of premium dollars spent on medical care—jumped from 87.5% to 93% between quarters. London said its Medicaid health benefits ratio reached “an unanticipated and unacceptable” 94.9%.
ABA drives costs. London said behavioral health was the biggest factor in Q2’s “step up” in medical costs, followed by home health and high-cost drugs. Elevance also called out increased use of behavioral health and emergency room services in its July 17 earnings call.
Navigate the healthcare industry
Healthcare Brew covers pharmaceutical developments, health startups, the latest tech, and how it impacts hospitals and providers to keep administrators and providers informed.
But one specific service in particular is hitting Centene hard.
London said applied behavioral analysis (ABA)—a therapy for people with autism and other developmental disabilities that provides positive reinforcement for desired social behaviors—was a growing contributor to the spike in care costs in multiple states, especially Florida.
Florida Medicaid previously covered ABA therapy on a fee-for-service basis, but on Feb. 1, started requiring the service be provided through Medicaid managed care plans.
Centene oversees one of the state’s nine managed care plans called the Children’s Medical Services Health Plan, which serves people under 20 on Medicaid with special healthcare needs. This program served nearly 123,000 people in 2024, according to state data.
London said this population “transitioned with inadequate rates” and Centene is seeking future and retroactive rate adjustments.
It’s not clear how much Centene will pay for ABA services, but the state expects to spend $2.6 billion on them in the current year, according to the Florida Phoenix.
London went on to allege “fraud, waste, and abuse” is spiking in behavioral health, “partly because of the fragmented provider base.”
She said the company has formed behavioral task forces to push for behavioral health rate adjustments and educate state partners on how to ensure behavioral health treatments are quality and evidence-based.