Shares of Centene (NYSE: CNC) have tumbled more than 20% after the healthcare giant stunned investors by withdrawing its full-year financial guidance.
The move echoed a similar shock from UnitedHealth Group (NYSE: UNH) in May, deepening concerns about rising costs and mounting pressure across the health insurance sector.
In pre-market trading on Tuesday, Centene stock dropped as much as 26% to $41.57. This followed a previous close of $56.65, where CNC shares had gained 4.3% in the prior session.
Why CNC stock is crashing
Centene, a major provider of government-sponsored health plans, sharply lowered its 2025 earnings forecast, citing a $1.8 billion shortfall. The company now expects earnings of approximately $2.75 per share, which is well below Wall Street’s consensus of $7.28.
The downgrade stems from unexpectedly high Medicaid costs, particularly in behavioral health services and the cost of expensive prescription drugs.
Additionally, Centene flagged a less favorable enrollee mix in its ACA marketplace plans, where healthier members have lowered the company’s risk-adjustment payments. Management also cautioned that further revisions could follow as more claims data becomes available.
Despite these setbacks, Centene noted strong performance in its Medicare Advantage and Medicare Prescription Drug Plan businesses.
It also reported continued SG&A expense discipline, helping sustain revenue leverage. Still, markets largely brushed off the positives, reacting instead to the steep earnings cut.
UnitedHealth woes
The situation mirrors recent turmoil at UnitedHealth, which withdrew its 2025 outlook following a major earnings miss tied to surging Medicare Advantage claims.
That miss, driven by increased outpatient care and a wave of older, sicker patients, triggered a stock drop of over 20%, its worst single-day performance in more than two decades.
Concerns about leadership changes and transparency, especially within its Optum division, further rattled investors.
Currently, the company’s leadership is aiming to boost investor confidence through several initiatives, including increased insider stock purchases.
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