Centene shares plummeted 40% to an 8-year low on Wednesday after the managed-care company withdrew its full-year outlook due to new data about enrollments and rising member health costs.
Why it matters: The significant drop in Centene’s stock price and the company’s revised guidance highlight the challenges faced by the managed care industry, with rising medical costs and declining enrollments impacting financial performance.
The details:
- Centene reported slower-than-anticipated growth in most of its marketplaces and significantly higher patient illness than expected.
- The company expects lower federal reimbursements and increased costs, impacting 2025 results by about $1.8 billion, or $2.75 in adjusted earnings per share.
- Since the start of 2025, Centene shares have dropped 44% as the company and its industry peers grapple with these challenges.
Investors should monitor key support levels around $27 and $17, as well as resistance levels at $42 and $74, as the stock navigates this challenging period.
What they’re saying: Jim Cramer weighed in on the developments, suggesting that the managed care industry is currently “borderline un-investable.”
- “Given this news from Centene, I think the whole managed care industry is borderline un-investable right now,” Cramer said.
- He warned that Centene’s situation could worsen as it raises premiums to adjust to the new economic environment, potentially leading to fewer enrollments and more expensive-to-treat policyholders.
Cramer also highlighted potential legislative challenges, such as a new Senate bill containing sweeping Medicaid policies that could shrink Centene’s customer base and restrict fees imposed on healthcare providers.
The bigger picture: Centene’s decision to withdraw its forecast reflects broader uncertainties faced by insurers operating in the Affordable Care Act (ACA) marketplaces as they navigate policy changes and varying levels of state support.
What’s next: As the managed care industry grapples with these challenges, investors will closely monitor the financial performance and guidance of Centene and its peers to assess the long-term impact on the sector.