CNC

As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the health insurance providers industry, including Centene (NYSE:CNC) and its peers. Upfront premiums collected by health insurers lead to reliable revenue, but profitability ultimately depends on accurate risk assessments and the ability to control medical costs. Health insurers are also highly sensitive to regulatory changes and economic conditions such as unemployment. Going forward, the industry faces tailwinds from an aging population, increasing demand for personalized healthcare services, and advancements in data analytics to improve cost management. However, continued regulatory scrutiny on pricing practices, the potential for government-led reforms such as expanded public healthcare options, and inflation in medical costs could add volatility to margins. One big debate among investors is the long-term impact of AI and whether it will help underwriting, fraud detection, and claims processing or whether it may wade into ethical grey areas like reinforcing biases and widening disparities in medical care. The 12 health insurance providers stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 2.8% while next quarter’s revenue guidance was 1.7% below. While some health insurance providers stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3.4% since the latest earnings results. Serving nearly 1 in 15 Americans through its government healthcare programs, Centene (NYSE:CNC) is a healthcare company that manages government-sponsored health insurance programs like Medicaid and Medicare for low-income and complex-needs populations. Centene reported revenues of $53.58 billion, up 9.9% year on year. This print exceeded analysts’ expectations by 13.1%. Overall, it was an incredible quarter for the company with a beat of analysts’ EPS estimates and a solid beat of analysts’ full-year EPS guidance estimates. "Our second quarter results and improved full-year outlook represent meaningful milestones on our path to restoring profitability and increasing shareholder value," said Chief Executive Officer of Centene, Sarah M. London. Centene scored the biggest analyst estimate beat and highest full-year guidance raise of the whole group. The company lost 387,500 customers and ended up with a total of 25.89 million. Unsurprisingly, the stock is up 4.6% since reporting and currently trades at $67.03. Is now the time to buy Centene? Access our full analysis of the earnings results here, it’s free. With over 9,000 retail pharmacy locations serving as neighborhood health destinations across America, CVS Health (NYSE:CVS) operates retail pharmacies, provides pharmacy benefit management services, and offers health insurance through its Aetna subsidiary. CVS Health reported revenues of $106.1 billion, up 7.3% year on year, outperforming analysts’ expectations by 6.7%. The business had an incredible quarter with a beat of analysts’ EPS estimates and a solid beat of analysts’ full-year EPS guidance estimates. Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 6.7% since reporting. It currently trades at $97.38. Is now the time to buy CVS Health? Access our full analysis of the earnings results here, it’s free. Pioneering a data-driven approach to family building that has achieved an industry-leading patient satisfaction score of +80, Progyny (NASDAQ:PGNY) provides comprehensive fertility and family building benefits solutions to employers, helping employees access quality fertility treatments and support services. Progyny reported revenues of $350.5 million, up 5.3% year on year, exceeding analysts’ expectations by 0.6%. Still, it was a slower quarter as it posted EBITDA guidance for next quarter missing analysts’ expectations significantly and full-year revenue guidance slightly missing analysts’ expectations. Progyny delivered the weakest guidance update among its peers. As expected, the stock is down 14.1% since the results and currently trades at $25.94. Read our full analysis of Progyny’s results here. Founded in 2013 with a mission to transform healthcare for seniors, Alignment Healthcare (NASDAQ:ALHC) provides Medicare Advantage health plans for seniors with features like concierge services, transportation benefits, and technology-driven care coordination. Alignment Healthcare reported revenues of $1.34 billion, up 31.6% year on year. This print surpassed analysts’ expectations by 2%. Taking a step back, it was a satisfactory quarter as it also produced a beat of analysts’ EPS estimates but EBITDA guidance for next quarter missing analysts’ expectations significantly. Alignment Healthcare scored the highest guidance raise in the group. The company added 9,300 customers to reach a total of 294,100. The stock is down 27.2% since reporting and currently trades at $13.54. Read our full, actionable report on Alignment Healthcare here, it’s free. With over 80% of its revenue derived from federal government contracts, Humana (NYSE:HUM) provides health insurance plans and healthcare services to approximately 17 million members, with a strong focus on Medicare Advantage plans for seniors. Humana reported revenues of $40.87 billion, up 26.2% year on year. This number beat analysts’ expectations by 0.6%. Overall, it was a satisfactory quarter as it also put up a beat of analysts’ EPS estimates. The company added 200,800 customers to reach a total of 17.91 million. The stock is up 5% since reporting and currently trades at $407.96. Read our full, actionable report on Humana here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

Centene Corporation CNC is rebuilding its Marketplace business after a difficult 2025, with better pricing, moderating medical costs and improved underwriting dynamics supporting a sharp improvement in profitability. The recovery is becoming an important contributor to Centene’s broader margin-restoration strategy. The Marketplace health benefits ratio improved to 79.2% in the second quarter of 2026 from 90.6% a year ago. The improvement reflected better medical cost trends and risk-adjustment dynamics. Centene also benefited from a $180 million favorable 2025 CMS risk-adjustment reconciliation during the quarter. Importantly, the improvement is not dependent solely on membership expansion. Marketplace membership stood at around 3.5 million at the end of June 2026, down substantially from 5.9 million a year ago. However, the business is now expected to generate a 4.5%-5% pretax margin in 2026, compared with the previous 3% outlook. This suggests that tighter pricing and a more favorable risk profile are helping Centene prioritize profitability over volume. The key challenge now is sustaining those gains as eligibility reviews could cause further membership attrition in the second half of 2026. Centene’s 6.9% adjusted SG&A expense ratio in the second quarter of 2026, which improved from 7.1% a year ago, and increased use of technology, automation and AI could provide another layer of support. If these trends hold, the Marketplace business could provide a more dependable earnings contribution and support Centene’s overall profit growth over time. Some of CNC’s major competitors in the healthcare service provider space are UnitedHealth Group Incorporated UNH and Elevance Health, Inc. ELV. UnitedHealth is taking a more selective approach to its individual exchange business, with pricing and benefit adjustments aimed at better aligning premiums with medical costs. UNH’s medical care ratio improved to 86.7% in the second quarter of 2026 from 89.4% a year ago. Elevance is also working to improve Individual ACA profitability through tighter pricing and plan repositioning. ELV is also investing in clinical oversight, payment integrity and value-based care to improve cost management and support more consistent margins. Shares of CNC have surged 56.4% in the year-to-date period compared with the industry’s rise of 20%. Image Source: Zacks Investment Research From a valuation standpoint, Centene trades at a forward price-to-earnings ratio of 12.39, below the industry average of 15.83. CNC carries a Value Score of A. Image Source: Zacks Investment Research The Zacks Consensus Estimate for Centene’s 2026 earnings is pegged at $4.89 per share, implying 135.1% growth from the year-ago period. Image Source: Zacks Investment Research CNC stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Centene Corporation (CNC) : Free Stock Analysis Report UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report Elevance Health, Inc. (ELV) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

A month has gone by since the last earnings report for Centene (CNC). Shares have added about 5.9% in that time frame, outperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Centene due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. Centene Q2 Earnings Beat Estimates on Increasing Premiums Centene reported second-quarter 2026 adjusted earnings per share (EPS) of $2.51, which surpassed the Zacks Consensus Estimate of 89 cents. Moreover, the bottom line climbed from a loss of 16 cents per share a year ago. Revenues totaled $53.6 billion, which rose 9.9% year over year. The top line beat the consensus mark by 12.7%. The strong quarterly results benefited from strong premium and services revenues in Medicaid and Medicare businesses, fueled by increased premium yield, expanding membership in the Prescription Drug Plan (PDP) business and rate hikes in Marketplace and Medicaid businesses. However, the upside was partly offset by a decline in total membership and an increase in medical costs. Revenues from Medicare advanced 17% year over year to $11.1 billion, and Medicaid revenues of $22.8 billion rose 5% in the quarter under review. Meanwhile, commercial revenues came in at $9.4 billion, down 7% year over year. Centene's premium of $43.6 billion grew 4.4% year over year on the back of higher premiums yield, increased membership in the PDP business and strength in the Medicaid and Marketplace rate hikes. The metric beat the Zacks Consensus Estimate of $42.5 billion. Service revenues rose 9.1% year over year to $793 million in the second quarter and surpassed the consensus mark of $723 million. Investment and other income of $435 million improved 17.3% year over year and topped the Zacks Consensus Estimate of $359 million. Total membership was 25.9 million as of June 30, 2026, which decreased 7.6% year over year due to membership declines in the Medicaid, Marketplace and Medicare businesses. However, the metric marginally beat the consensus mark. Centene’s health benefits ratio improved 340 basis points year over year to 89.6% in the quarter under review. Operating expenses totaled $52.4 billion, which increased 6.5% year over year due to higher medical costs, selling, general and administrative expenses, cost of services and premium tax expense. Medical costs escalated 0.6% year over year. Adjusted net earnings were recorded at $1.2 billion against the year-ago loss of $79 million. Centene exited the second quarter with cash and cash equivalents of $24.2 billion, which rose 35% from the 2025-end level. Total assets of $83 billion grew 8.2% from the figure at 2025-end. Long-term debt amounted to $16 billion, down 7.6% from the figure as of Dec. 31, 2025. The current portion of long-term debt totaled $75 million. Total stockholders’ equity of $22.6 billion increased 13% from the 2025-end figure. Centene generated $8 billion of net cash from operations in the first half of 2026, which increased from the prior-year comparable period’s $3.3 billion. Management now expects premium and service revenues within the band of $173-$177 billion for 2026, up from the previous guidance range of $171-$175 billion. The midpoint of which indicates growth of 0.2% from the 2025 reported figure. Revenues are now estimated between $193.5 billion and $197.5 billion, up from the previously projected band of $187.5 billion-$191.5 billion, the midpoint of which implies a 0.4% increase from the 2025 figure. Adjusted EPS is now expected to be greater than $4.80, higher than the previously projected figure of $3.40, which indicates a surge of more than 130.8% from the 2025 figure. GAAP EPS is now forecasted to remain greater than $3.11. Health benefits ratio is now estimated to be in the band of 90.5-91.3% for 2026, while the adjusted SG&A expense ratio is now anticipated to be 6.9-7.5%. The adjusted effective tax rate is now expected to be in the range of 25.5-26.5%. Shares outstanding are now projected to be between 497 million and 500 million. Since the earnings release, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted 22.57% due to these changes. Currently, Centene has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock has a score of A on the value side, putting it in the top 20% for this investment strategy. Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Centene has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months. Centene is part of the Zacks Medical - HMOs industry. Over the past month, Molina (MOH), a stock from the same industry, has gained 1.7%. The company reported its results for the quarter ended June 2026 more than a month ago. Molina reported revenues of $10.87 billion in the last reported quarter, representing a year-over-year change of -4.8%. EPS of $1.51 for the same period compares with $5.48 a year ago. For the current quarter, Molina is expected to post earnings of $0.73 per share, indicating a change of -60.3% from the year-ago quarter. The Zacks Consensus Estimate has changed -17.4% over the last 30 days. Molina has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Centene Corporation (CNC) : Free Stock Analysis Report Molina Healthcare, Inc (MOH) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

It is not surprising that before an earnings season, every investor looks for stocks that can beat market expectations. This is because investors always try to position themselves ahead of time and look to tap stocks that are high-quality in nature. In this regard, we ran a screener that yielded stocks Centene CNC, Tenet Healthcare THC, Fortinet FTNT, Unity Software U and The Goldman Sachs Group GS as the likely winners on the earnings beat potential. Historically, stocks of companies with solid quarterly earnings (on a nominal basis) tank if they miss or merely meet market expectations. After all, a 20% earnings rise (though apparently looks good) doesn’t tell you if earnings growth has been exhibiting a decelerating trend. Also, seasonal fluctuations sometimes come into play. If a company’s Q1 is seasonally weak and Q4 strong, then it is likely to report a sequential earnings decline. In such cases, growth rates are misleading while judging the true health of a company. On the other hand, after much brainstorming and analysis of companies’ financials and initiatives, Wall Street analysts project earnings of companies. They in fact club their insights and a company’s guidance when deriving an earnings estimate. Thus, outperforming that estimate is almost equivalent to beating the company’s own expectation as well as the market perception. And if the margin of earnings surprise is big, it typically drives the stock higher right after the release. Thus, more than anything else, an earnings surprise can push a stock higher. Now, finding stocks that have the potential to beat on the bottom line may be investors’ dream but not an easy job. One way to do this is to look at the earnings surprise history of the company. An impressive track record in this regard generally acts as a catalyst in sending a stock higher. It indicates the company’s ability to surpass estimates. And investors generally believe that the company will apply the same secret sauce to execute yet another earnings beat in its next release. In order to shortlist stocks that are likely to come up with an earnings surprise, we chose the following as our primary screening parameters. Last EPS Surprise greater than or equal to 10%: Stocks delivering positive surprise in the last quarter tend to surprise again. Average EPS Surprise in the last four quarters greater than 20%: We lifted the bar for outperformance slightly higher by setting the average earnings surprise for the last four quarters at 20%. Average EPS Surprise in the last two quarters greater than 20%: This points to a more consistent surprise history and makes the case for another surprise even stronger. In addition, we place a few other criteria that push up the chance of a positive surprise. Zacks Rank less than or equal to 2: Only companies with a Zacks Rank #1 (Strong Buy) or 2 (Buy) rating can get through. Earnings ESP greater than zero: A stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for an earnings beat to happen, as per our proven model. In order to zero in on those that have long-term growth potential and high trading liquidity, we have added the following parameters too: Next 3–5 Years Estimated EPS Growth (Per Year) greater than 10%: Solid expected earnings growth exhibits the stock’s long-term growth prospects. Average 20-day Volume greater than 100,000: High trading volume implies that the stocks have adequate liquidity. A handful of criteria has narrowed down the universe from over 7,700 stocks to only 16. Here are five out of 16 stocks: Centene: The Zacks Rank #1 company has established itself as a national leader in healthcare services. You can see the complete list of today’s Zacks #1 Rank stocks here. The average earnings surprise of CNC for the past four quarters is 151.28%. Tenet Healthcare: The Zacks Rank #1 company is an investor-owned healthcare services company, which owns and operates general hospitals and related healthcare facilities for urban and rural communities in numerous states, and has offices in California and Florida. The average earnings surprise of THC for the past four quarters is 22.70%. Fortinet:The Zacks Rank #1 company is a leader in cybersecurity, driving the convergence of networking and security. The average earnings surprise of FTNT for the past four quarters is 20.34%. Unity Software: The company provides a platform to develop, deploy and grow games and interactive 3D experiences across mobile, PC, console and extended reality. The stock has a Zacks Rank #2. The average earnings surprise of U for the past four quarters is 12.54%. The Goldman Sachs Group: It is a leading global financial holding company providing investment banking, securities, investment management, and consumer banking services to a diversified client base. The stock has a Zacks Rank #1. The average earnings surprise of GS for the past four quarters is 20.42%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report Tenet Healthcare Corporation (THC) : Free Stock Analysis Report Fortinet, Inc. (FTNT) : Free Stock Analysis Report Centene Corporation (CNC) : Free Stock Analysis Report Unity Software Inc. (U) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Hotchkis & Wiley, an investment management company, released its second-quarter 2026 investor letter for the “Hotchkis & Wiley Mid-Cap Value Fund.” A copy of the letter can be downloaded here. Equity markets posted strong returns in the second quarter of 2026, with the Russell Midcap Index rising 13.8% and the Russell Midcap Value Index returning 13.4%, despite concerns about inflation, a hawkish Federal Reserve, and rising oil prices due to the Iran conflict. Narrow market leadership was evident, particularly semiconductor stocks and other stocks in the AI sector, which saw returns exceeding 100%. The Firm favors quality businesses with attractive valuations, believing that fears regarding AI's impact are overstated. The Hotchkis & Wiley Mid-Cap Value Fund lagged the Russell Midcap Value Index, achieving a 4.74% return in the second quarter, primarily due to underperformance in technology and energy sectors, while stock selection in healthcare contributed positively. In addition, please check the Fund’s top five holdings to know its best picks in 2026. In its Q2 2026 investor letter, Hotchkis & Wiley Mid-Cap Value Fund highlighted Centene Corporation (NYSE:CNC) as a leading performance contributor. Centene Corporation (NYSE:CNC) is a US-based healthcare enterprise that offers services to underinsured and uninsured families and commercial organizations. On August 3, 2026, Centene Corporation (NYSE:CNC) closed at $63.76 per share, reflecting a market capitalization of $31.49 billion. Centene Corporation (NYSE:CNC) posted a one-month return of -3.57%, while its shares gained 146.27% over the past 52 weeks. Hotchkis & Wiley Mid-Cap Value Fund stated the following regarding Centene Corporation (NYSE:CNC) in its Q2 2026 investor letter: Centene Corporation (NYSE:CNC) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 72 hedge fund portfolios held Centene Corporation (NYSE:CNC) at the end of the first quarter, compared to 78 in the previous quarter. While we acknowledge the potential of Centene Corporation (NYSE:CNC) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. In another article, we covered Centene Corporation (NYSE:CNC) and shared the list of firms beating earnings expectations. Oakmark Select Fund noted in its Q2 2026 investor letter that Centene Corporation (NYSE:CNC) rallied during the quarter on strong results, reinforcing its position as a leader in government‑managed care. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors. READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years. Disclosure: None. This article is originally published at Insider Monkey.

Mettler-Toledo International MTD reported second-quarter 2026 adjusted earnings of $11.46 per share, which beat the Zacks Consensus Estimate of $10.78 by 6.31%. Adjusted earnings increased 14% year over year.Net sales of $1.03 billion increased 4% year over year but missed the Zacks Consensus Estimate of $1.03 billion by 0.46%. Better-than-expected organic sales growth, including strong demand in China and emerging markets, supported the quarter. On a local-currency basis, MTD's sales increased 3% in the Americas, 4% in Europe and 10% in Asia/Rest of World in the quarter. Excluding acquisitions and one-time tariff refunds to customers, organic local-currency sales increased 4%, including 1% growth in the Americas and 9% growth in Asia/Rest of World.By geography, Americas sales declined to $402 million from $414 million, accounting for 39% of total revenues. Europe sales increased to $294 million from $274 million and represented 29% of revenues, while Asia/Rest of World sales rose to $331 million from $295 million, contributing 32% of total revenues. Mettler-Toledo International, Inc. price-consensus-eps-surprise-chart | Mettler-Toledo International, Inc. Quote Laboratory sales increased to $553 million from $538 million in the prior-year quarter. Industrial sales improved to $418 million from $395 million, while Food Retail revenues increased to $57 million from $51 million.On an organic local-currency basis, Laboratory sales increased 4%, Industrial sales rose 3%, including 4% growth in Core Industrial and 1% growth in Product Inspection, while Food Retail sales climbed 11%. Service revenues increased 9%, or 7% organically.Management noted that China delivered 9% growth, supported by Industrial demand, while emerging markets outside China also posted high-single-digit growth. Improved conditions in biopharma, automation, semiconductor, batteries and food manufacturing markets also aided performance. Adjusted gross profit increased to $625.7 million from $579.9 million. Adjusted gross margin expanded 30 basis points year over year to 59.3%, benefiting from pricing, lower tariff rates, productivity initiatives and volume growth, partly offset by higher transportation costs.Research and development expenses increased to $53 million from $49.3 million. Selling, general and administrative expenses rose to $263.3 million from $247.3 million.Adjusted operating profit increased 9% year over year to $309.3 million. Adjusted operating margin expanded 50 basis points to 29.3%. Reported diluted earnings per share were $11.55 compared with $9.76 in the prior-year quarter. As of June 30, 2026, cash and cash equivalents were $51.4 million compared with $60.5 million as of March 31, 2026. Long-term debt declined sequentially to $2.04 billion from $2.16 billion.Year-to-date adjusted free cash flow totaled $367 million. Management noted that free cash flow was affected by the timing of tax payments, which were $55 million higher than the prior year.The company also increased its planned share repurchases for 2026 to $875 million from the annualized first-half pace of $825 million. Management cautioned that market conditions remain uncertain and could change quickly, but guided for third-quarter 2026 local-currency sales growth of approximately 4%. Adjusted earnings for the third quarter are forecast to be in the range of $12-$12.15 per share, implying 8-9% growth year over year.For 2026, MTD raised its local-currency sales growth outlook to approximately 4-5% from the prior view of approximately 4%, and raised adjusted earnings guidance to $47.15-$47.50 per share, representing growth of 10-11%, from the prior outlook of $46.30-$46.95. MTD currently carries a Zacks Rank #2 (Buy).Some other top-ranked stocks in the broader Zacks Medical sector are Progyny PGNY, Centene CNC and GETINGE GNGBY, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Shares of Progyny have surged 21.2% year to date. The Zacks Consensus Estimate for Progyny’s 2026 earnings is pegged at $2.04 per share, up by 3.55% over the past 30 days, indicating an increase of 7.94% year over year.Shares of Centene have jumped 51.2% year to date. The Zacks Consensus Estimate for Centene’s 2026 earnings is pegged at $4.71 per share, up 36.13% over the past 30 days, indicating a rise of 126.44% year over year.GETINGE shares have appreciated 5.2% year to date. The Zacks Consensus Estimate for GETINGE’s 2026 earnings is pegged at $1.38 per share, up by 9.52% over the past 30 days, indicating an increase of 20% year over year. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Mettler-Toledo International, Inc. (MTD) : Free Stock Analysis Report Centene Corporation (CNC) : Free Stock Analysis Report GETINGE (GNGBY) : Free Stock Analysis Report Progyny, Inc. (PGNY) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St's investing ideas for FREE. Centene (CNC) is back in the spotlight after its second quarter 2026 update, which combined strong earnings and a higher full year profit outlook with a sharp year over year membership decline. See our latest analysis for Centene. At a share price of US$61.82, Centene has given investors a 47.97% year to date share price return and a very large 139.71% 1 year total shareholder return, even though the share price has recently pulled back after the Q2 earnings and guidance update. If Centene's recent move has you thinking about where else strong execution and changing expectations might be priced in, it could be worth scanning for other healthcare-focused AI opportunities using this stock screener: 41 healthcare AI stocks Centene has already delivered a very strong 1 year return, yet the stock pulled back after Q2 even as earnings and guidance moved higher. Is the recent surge already reflecting most of the good news, or does the current valuation still leave meaningful upside? Centene's most followed narrative points to a fair value of about $63.78, slightly above the last close of $61.82, and leans on a detailed earnings and margin recovery story. Read the complete narrative. Want to see what sits behind that fair value for Centene? The narrative leans heavily on a multi year shift in margins, revenue mix, and earnings power, all tied to specific contract wins and segment level targets that are laid out in full for readers willing to go deeper. Result: Fair Value of $63.78 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, you should also factor in that unexpected medical cost spikes and uncertainty around Medicaid rate adjustments could quickly undermine Centene's margin recovery story. Find out about the key risks to this Centene narrative. This mix of optimism and caution around Centene makes sense, although you should always pressure test it against your own research. If you want a clearer view of both sides of the story, start with the 3 key rewards and 1 important warning sign. If Centene has sharpened your interest in what strong execution can look like, do not stop here. Use focused screeners to spot other opportunities before the crowd. Target stability first and see which companies pass strict quality filters by running the solid balance sheet and fundamentals stocks screener (48 results). Hunt for mispriced opportunities and compare Centene with companies that screen as 49 high quality undervalued stocks. Zero in on overlooked potential and see what stands out in the screener containing 21 high quality undiscovered gems. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include CNC. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

The Cigna Group CI reported second-quarter 2026 adjusted earnings per share (EPS) of $7.78, which beat the Zacks Consensus Estimate by 2.6%. The bottom line improved 8.1% year over year. Adjusted revenues grew 6.6% year over year to $71.56 billion. The top line beat the consensus mark by 0.2%. The strong quarterly results were primarily driven by robust growth in the Cigna Healthcare segment, while growth in the Middle and Select markets and higher specialty volumes supported revenues. However, the upside was partly offset by higher pharmacy and other service costs. Cigna Group price-consensus-eps-surprise-chart | Cigna Group Quote Cigna’s medical customer base came in at 18.4 million as of June 30, 2026, which inched up 2% year over year and surpassed the Zacks Consensus Estimate of 18.3 million. The metric benefited from well-performing Middle and Select markets, partially offset by low membership in National Accounts. Total benefits and expenses of $69 billion increased 6% year over year in the reported quarter due to a rise in pharmacy and other service costs. The adjusted SG&A expense ratio improved 30 basis points year over year to 4.6%, primarily driven by operating efficiencies. Adjusted income from operations totaled $2.1 billion, which advanced 6.4% year over year, primarily driven by higher contributions from Cigna Healthcare. Evernorth Health Services: The unit's adjusted revenues increased 6.3% year over year to $61.5 billion in the second quarter, primarily driven by drug mix in the Pharmacy Benefit Services business and specialty volume growth in the Specialty and Care Services business. The metric, however, missed the Zacks Consensus Estimate of $61.6 billion. Adjusted operating income, on a pre-tax basis, came in at $1.7 billion, down 2% year over year and marginally ahead of the Zacks Consensus Estimate of $1.6 billion. The pre-tax margin contracted 20 basis points year over year to 2.7%. Cigna Healthcare: The segment recorded adjusted revenues of $11.7 billion, which increased 9.1% year over year in the second quarter. The growth was driven by premium rate increases to offset higher medical costs. Pre-tax adjusted operating income improved 17% year over year to $1.3 billion, surpassing the Zacks Consensus Estimate of $1.2 billion. The increase primarily reflected improved margins in the U.S. Employer business. MCR deteriorated 130 basis points year over year to 84.5%, primarily due to higher prior-year risk adjustment benefits recognized in the second quarter of 2025. Cigna exited the second quarter with cash and cash equivalents of $6.3 billion, which fell 18% from the 2025-end level. Total assets of $157.1 billion slid 0.5% from the 2025-end level. Long-term debt amounted to $29.1 billion, down 5.8% from the figure as of Dec. 31, 2025. Short-term debt totaled $2.8 billion. Total equity of $42.9 billion inched up 2.5% from the 2025-end level. Net cash provided by operating activities improved to $710 million for the first six months of 2026 from $34 million a year earlier. Adjusted EPS is now expected to be at least $30.45 for 2026, up from the prior guidance of at least $30.35. The revised outlook implies at least 2.0% growth from the 2025 reported figure. The MCR is reiterated to be in the band of 83.7-84.7%. Adjusted operating income, on a pre-tax basis, for the Evernorth Health Services segment is expected to continue at a minimum of $6.9 billion. The same metric for the Cigna Healthcare unit is presently forecasted to be a minimum of $4.550 billion, whereas the earlier projection called for it to be at least $4.525 billion. Earlier, adjusted revenues were forecasted to be around $280 billion, which indicates an improvement of around 2% from the 2025 figure. Adjusted operating income was anticipated to be a minimum of $7.95 billion. Operating cash flow was forecasted at around $9 billion. Capital expenditures were expected to be around $1.3 billion. Cigna expected total medical customers to be roughly 18.1 million. The adjusted SG&A expense ratio was estimated at around 5%. Cigna currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Here are some stocks from the broader Medical space that have also reported their quarterly results: Humana Inc. HUM, Acadia Healthcare Company, Inc. ACHC and Centene Corporation CNC. Here's how they have performed: Humana reported second-quarter 2026 adjusted earnings of $7.61 per share, which beat the Zacks Consensus Estimate by 22.4%. The bottom line rose 21.4% year over year. Adjusted revenues improved 26.2% year over year to $40.9 billion. The top line surpassed the consensus mark by 0.6%. Humana’s quarterly results benefited from premium gains and a robust performance from the CenterWell segment, which saw a revenue jump supported by its primary care business. A rise in overall medical membership also contributed to the upside. However, the upside was partly offset by escalating operating expenses and a deteriorating benefit ratio. Acadia Healthcare reported adjusted second-quarter earnings of 38 cents per share, which beat the Zacks Consensus Estimate by 15.2%. However, the bottom line declined 54% year over year. Acadia Healthcare’s top line declined 0.4% year over year to $865.8 million and surpassed the Zacks Consensus Estimate by 2.5%. The quarterly results reflected strong patient demand, as admissions increased and same-facility patient days improved. Residential Treatment Facilities also delivered double-digit revenue growth. However, lower revenue per patient day, a shorter average length of stay and higher operating expenses weighed on profitability. Centene reported second-quarter 2026 adjusted earnings per share of $2.51, which surpassed the Zacks Consensus Estimate of 89 cents. Moreover, the bottom line climbed from a loss of 16 cents per share a year ago. Revenues totaled $53.6 billion, which rose 9.9% year over year. The top line beat the consensus mark by 12.7%. Centene’s quarterly results benefited from strong premium and services revenues in Medicaid and Medicare businesses, fueled by increased premium yield, expanding membership in the Prescription Drug Plan business and rate hikes in Marketplace and Medicaid businesses. However, the upside was partly offset by a decline in total membership and an increase in medical costs. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cigna Group (CI) : Free Stock Analysis Report Humana Inc. (HUM) : Free Stock Analysis Report Centene Corporation (CNC) : Free Stock Analysis Report Acadia Healthcare Company, Inc. (ACHC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Tuesday, July 28, 2026 at 8:30 a.m. ET Senior Vice President, Investor Relations - Jennifer Gilligan Chief Executive Officer - Sarah London Executive Vice President and Chief Financial Officer - Andrew Asher Operator: Good day, and welcome to the Centene Corporation 2026 Second Quarter Conference Call. [Operator Instructions] Please note, today's event is being recorded. I'd now like to turn the conference over to Jennifer Gilligan, Senior Vice President, Investor Relations. Please go ahead. Jennifer Gilligan: Thank you, Rocco, and good morning, everyone. Thank you for joining us on our second quarter 2026 earnings results conference call. Sarah London, Chief Executive Officer; and Drew Asher, Executive Vice President and Chief Financial Officer of Centene, will host this morning's call, which also can be accessed through our website at centene.com. Any remarks that Centene may make about future expectations, plans and prospects constitute forward-looking statements for the purpose of the safe harbor provision under the Private Securities Litigation Reform Act of 1995. Specifically, our commentary on our full year 2026 outlook, including the drivers of such outlook, are forward-looking statements. Actual results may differ materially from those indicated by those forward-looking statements as a result of various important factors, including those discussed in our second quarter 2026 press release and other public SEC filings, which are available on the company's website under the Investors section. Centene anticipates that subsequent events and developments may cause its estimates to change. While the company may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. The call will also refer to certain non-GAAP measures. A reconciliation of these measures with the most directly comparable GAAP measures can be found in our second quarter 2026 press release. With that, I would like to turn the call over to our CEO, Sarah London. Sarah? Sarah London: Thanks, Jen, and thanks, everyone, for joining us on the call. This morning, we will review our second quarter results and provide details around our improved full year 2026 financial guidance. Q2 adjusted diluted earnings per share of $2.51 exceeded our previous expectations, with outperformance driven by the underlying business strength and a more fully informed view of our marketplace risk adjustment positioning. Thanks to strong first half results, we now expect full year 2026 adjusted diluted earnings per share of greater than $4.80, up from our prior outlook of greater than $3.40 provided during our April update. We are excited by the positive momentum we have built and remain focused on our goal of delivering industry-leading health outcomes with an industry-leading cost structure. Now let's talk about the business. Starting with Medicaid. Medicaid results were in line with our expectations for the quarter, driven by disciplined execution against our operational and financial goals. We ended the quarter with just over 12 million members, a slightly larger step-down in membership than anticipated. While some of this was driven by state-specific program changes, we also saw an uptick in activity around enrollment and eligibility in certain states. As we look at core medical cost drivers in the quarter, the big rocks remained consistent with past quarters, with behavioral health, home health and [ high cost ] among the top contributors. We did see a slight uptick in acuity from the expansion population directly consistent with the increased attrition in the quarter but we were able to absorb that given the strength of our execution across quality and affordability initiatives. Rates remain a critical lever and continue to develop positively, with 7/1 rates coming in better than expected. This improves our full year 2026 composite rate forecast from roughly 4.5% to roughly 5%. The tone and tenor of our state rate conversations remains constructive and rate [ event ] continues to be supported by the incorporation of more current data. As you think about our guidance, we are now expecting lower year-end membership than our previous outlook, with the increased enrollment and eligibility activity as we move through the back half of the year. As is typical, we assume that additional attrition will impact acuity and have set guidance to account for that possibility in the second half of 2026. As you would imagine, we are heavily engaged with our state partners as they prepare for OB3 implementation, and we are working hard to minimize unnecessary membership disruption. This includes investing in near real-time data exchange with states to form ex parte member eligibility, exemption validation and member outreach. We are also activating a nationwide playbook, building on the work programs we already have in place across our states to help members identify community engagement, education and workforce opportunities. And we are engaging with state actuaries about the best approach to OB3-related rate adjustments. Given recent cost pressures in the business, we haven't talked as much about quality, but it is worth sharing that, behind the scenes, we have been systematically driving improved quality performance across our Medicaid markets. Over the last 3 cycles, through expanded data capture, scalable member engagement programs and targeted provider incentives, we have delivered improvement in more than 90% of our core clinical measures, ensuring Centene members receive more complete and better quality care each year. And in this cycle, we are targeting more than 75% of our Medicaid health plans NCQA quality ratings to be at or better than 3.5 stars. Ultimately, the value of Medicaid managed care is ensuring high-quality outcomes at lower costs, and we are building tangible momentum around both. Turning to Medicare. Our Medicare segment once again delivered outperformance in Q2, with continued strength in both our PDP and our Medicare Advantage businesses. PDP benefited in the quarter from the true-up of certain prior-period items, but the results also reflect fundamental favorability. While we continue to see elevated levels of specialty drug trends, they remain lower than our original expectations through the first half of the year. As a result, we now expect PDP to deliver a pretax margin greater than 3% in 2026 versus the 2% we guided to at the beginning of the year. Our PDP team once again took a thoughtful approach to the 2027 bid process, prioritizing sustainable profitability. As this business hits post IRA stability, we look forward to delivering consistent margin on what is now roughly $25 billion of premium revenue and successfully leveraging our greater than $60 billion in pharmacy spend through our partnership with ESI to deliver industry-leading cost structure to our state customers and members across lines of business. Solid execution from the Medicare Advantage team led to outperformance once again this quarter. Medical costs remain elevated when compared to historical averages, but year-to-date trend is running modestly favorable to expectations. Key medical cost drivers were stable quarter-over-quarter. D-SNP members now represent approximately 40% of our Medicare Advantage portfolio, and that cohort continues to perform favorably. Looking ahead to 2027, we plan to further simplify our Medicare Advantage footprint, focusing our benefits increasingly on the duals population where our deep expertise in Medicaid allows us to deliver a local, integrated and differentiated experience to these members. On the STARS front, we are once again seeing year-over-year improvement in raw performance, supported by the full range of quality initiatives we have deployed over the last 3 years. That said, we, along with the industry, are facing headwinds from artificial [ cut point ] increases and overall STARS program methodology changes, not to mention uncertainty around the future of the program overall. As you'll recall, the company took steps coming into 2025 to derisk STARS's results more broadly as we considered our Medicare Advantage strategy of focusing on lower income complex populations in the face of a STARS program that fails to effectively risk-adjust for these members. Thanks to these actions, including portfolio optimization, strong operational execution and SG&A management and strategic duals growth, we are seeing accelerated margin improvement, and we are confident in our plan to deliver breakeven or better results in 2027 and margin improvement thereafter. Overall, we are pleased with the momentum building in our Medicare segment thus far in 2026 and look forward to leveraging that strength as we prepare for 2027. Last, but certainly not least, Marketplace delivered excellent Q2 results after more than a year's worth of focused execution to achieve meaningful margin recovery in that business. Recall that we moderated our pretax margin expectations for the Marketplace at the end of Q1. Our 3% pretax guidance at the time accounted for elevated utilization patterns we observed in Q1, largely driven by our Silver tier members, and did not fully reflect the corresponding risk adjustment offset we anticipated given the level of observed membership acuity, a posture that we felt was prudent in advance of receiving the first full weekly report, which includes the first view of overall market acuity. Rolling those assumptions forward to Q2, first, we continued to see higher utilization patterns among our Silver tier members, but these moderated over the quarter compared to what we assumed in our guidance. At the same time, a thorough analysis of the highly anticipated June Wakely report not only confirmed our hypothesis about the relative acuity of our population, but has also allowed us to revise our view of full year performance for the Marketplace business. And finally, we received favorable development on our final 2025 CMS risk adjustment reconciliation to the tune of $180 million in the quarter. In light of the aggregate first half results, we now expect to deliver a pretax margin between 4.5% and 5% for the Marketplace business for the full year, an improvement compared to our previous guidance as well as our initial guidance issued in February. While the year is not finished, it feels important to pause and reflect on the strength of these results, and I would be remiss if I did not take this opportunity to very publicly acknowledge and thank our Marketplace team for the exceptional leadership and discipline they demonstrated over the last year to get us to this point. They saw and called a market-wide issue first. They leveraged more than a decade of experience and the breadth and depth of data that comes with operating in 29 markets to comprehensively diagnose the issue at hand, quickly translate that into actionable insights, execute in a very tight window to appropriately reprice our business for 2026, while correctly and conservatively planning for how 2025 would ultimately unfold. I am humbled by their expertise and grateful to have them guiding this business through an unprecedented year of turbulence and uncertainty. Looking to the rest of 2026, we are jumping off a Q2 membership of roughly 3.5 million members, slightly better than previous expectations, with metal tier distribution, age and other key demographics largely unchanged from our Q1 results. We continue to expect membership to decline as we move through the rest of the year, consistent with the return to more regular seasonality, and our guidance has accounted for membership impacts related to various ongoing CMS program integrity efforts. As a leader in this market, we will continue to push for and promote transparency and policy stability as we believe that, regardless of the origin story you give it, the individual [ market is ] a compelling future-proof platform that can deliver access to high-quality health care for hard-working Americans and small business owners and increasingly serve as a flexible, portable and affordable alternative to employer-provided insurance options. Overall, we are very pleased to deliver a quarter of solid performance and year-over-year progress in each of our business lines. While this dynamic health care operating landscape has presented challenges, it has also provided important opportunities at the enterprise level to enhance the way we do business. And we are taking advantage of this moment to lean in and transform our organization to better serve the needs of our members, state partners and stakeholders. This includes thoughtfully reviewing our portfolio to position each business for long-term earnings growth, maximizing our [ temp ] bench, organizing our teams in a way that even more fully leverages our scale and, of course, deploying data, technology and AI to streamline our service delivery and improve our member experience. While we have made progress across all of these categories, I'd like to touch briefly on our AI strategy. You've heard us reference examples over the last few quarters of high-value AI-enabled use cases, including integrating AI into our forecasting processes to improve precision and the always-on suite of fraud waste and abuse algorithms that learn from our inbound claims data every day. And there are others. Even our legal department has several high-ROI agentic use cases in production, including one agent that reviews invoices from outside counsel firms and now saves us 1.5 points in our legal bills every month. We view these early successes as proof points for a much larger opportunity to head. As we look to the next phase of our AI strategy, our focus is increasingly shifting from individual use cases to the underlying capabilities that make AI scalable across the enterprise. As a Medicaid-first company, operating in a margin-conscious environment, we take a deliberate approach to where we invest. That means prioritizing investments in foundational capabilities such as trusted data products, dynamic context management and open standards that keep business knowledge reusable and portable as the technology evolves. We believe long-term differentiation will increasingly come from proprietary data and context as model technology becomes more commoditized. This disciplined approach positions us to unlock the full potential of AI while maintaining a relentless focus on ROI. It also provides a governed, predictable foundation for AI, which is critical in a regulated environment where consistency, auditability and compliance are nonnegotiable. This work, like all of our transformation efforts, is designed in service of delivering industry-leading outcomes with an industry-leading cost structure, fulfilling our mission and ultimately supporting our ambition to not just manage care but to power health for the communities we serve. In closing, we are making meaningful progress on our path to margin restoration while advancing the platform and processes that will modernize and improve the way we do business. This momentum is visible in our strong second quarter results and our increased earnings outlook for 2026. With our members at the center of every strategic decision we make, we see significant opportunity to reshape the health care experience for millions of Americans. With that, I'll turn it over to Drew to provide more details on the quarter and our updated full year outlook. Andrew Asher: Thank you, Sarah. Today, we reported very strong second quarter 2026 results, including $44.4 billion in premium and service revenue and adjusted diluted earnings per share of $2.51. As you evaluate Q2 in the context of a baseline for 2027, we had approximately $0.50 of earnings in the quarter that were linked to settlements of 2025 items in amounts that we wouldn't expect to recur in 2027. About $180 million related to Marketplace final 2025 risk adjustment net favorability relative to our prior guidance. And about $160 million in our Medicare segment largely favorable PDP 2025 risk adjustment and quality settlements. These items took strong execution by the team, but we wanted you to understand these drivers since the $0.50 will be a reconciling item when we provide a bridge from 2026 to 2027 in a couple of quarters. That aside, any way you slice it, this was a fantastic quarter. Our consolidated HBR was 89.6% for Q2, down from 93% in Q2 of 2025. Let's dig into each segment. In Medicaid, at a 93.9% HBR, we are right on track with our prior forecast and are still expecting a full year HBR of around 93.5%. This is down from our original expectation of 93.7% as we covered on the Q1 call. Consistent with our prior commentary, we expect Q2 and Q3 Medicaid HBRs to be higher than Q1 and Q4. As we look ahead to Q3, our 7/1 rate cohort, which represents about 20% of our membership, came in strong. This 7/1 cohort provides a nice sequential benefit from Q2 to Q3 to make progress toward matching rate and cost. Overall, we now expect the full year 2026 rate impact to be approximately 5%, up from 4.5%, with no change in our view of fundamental trend of mid-4s for the year. As some of you have written about, we did continue to see attrition in our Medicaid membership, ending Q2 with 12.1 million members, and we expect some states to continue to trim Medicaid roles leading up to any OB3 implementation in 2027. So for now, we are holding the incremental 50 basis point benefit of the rate improvement to account for a little higher membership attrition in the back half of the year, including the associated acuity impact. To be more specific, we expect full year Medicaid membership to be down 8% to 9% compared to 12/31/25 versus our prior view of being down 6%. Overall, Medicaid was right on track in Q2 with good signs of medical expense execution coupled with progress on rates, and there's more work to do over the next couple of years to restore margin. Medicare segment results were strong in the quarter, including an HBR at 89.5%, inclusive of the 2025 item discussed a minute ago. PDP, with good visibility once you get through 2 quarters, is having another strong year, and we now expect a full year pretax margin of greater than 3%, compared to original guidance of 2%. Strong execution by the team coupled with varied product positioning and being another year removed from the inception of the Inflation Reduction Act have all contributed to the improvement in our 2026 PDP forecast. Medicare Advantage, representing a little over 40% of segment revenue, continued to perform well, getting closer to breakeven for full year 2026 performance. The Commercial segment, led by Marketplace, had a very strong quarter with an HBR of 79.2%, compared to prior year 90.6%, driven by the conversions of 3 positive factors. One, a strong end to 2025 as discussed a minute ago. Two, confirmation of 2026 market acuity, and particularly our relative risk adjustment position being better than reflected in our prior guidance. And three, tapering medical trend, driving better-than-expected Q2 medical costs. While we were optimistic after seeing the new Wakely March demographic report that we helped initiate, as discussed on the Q1 call, as you know, we are waiting to see corroboration from the first Wakely claims reports received in late June. This data helps us understand our acuity relative to the market. Essentially, the data confirmed we took the correct swift actions in the summer of 2025 when we refiled 2026 rates with the visibility we had at the time of last year's major market shift. Accordingly, we now expect a Marketplace pretax margin of 4.5% to 5% in 2026, back on track after a temporary industry detour in 2025. As you can see, Marketplace membership was reasonably stable compared to Q1 at 3.5 million members, and we continue to expect a little more attrition as eligibility verifications may step up in the back half of the year. While we are still vigilant about pricing for risk shifts due to program integrity measures and changes affecting eligibility prospectively, we would expect the Marketplace to be a more stable business for Centene as we look out over the next couple of years, compared to the prior periods of abrupt program changes and the expiration of EAP TCs. Our adjusted SG&A expense ratio was 6.9% in the second quarter, compared to 7.1% last year, reflecting continued discipline and scale as well as product mix. As Sarah referenced, we are taking actions as part of an enterprise optimization to drive efficiencies and support the affordability of health care in 2027 and beyond. These actions, including further digitization, more ubiquitous use of technology and AI, and improvements in the customer experience alongside operational efficiencies, should help us not just adapt to volume changes in our business but also drive margin restoration over the next few years. Q2 is initial evidence of that momentum. We ended the quarter with $715 million of cash available for general corporate use. During the second quarter of 2026, we repurchased $260 million of senior notes in our continued effort to delever to create capacity to seize future opportunities. Accordingly, we ended the quarter with a debt-to-cap ratio of 41.6%, down from 46.5% at year-end. Our medical claims liability totaled $20.3 billion and represents 47 days in claims payable, a decrease of 1 day as compared to the first quarter of 2026, driven by timing of state-directed payments. Cash flow provided by operations was $8 billion year-to-date and $3.6 billion for Q2, primarily driven by net earnings and the net impact of temporary pass-through payment receipts, state premium payments and marketplace-related payments to CMS. As a heads-up in Q3, we expect to pay out over $3 billion of Medicaid pass-through payments that are sitting on our balance sheet at the end of Q2. As you've seen in our disclosure definitions, pass-through payments merely go through premium tax revenue and premium tax expense on our P&L and do not impact any key operating metrics like HBR, SG&A rate or DCP. Overall, given the strength of the quarter, we now expect greater than $4.80 of adjusted EPS in 2026 inclusive of the $0.50 that we wouldn't expect to recur in 2027. This increase from prior guidance of greater than $3.40 is primarily driven by an improved Marketplace pretax margin of 4.5% to 5% and PDP margin of greater than 3%. Our Medicaid HBR forecast is consistent with prior guidance, and the forecasted enterprise adjusted SG&A rate for 2026 is better by 10 basis points. Total revenue was up $6 billion from prior guidance, but only $2 billion of that is actually premium and service revenue, with $1.5 billion attributable to Marketplace and $0.5 billion for Medicaid. The remaining $4 billion is merely premium tax pass-through revenue. While we have reported year-to-date adjusted EPS of $5.88, we expect a little above breakeven in Q3 and a loss in Q4 due to the seasonal sloping of our Medicare Part D and Commercial products. This second half trajectory is consistent with prior year and commentary we provided on the Q1 call. You can see other guidance elements that were modified in our guidance table. Our workforce and enterprise optimization is expected to drive an estimated [ $480 million ] midpoint of SG&A costs in 2026 and that are part of GAAP guidance and highlighted in the reconciliation table in the press release. We look forward to showing continued progress toward restoration of earnings as we look ahead. For those of you who hung in with us through 2025 industry turbulence, joined us since or thinking about joining in, we thank you for your interest in Centene. Rocco, let's open it up for questions. John Stansel: I wanted to ask about Medicaid enrollment. Just firstly, as you think about the high acuity population stepping down, any particular areas that are driving that? And then just as we think about overall acuity shifting in the population within 2026, how you view that with a bridge to next year? Are you seeing this as a pull forward? Or is this kind of incremental to anything we think about for OB3 impact next year? Sarah London: Yes, John. So as we said, we did see slight incremental attrition compared to expectation in Q. Mostly that was in the expansion population. Some of it was driven by specific changes, but I think more of the uptick, as you pointed out, in terms of the enrollment and eligibility activity in certain states that are starting to tighten in general, consistent with what we've seen over the last year or so, but also starting to think about and prepare for OB3. So we saw a slight uptick acuity in Q2 around that attrition. Obviously, we're able to absorb that given the strength of execution on initiatives. And as Drew talked about, as we think about guidance for the back half of the year, we're for now holding back that 50 basis points of favorability in the rate in order to see how the additional membership attrition, so the move from 6% to 8% to 9% impact acuity in the back half of the year. If we take a big step back, I think your question is exactly right, which is, to what extent is this sort of not just a preparation, potentially a pull forward of some of the activity. Again, obviously not formal implementation of OB3. But states starting to tighten those criteria and starting to prepare and sort of categorize populations and, in some ways, I think, probably prevent enrollment that would otherwise have had to go through a work requirements process. So I think it's possible that will end up being some degree of pull forward. Again, we're accounting for that as we think about guidance for the back half of the year. And then as I mentioned, we are very, very deep in the planning process with all of our states and thinking about how they're going to go through, not just the ex parte process, trying to maximize the data they have for that so that we ensure that folks who are eligible today and have clear data behind that don't face any coverage disruption. And then where there's opportunity for us to lean in and leverage all of the work we've done in terms of building out networks of community engagement, job programs for our members, we already had those in 17 states coming into this year. And so that's given us a fantastic blueprint to build out and obviously have the latitude from CMS guidance to really help members through that process. And so as we think about this process compared to the broader redetermination process, it's obviously very different in terms of scope and scale. It's a much more targeted population. We have a much higher degree of impactability than we had during that process in terms of being able to support members who want to be eligible and who need avenues for engagement. And then continue to have very constructive conversations with our state partners about the right way to implement rates that will account for the acuity shift that we would expect as part of the Medicaid expansion population moves. Ann Hynes: I get a lot of questions just on the Medicaid margin progression given all the OBBB changes. And I know it's a little too early to provide 2027 guidance, but would you expect margins in Medicaid to expand just given the dynamic environment with all the regulatory changes? Sarah London: Yes, Ann. I'll go back to sort of where I just landed in John's question and expand that a little bit as we think about our, first of all, overarching commitment to continued margin progression in Medicaid. And that includes this year and moving from the 93.7% to 93.5% and continuing to hold ourselves to a high standard of execution, and certainly going to try to improve that the rest of this year. But if we think about the number of different policy changes that are going to collide for states next year, it is certainly impactful. And so it is not something that we can or should hand-wave. But that again, I'll sort of tick through a couple of things that I think are helpful to think about and the things that we're thinking about as we approach kind of planning for '27, guiding for '27, that give us a sense of confidence in terms of, again, that goal of continued margin progression through the headwinds of OB3. So first is that point about scope and scale. Obviously, a very different population than what we went through with the broader redeterminations PHE unwind. Some data points for context. We came into the year with our expansion population as 25% of the -- sorry, 20% of the Medicaid portfolio. We will end the year with that being roughly 18%. And so if you just take some of the rough estimates that have been put out there, whether it's RWJ or CBO, of, call it, 25% to 40% of that, that may roll off, you're talking either way sort of mid-single-digit attrition. And that would be over '27, '28, possibly '29, if some states delay. So think about that number in the context of the fact that we just said what we anticipate an 8% to 9% membership drop this year and are still committed to margin progression. The second piece is this point about impactability. And so as you think about the cohorts that the expansion members are going to fall in, one is going to be that ex parte eligible where there's very clear data, whether they're claims data, run through the frailty algorithm, they're automatically eligible. You have a bigger cohort that is what I would sort of describe as practically eligible, right? So they are engaged in community activities, they are going to school, they are serving as a caregiver. And all that needs to happen is they need to appropriately document that. And so that's a cohort that, again, we can support and make -- and we're trying to maximize all the sources of data around that. But that's a population that we would want to see maintain their eligibility because they're doing all of the right things relative to the legislative guidance. And then the third cohort are folks who are not currently eligible, but again, they can become eligible. And so that's part of the playbook to offer them opportunities to engage in the community, workforce opportunities, job training. And if you separate for just a second kind of the perspective on the legislation as being sort of a pay for, when you get down to the state level, even in some of the more ambitious Red states, the goal is really for people to be engaged in their own care and their own sort of forward-looking trajectory, not necessarily to keep people from getting health care coverage. And so I think we're talking about a very different kind of impactability to this overall program than [ we sell with PHE ]. And then the last thing, quickly, is just rate. And the fact that coming out of the PHE, we did not have, I don't know if you should ever call trend a tailwind, but we did not have the tailwind of having heavy trend in that look back base period like we do, if you think about the trend that we've been managing in '24 and '25 and '26 as we roll into '27, so that's a little bit of a difference in terms of air cover to the degree there is a dislocation between rate and acuity. But we also didn't have the explicit guidance that CMS has given in terms of mid-cycle and retro rate adjustments. We didn't have the need for states to document the OB3 rate considerations as they set rates up to certification. And so we just have a different set of tools at our disposal as we think about managing this over the next couple of years. All of which is to say, again, you cannot hand-wave it, but we do think it is a more manageable effort than what we went through with redeterminations, and our goal remains margin recovery for the Medicaid business even through the OB3 headwinds over the next year or 2. Justin Lake: I had a few questions on the exchanges quickly. First, your 10-Q indicates the 2025 risk adjustment settlement benefited the company by $481 million for the year. You talked about $180 million in the quarter. Just wanted to get the delta there, what's driving that, and how we should think about that versus that nonrecurring benefit you talked about, Drew, in the -- for the year? And then what are you assuming for the full year '26 risk adjustment in the exchanges? And lastly, maybe just a quick comment on the lower cost trend in 2Q and what's driving that. Sarah London: Sure. I'll hit those in reverse order and let Drew walk through sort of the mechanics of the '25 risk adjustment. So first, in terms of overall utilization, we did see that moderate in Q2 from Q1 expectations. And again, if you think about how we set guidance on the Q1 call, we saw that uptick in utilization in Q1, initially called it out around specialty drugs. And our hypothesis at the time was that we had retained and attracted a higher acuity Silver membership and the utilization was consistent with that hypothesis. But we didn't yet have the full view of the market acuity from the Wakely data. And so what we essentially assumed in guidance was a continuation of that step-up and did not sort of give full credit for the risk adjustment offset. So what we saw in Q2 was a moderation from Q1 expectations and utilization patterns that are very consistent with the higher acuity Silver membership that we do, in fact, have as confirmed by the Wakely data. And if you just look at disease states and the drug categories, again, consistent with what we called out in March around chronic conditions, anti-inflammatory, oncology, these are conditions and drugs that have high [ HCC ] coding and, therefore, have pretty robust risk adjustment associated with them. So all of that really came together essentially as we expected it to, maybe even a little bit better than expected in Q2. And then for year 2026, we are now assuming a meaningful receivable in our 2026 risk adjustment position. And then I'll turn it over to Drew to walk through the mechanics of the 2025 reconciliation. Andrew Asher: Yes, Justin, so you're right, the $481 million is in the Q. That's an absolute number. And then you may recall, every year we have explicit margin on these estimates that gets released and then reestablished largely the same amount. So that's about $250 million, that doesn't benefit the P&L relative to our prior guidance because that's expected to roll each year. And so that gets you down to about $230 million. And then there's about $50 million of other deducts, [ BBC], we had a little bit of a refinement in Q1, which leaves $180 million better than our previous guidance. Andrew Mok: Given the increased visibility into this year's ACA acuity and higher full year margin outlook, can you share how you're thinking about pricing for 2027 and the balance between further margin recovery versus membership growth next year? And at this point, do you expect the ACA market as a whole to grow? Sarah London: Yes, Andrew. So as usual, we are taking a state-by-state approach to pricing. And the goal is competitive and balanced portfolio. There has obviously been some movement in the market in terms of market exits, sort of the competitive landscape has changed slightly. Our brand strategy has not changed as we think about 2027. And so it's a little bit too early to say, we're still sort of in the pricing process. We'll get visibility into our competitive positioning as we get into Q3. But you can imagine our goal has been margin restoration for that business, and that will continue to be our focus and has underpinned the strategy relative to 2027 pricing. Relative to overall market growth, I think our view is that once we got through the implementation of various policy changes, that this market would return to normalized growth. It continues to be a popular product and, in many geographies, is increasingly sort of the only point of access for folks to affordable health care. We do -- we are watching some of the lawsuits that are out there and the different rules that may impact membership right now. All of those have either been vacated and are on appeal or have been stayed. And so that would probably mute some of the membership impacts that those would otherwise have, but we need to see how those going to play out as we step into open enrollment. We'll obviously be able to give you a better viewpoint on that on the Q3 call. Kevin Fischbeck: Great. I want to follow up on some of the other conversations about Medicaid rates and acuity, because I think that is a concern that people have is that rates will catch up, but then the acuity keeps shifting, making it hard to fully recapture the margin. I would have thought that we would start to see a little bit more progress in 2026 relative to that. Is there a time period where you feel like the data really does inflect and that we should be seeing it in whatever it is, the Jan 1 rates next year, the kind of midyear rate next year? Is there a time period where you kind of say, yes, mathematically, this is the time we should be expecting it? And then is there anything that you think about as far as the risk -- the data points you gave about the risk pool rolling off was very helpful. But is there anything that you think about as far as like impact of that risk pool relative to the MLR impact of the membership that has already dropped? Is there a reason to believe that work requirements will be better or worse, neutral relative to the overall risk pool? Sarah London: Kevin, on your last point, do you mean relative to those 2 dropped during redeterminations or those who have already rolled off in some of the sort of early attrition, if you will? Kevin Fischbeck: Well, yes, I guess, versus the comparison period that we're looking at. Because I guess, if you have 1 million people drop off, 1 million people drop off in each period, is the 1 million dropping off now sicker, healthier than the 1 million you dropped off a year or 2 ago and now in the base data? Sarah London: Got it. Okay. So let me talk a little bit about sort of overarching arc. As we come into 2026, obviously, we've been very focused in the last year on sort of the multi-tenant program in terms of execution and discipline on cost trend. We, as you know and everyone knows, we have incrementally every quarter, we have more and more of the trend that we've seen in that base period. And that's why I think we continue to see strength in the development of the rates. And I think what we are seeing a little bit now and what we're at least accounting for in the back half of '26, and frankly, to some degree, what we've seen in that kind of 1 point to 1.5 points of membership attrition that we originally accounted for, obviously, it's a little bit higher now, I do think is some degree of pull forward of the OB3 impact. And so those things are sort of colliding, if you will, in the back half of this year. And we're able to demonstrate that we're still powering through that. Again, with some degree of benefit from the tailwind of the rates, and not necessarily with the explicit input into the rates of the OB3 impact that we believe were to come. And so if you think about the 7/1 rate cohort, a few of those states did put in explicit factors for the OB3 implementation, but all of them have committed to looking at those rates 1/1/27 and thinking about mid-cycle adjustments as we step into the year when those impacts are going to come. So again, in terms of that delta between when do we see the impact, when do we get rate for it, it continues to feel as we look at OB3 that there's going to be a tighter coordination between states, knowing that these impacts are going to come, actually being able to calculate what those will be and then accounting for those in the rates ahead of time. Again, to the extent that there's a dislocation, I think we have the tailwind of strength in rates from trend. All of that said, and I think this is exactly what you're getting at in your point, I do think that will mute the full potential of margin recovery that we would want to see from our efforts as we think of back half of '26 and part of '27. And once we get back half of '27, I think what we will start to see is the ability to impact underlying trend, have the benefit of the tailwind of rates from the base period and then the benefit of explicit adjustments in the forward-looking rates relative to OB3. And that's when I think we start to get acceleration on margin recovery. But again, our goal is to continue to drive margin improvement regardless. And then maybe, Drew, do you want to talk just a little bit about sort of the relative acuity of the populations that are -- have been rolling off sort of quarter-over-quarter, if we see any changes there? Andrew Asher: Yes. I think to reinforce something Sarah said earlier, really important to understand this in the context, I know Kevin, you do, but for the broad audience. The expansion population, historically, about 20% of our membership, as of June 30, 19%, we expect within our guidance and our forecast down to 18%. So it is an isolated population that we can track the data on, which gives us comfort with what we've seen so far in terms of acuity moves as that population is slowly shrinking with the pull forward, that we've got that covered in our guidance, inclusive of the benefit that Sarah covered on the 7/1 rates. Pleased with the discussions with our state partners, as she said, in terms of the acknowledgment -- explicit acknowledgment in terms of adding into the rates for a few of the states, but the acknowledgment that once those states decide how they're going to implement OB3 or any pull forward of expansion membership verifications, that the rates would be reconsidered at that interim point in 1/1, really before much of the impact were to occur. So there's a lot to execute on, but we're sort of all over it with that isolated population really focused in the expansion population. Stephen Baxter: Just a couple of more clarifications on the improvement in the exchange outlook. Is the out-of-period 180 basis points included in the margin revision that you gave? So I think it's worth about 50 basis points of the improvement. And then if we think about the other improvement that you're seeing, I think you're saying both the risk adjustment is improving versus the -- I think it was a slight receivable before now a meaningful receivable, and cost trend is a little bit favorable to what you previously assumed? So as we think about the remaining 125 basis points of improvement, I guess how should we think about the relative contribution of those 2 factors? Andrew Asher: Yes, you're right. We're going from a 3% pretax margin in prior guidance to 4.5% to 5%, midpoint 4.75%. And yes, I think you got the math right, the $180 million is about 60 basis points on the full year. But there's some additional improvement in there, both from -- and you sort of have to look at these in tandem, both from the improvement relative to prior guidance in our relative risk position. I mean we had the hypothesis, as you may have -- you may remember from the Q1 call with the early Wakely demographic data, that report that we helped drive for the first time this year, and we got the corroboration and the actual claims data, 4 months of claims data in the June Wakely. So you have to look at that in the context of cost trend. But both of those things were positive drivers in the quarter and for the full year. And we're also being thoughtful in our guidance about we increased the sloping of the HBR in terms of thinking through the benefit plan rollout, especially with a higher Bronze population for us, and we were thoughtful about any potential revenue reconciliations relative to eligibility verifications as we thought about making sure we're covered for in that 4.5% to 5% for any potential aberrations in the back half of the year, though Q2 looked pretty good in terms of a jumping-off point for Q3. Albert Rice: I know you're undertaking some initiatives to just impact the overall company cost structure. I think you instituted some employee buyouts in the quarter. Drew is also talking about the technology and AI investments you're making. Can you just comment on how [ that ] in and of itself, regardless of what's happening with the cost trend, impact your cost structure, maybe your G&A ratio and how you think about how that may improve going forward? Sarah London: Yes, A.J. So coming out of sort of back half of '25 and into '26, you heard us talk about our focus on multiyear margin restoration for the business, and also view that there was an opportunity in this moment for a lot of different reasons to really optimize enterprise for what we see in the future. And that has taken a number of different shapes and forms, including simplifying the organization, simplifying our operating model ways of working, really thinking about how to even further leverage the size and scale of the organization for the benefit of member experience and, obviously, being sort of good stewards of taxpayer dollars. Really simplifying our interaction with members and providers and then, again, leveraging data and AI to modernize our operations overall. So we touched on a couple of those. I think we'll continue to share the impacts of those and the different opportunities. But it is -- it really is in service, as I've said a couple of times, of delivering industry-leading health outcomes. So really thinking about the quality impact to our members, making sure they have access to high-quality care, that they are actually sort of seeing improvements overall, which impact the HBR, but also doing that with an industry-leading cost structure. And so that's something that we're focused on. I think you see good SG&A results this year. We're going to continue to focus on that as we go forward because we believe that there is opportunity in that area. And that's part of the goal that we've set out for ourselves over the long term. Lance Wilkes: Can you talk a little bit about your ICHRA business and in particular, kind of size the membership, sales outlook margin performance and the types of clients that are interested in that thus far? And maybe just 2 quick cleanup clarifications. One would be, what are you seeing as far as low utilizers over in Medicaid? I think you've commented on that previously. Maybe you could just update us on how that is looking. And in the note or in the press release, you talked about particular areas of medical cost management that you were performing well in. Maybe if you could just highlight what those were within Medicaid. Sarah London: Yes, sure. So Medicaid, in terms of medical cost, fundamental trend drivers were consistent with past quarters. So we've talked about behavioral health, home health, high-cost drugs. We did see a second quarter of year-over-year moderation in behavioral health, particularly in ABA, and I think that's a direct result of our focus in the space and the work that we've talked about and done really over the last 12 to 18 months in terms of everything from member outreach, educating providers on standard of care, influencing policy, and then, of course, aggressive fraud waste and abuse in such a fragmented provider network. So that is a space that we really are seeing the impact of our efforts. There are other places that we made progress in the quarter. One example around payment integrity, is really in those areas that are susceptible to more of the AI up-coding. We've talked a bit about sepsis and the fact that we started to see an uptick on that as well as it's showing up on lower duration stays and showing up as a diagnosis code without the underlying clinical documentation to support the level of acuity that diagnosis would suggest. And so we made great progress in the quarter in terms of implementing algorithms, and some of that is the AI I talked about, but also kind of clinical conversations and making sure that we're actually paying correctly for the care that's delivered. So those are the 2 areas. And then as we talked about, we have a pretty robust pipeline. Let me just talk quickly about ICHRA and then I'll turn it over to Drew to talk about the low utilizers in Medicaid. Our ICHRA business is roughly 50,000 members today. That's a 2.5x growth since last year. So great growth rates, small numbers. But I would say that there is no shortage or abatement in the interest and energy around ICHRA as an alternative. And that is -- some of that is driven by the fact that employers, were among those, are seeing the pressures cost drivers going up and those getting passed through to us. But it's also the fact that in the number of geographies, the options for small group are deteriorating. So we think there is -- continue to believe that there is a great opportunity there, as I think many know, we offered ICHRA as a benefit to some of our employees and have used that to get a really good sense of the benefits that can give employees as an alternative in terms of choice and portability and frankly, greater affordability. So we continue to be bullish about that. It's obviously a much smaller portion of our portfolio, but we think it's a great option for the future. And then over to Drew on low utilizers. Andrew Asher: Yes. So Lance, yes, we track low utilizers in all of our lines of business. And as you understand, in an insurance business, you have sort of this gamut of high utilizers and you always have a cohort of low and 0 utilizers. When you look at that for Medicaid specifically, you're right, we've seen a drop in those low utilizers, 0 utilizers from the PHE, public health emergency, period, as you would expect, making our way towards pre-PH. And interestingly, which ties back to our discussion about the expansion population and the slight acuity shift that we're noticing and we're planning for, it's the most pronounced, the drop is most pronounced in the Medicaid expansion population as a subset of our overall Medicaid portfolio. George Hill: And I'm going to ask Steve's question, but from the PDP perspective. If we back out the PDP adjustment, it looks like that's about 60 basis points, if I'm doing the math right. The margin expansion is going from -- expectations going from 3% versus 2%. So I guess I would ask, like, is that like 50 basis points of like real margin expansion versus the prior expectation? And kind of how do you think about the risk and the balance of the year as those beneficiaries hit their moves? And do we see like a step-up in utilization in the back half of the year? So just how we're thinking about this to the organic margin expansion. Andrew Asher: Yes. Good questions around PDP, and a business that's performing well. Once you get through the second quarter, George, you have a pretty good sense -- since it's a pharmacy benefit only, while it's complex. It's a pharmacy benefit only. You've got a pretty good read on the year. But you're absolutely right, tracking through the maximum amount of pocket moves through the year and then having visibility of the prior years that were impacted by the Inflation Reduction Act and, quite frankly, triggering some additional utilization in specialty, as we covered about a year ago. So that's performing well. You may have noticed we said greater than 3%, not just 3%. And so we're bullish about sort of our positioning for this year. We're sitting on greater than 3% right now. And you're right on your math in terms of the benefit that we had in the quarter for the settlement of prior-year risk adjustment and quality items that we wanted to make sure you understood as you think about rolling this year into 2027. Sarah James: I wanted to drill a little bit into the AI investments and G&A. So in AI, your shift and focus to platform-related items, trusted data products, dynamic context management, can you help us understand on the more practical level, what that means? And is it a platform build or a vendor relationship? And then second, in the Q, you guys mentioned that you're considering early adoption of ASU 2025-06. So if you do that, how meaningful of a tailwind could it be to G&A? And is any of that overlapping with the $480 million enterprise optimization of G&A? Or is it a separate lever? Sarah London: Yes, Sarah. So my comments were to go a little bit deeper on strategy. Less so a shift, but more to point out that there we've made good products in terms of high ROI use cases and deployment of AI. It is still early. And it's a little bit more of a philosophy, which is, I think it's easy to get on an earnings call and say, we're doing AI everywhere and we've got all these great partnerships. But our view is that for -- there is also a risk of spending a lot of money on AI and getting no return for it. And that's not something that we can afford to do as a Medicaid-first company in a margin-compressed environment. And so we are really strategically thinking of this around, first, the greatest value that will come from all of this and sort of the ability to maximize AI is really predicated on the command you have of your data, the ability to build differentiated data products and to maintain and own the context layer. And if you think about being the largest Medicaid managed care, the largest government-sponsored programs company in the market with 25 years of history and context, that's really where we are focusing in terms of the foundational work. And so while we'll continue to highlight places where we're then leveraging that to deploy use cases, are also holding ourselves to an extraordinarily high bar in terms of the ROI. We aren't just going to deploy AI to talk about AI. We're going to deploy it where there is very clear, tangible return on that investment. And we think the way to do that is by this foundational focus on data and context in the short term. So more to come on that, but it was really just trying to sort of click down and give folks a sense of our philosophy and how we're being prudent about investments in that space. Andrew Asher: Yes. And as far as the early adoption of that internally developed software pronouncement, that's not going to be material to the company. What you're seeing in SG&A is sort of real true, substantive execution and action. And as you heard from Sarah, and as we look ahead, we're very optimistic about our ability to deliver an industry-leading cost structure, including the SG&A element on behalf of state and federal customers and, ultimately, taxpayers. Scott Fidel: Wanted to just tack on -- I know there's been already a couple of questions about the out-year dynamics in Medicaid with OBBBA. I feel like one area that the work requirements get a lot of attention, and rightfully so, but the other regs seem to get a lot less attention in the discussion in terms of the Medicaid [ SVPs ] and the provider tax reform and then the budget neutrality of the [ 1115 ] waivers and just effectively around how much more limitation on the states that's going to create on their funding as the Feds look to sort of bring the sort of the mapping back down in ballast where it used to be more traditionally. So just would be interested in your thoughts there in terms of ultimately how do you think the funding environment may evolve with the states and how that sort of intersects with your efforts to get rates back up above cost trends and then continue with margin recovery, more looking out sort of into FY '28, '29 and '30. Sarah London: Yes, Scott. And you're right to point out sort of what I referenced before that there are kind of multiple components of this that are colliding that aren't just work requirements. What's interesting is -- and it goes back to kind of what is the value of managed care. One of the biggest values that we deliver to the states is being able to help them contain their budget and have budget predictability. And so what we have found is that when states go through periods of budget pressure, it actually creates strength in the partnership. And it's part of why we've talked -- you've seen over the last year a different level of engagement and movement in terms of program changes and benefit changes. And a lot of that is because states look to us for ideas and for opportunities to maintain the fidelity of the benefits that they want to offer to the Medicaid population, but doing so within a more budget-constrained environment. It's also a time where we've seen much more movement of specialty populations into managed care. And so the states are absolutely sort of wrangling all of those pieces at the same time. But we actually think it's an opportunity to have productive conversations about where they can get savings without further cutting into the Medicaid program. Think about carving in more population. So it actually could be a period of potential further growth. You're seeing a little of that come through in the RFP cycle. And so again, it's certainly going to be a number of things that we've got to work with them on over the next couple of years, but I think it's a much more balanced view than just feeling like all of these policy changes are going to create pressures ultimately on rates. I think they need to fund the programs. And I think we've got great ideas about how they can do that and have the opportunity to -- and are engaging with them on that front already. Hua Ha: I just wanted to follow up on Kevin and Lance's question, just ask it in a different way, just looking for more granularity since it's such an important topic. So I understand, Drew, you said the remaining low, no utilizer Medicaid members much lower now than the last few years, and you only expect a very modest acuity shift into next year. That said, I know this year, a bit higher member attrition [indiscernible] rate cushion on the table for back half acuity shifts potentially, I was wondering if you could provide just more granularity around what you mean by low utilizer today, specifically, like what MLR range would you even consider a lower utilizer? And how is the distribution members across these buckets changed in your expansion book since redetermination first began in 2023? Andrew Asher: Yes. So we take a look, we can slice the data in so many different ways. And then you also have to think about we're only 6 months into the year and factor that into the cohort you're looking at because, obviously, you have to compare that to like periods. But like if you step up and look at fundamentally, as you would expect, the, let's say, 0 utilizing population is down from that PHE time period, as I said before, and the med expansion population where we are seeing slight -- I mean I'm talking slight acuity in terms of what we expect this year, which the 50 basis points should more than cover in terms of the back half of the year. But we're being thoughtful about there is an impact when you shed lower utilizing members when states may not adopt OB3 early, but some states are explicitly taking action, effectively pulling forward some of that impact. And that actually gives us really good data to be able to share with other states. I mean there's one state, as you know, that adopted the OB3 provisions early. So we're getting early data on that state. It's pretty immaterial, but it's data nonetheless. So we're confident we can manage through this. But it's good to be able to have these discussions with our state partners to acknowledge that when actions are taken on the expansion population, which is not in all of our states, but those actions will have rate consequences. And we're already seeing traction, not just in discussions, but in actual rates being provided in advance in 7/1 in a few states. So we're optimistic we can roll through this, and it's really good to have the muscles that have been built both on the payer side, but also on the [indiscernible] in terms of the acknowledgment of what acuity shifts mean in Medicaid. Sarah London: Thanks, Rocco. Just to wrap up, obviously, we feel great about the progress so far this year on our margin restoration agenda and feel like we have a prudent posture as we look at the back half of the year. Just want to thank everyone for joining us this morning, for your interest in Centene. And a big thank you, as always, to the CenTeam. It is an honor to be on this mission with you. Have a great day. Operator: Thank you, ma'am. This does conclude our conference call for today. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day. Before you buy stock in Centene, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Centene wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management raised full-year 2026 adjusted EPS guidance to greater than $4.80, citing underlying business strength and a more fully informed view of Marketplace risk adjustment positioning. Marketplace results outperformed expectations following a year of disciplined repricing and data analysis that confirmed the relative acuity of the population. Medicaid performance remained on track with disciplined execution against quality and affordability initiatives, successfully absorbing a slight uptick in acuity from expansion population attrition. The Medicare segment delivered outperformance in both PDP and Medicare Advantage, with PDP benefiting from prior-period true-ups and lower-than-expected specialty drug trends. Management is systematically driving quality improvements, targeting more than 75% of Medicaid health plans to achieve NCQA ratings of 3.5 stars or better. Strategic focus is shifting toward foundational AI capabilities, prioritizing trusted data products and proprietary context over commoditized model technology to drive long-term differentiation. The company is simplifying its Medicare Advantage footprint to focus increasingly on the dual-eligible population, leveraging deep Medicaid expertise for a differentiated member experience. Full-year 2026 Medicaid composite rate forecast improved from roughly 4.5% to roughly 5%, supported by constructive state conversations and incorporation of current data. Guidance assumes lower year-end Medicaid membership, down 8% to 9% compared to year-end 2025, to account for increased enrollment and eligibility activity. Management is holding a 50 basis point rate benefit in reserve to offset potential acuity impacts from anticipated membership attrition in the second half of 2026. The company expects to deliver breakeven or better results in Medicare Advantage by 2027, with margin improvement thereafter despite industry-wide STARS program headwinds. Marketplace pretax margin expectations for 2026 were raised to between 4.5% and 5%, reflecting a return to stability after 2025 industry turbulence. Q2 results included approximately $0.50 of earnings linked to 2025 settlements, including $180 million in Marketplace risk adjustment and $160 million in Medicare settlements, which are not expected to recur in 2027. The company recorded a $180 million favorable development on the final 2025 CMS risk adjustment reconciliation during the quarter. Management flagged headwinds from artificial STARS cut point increases and methodology changes, though prior portfolio optimization efforts have helped derisk these impacts. Enterprise optimization efforts are expected to drive an estimated $480 million in SG&A costs in 2026 as part of a broader push for operational efficiency. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted that recent attrition in the expansion population may represent a pull-forward of OB3 impacts as states tighten eligibility criteria in preparation. The company is leveraging a nationwide playbook and near real-time data exchange with states to minimize unnecessary membership disruption during the transition. Management remains committed to Medicaid margin progression, noting that the OB3 impact is more targeted and manageable than the prior redetermination process. Confidence is supported by the ability to implement mid-cycle and retroactive rate adjustments and the fact that expansion members represent a smaller portion of the portfolio than in previous years. The $180 million benefit in the quarter was the net favorability relative to prior guidance after accounting for standard margin releases. For the full year 2026, the company is now assuming a meaningful receivable in its Marketplace risk adjustment position based on confirmed market acuity data. Pricing for 2027 will continue to focus on margin restoration while maintaining a competitive and balanced portfolio on a state-by-state basis. Management expects the individual market to remain a stable and compelling platform for growth as it serves as a flexible alternative to employer-provided insurance.

Centene Corporation CNC used its second-quarter 2026 earnings call to highlight improving profitability across its major businesses, supported by stronger Marketplace results, Medicare execution and disciplined cost management. Management also raised its full-year adjusted earnings per share (EPS) outlook. The discussion focused on margin restoration efforts, Medicaid enrollment trends and the company’s approach to navigating regulatory changes while investing in technology and operational efficiency. CEO Sarah London said that Medicaid performance remained aligned with expectations, with execution on medical cost management helping offset membership changes. The company ended the quarter with 12.1 million Medicaid members and reported a Medicaid health benefits ratio (HBR) of 93.9%. London noted that Medicaid membership declined more than previously expected because of increased enrollment and eligibility activity in certain states. Management adjusted its outlook for full-year Medicaid membership to an 8% to 9% decline from Dec. 31, 2025 levels. The company said that rate developments remained constructive, increasing its full-year 2026 Medicaid composite rate forecast to roughly 5% from roughly 4.5%. Management highlighted continued work with state partners ahead of OB3 implementation and efforts to reduce unnecessary coverage disruptions. Centene reported continued strength in Medicare, with management pointing to solid performance in both Medicare Advantage and the Prescription Drug Plan (PDP) business. The Medicare segment delivered an HBR of 89.5% in the quarter. London said that PDP performance benefited from prior-period items and underlying execution, with the company now expecting a 2026 PDP pretax margin above 3% compared with its earlier expectation of 2%. Management also said that Medicare Advantage continued moving closer to breakeven results for 2026. The company plans to further focus on its Medicare strategy on dual-eligible populations by leveraging its Medicaid expertise. Marketplace was a key focus of the earnings call after Centene improved its outlook for the business. Management raised its expected 2026 Marketplace pretax margin to 4.5%-5% from the previous 3% outlook. London attributed the improvement to better-than-expected utilization trends, updated market acuity information and favorable 2025 risk adjustment development. The company received $180 million of favorable 2025 CMS risk adjustment reconciliation in the quarter. The company ended the quarter with approximately 3.5 million Marketplace members. Management said that membership should continue to decline as the year progresses, reflecting normal seasonality and ongoing CMS program integrity efforts. Centene continued emphasizing enterprise efficiency efforts, including greater use of technology and artificial intelligence. London said that the company is focusing on simplifying operations, improving member experiences and creating a more efficient cost structure. CFO Andrew Asher highlighted a second-quarter adjusted SG&A expense ratio of 6.9%, down from 7.1% a year earlier. Asher attributed the improvement to scale, expense discipline and business mix changes. Management also discussed AI initiatives across the organization, including applications in forecasting, fraud detection and legal operations. The company said that it is prioritizing foundational capabilities to expand AI use while maintaining compliance in a regulated environment. During Q&A, a JPMorgan analyst asked about the changing Medicaid membership mix and whether higher-acuity exits represented a pull-forward of future regulatory impacts. London said that the company was monitoring enrollment activity and accounting for potential acuity shifts in its guidance. A Wolfe Research analyst questioned Medicaid margin progression amid regulatory changes. London said that the company expects margin recovery efforts to continue, supported by rate actions, operational execution and targeted support for eligible members. Analysts also questioned Marketplace margin improvement and risk adjustment assumptions. Management said that updated market data confirmed its earlier pricing actions and supported the revised profitability outlook. Centene reported second-quarter adjusted EPS of $2.51, beating the Zacks Consensus Estimate of $0.89. The company’s revenues of $53.60 billion missed the consensus estimate of $47.53 billion. CNC raised 2026 adjusted EPS guidance to more than $4.80 from more than $3.40. Centene Corporation price-consensus-eps-surprise-chart | Centene Corporation Quote Management maintained its focus on margin restoration, operational efficiency and investments designed to improve healthcare delivery. The company ended the quarter with $715 million of cash available for general corporate use and reduced its debt-to-capital ratio to 41.6%. Centene currently carries Zacks Rank #3 (Hold). The Zacks Rank reflects earnings estimate revisions and is designed to help indicate the potential direction of a stock over the next one to three months. The Rank can change after earnings as analysts update their estimates. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The stock has a Value Score of A, a Growth Score of A, a Momentum Score of B and a VGM Score of A. Zacks Style Scores rate stocks from A to F based on characteristics such as value, growth and momentum, with higher scores representing stronger attributes within each style category. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Centene Corporation (CNC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Adjusted Diluted EPS: Q2 adjusted diluted earnings per share of $2.51, exceeding previous expectations. Full-Year EPS Guidance: Increased to greater than $4.80 from prior outlook of greater than $3.40. Premium and Service Revenue: $44.4 billion for Q2 2026. Medicaid Membership: Ended Q2 with 12.1 million members, expecting full-year membership to decline 8% to 9% compared to December 2025. Medicaid HBR: 93.9% for Q2, with full-year expectation around 93.5%. Medicare HBR: 89.5% for Q2. Marketplace Pre-Tax Margin: Expected between 4.5% and 5% for full year 2026. Cash Flow from Operations: $8 billion year-to-date and $3.6 billion for Q2. Debt-to-Cap Ratio: 41.6% at the end of Q2, down from 46.5% at year end. Cash Available: $715 million for general corporate use at the end of Q2. Medical Claims Liability: $20.3 billion, representing 47 days in claims payable. Warning! GuruFocus has detected 7 Warning Sign with CNC. Is CNC fairly valued? Test your thesis with our free DCF calculator. Release Date: July 28, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Centene Corp (NYSE:CNC) reported Q2 adjusted diluted earnings per share of $2.51, exceeding previous expectations. The company raised its full-year 2026 adjusted diluted earnings per share guidance to greater than $4.80, up from the prior outlook of greater than $3.40. Medicare segment delivered strong performance with a pre-tax margin expectation of greater than 3% for 2026. Marketplace business showed significant improvement, with a revised pre-tax margin expectation of 4.5% to 5% for the full year. Centene Corp (NYSE:CNC) is leveraging AI and technology to enhance operational efficiencies and improve member experience. Medicaid membership saw a larger than anticipated decline, with expectations of further attrition impacting acuity. The company is facing challenges with elevated medical costs, particularly in behavioral health and high-cost drugs. There are concerns about the impact of regulatory changes, such as OB3 implementation, on Medicaid margins. The Medicare Advantage segment is experiencing headwinds from STARS program methodology changes and artificial cut point increases. Centene Corp (NYSE:CNC) anticipates a loss in Q4 due to seasonal sloping of Medicare Part D and commercial products. Q: Can you discuss the factors driving the slight incremental attrition in Medicaid enrollment and how it affects your outlook for 2026 and beyond? A: Sarah London, CEO, explained that the attrition was mainly in the expansion population, driven by state-specific changes and increased enrollment and eligibility activity in certain states. This uptick in acuity was absorbed due to strong execution on initiatives. The company is holding back 50 basis points of rate favorability to account for potential impacts from further membership attrition. They are also preparing for OB3 implementation, which may lead to some pull-forward of activity, and are working closely with states to minimize coverage disruption. Q: With the dynamic environment and regulatory changes, do you expect Medicaid margins to expand in 2027? A: Sarah London emphasized Centene's commitment to continued margin progression in Medicaid, despite the regulatory changes. She noted that the expansion population is a smaller portion of the Medicaid portfolio, and the company is focused on supporting eligible members through community engagement and job programs. The company is also working with states on rate adjustments to account for acuity shifts, aiming for margin recovery even through OB3 headwinds. Q: Can you clarify the impact of the 2025 risk adjustment settlement on the company's financials and how it relates to the 2026 outlook? A: Andrew Asher, CFO, explained that the 2025 risk adjustment settlement benefited the company by $481 million, with $180 million impacting the quarter. The remaining amount was expected to roll each year, and the company is assuming a meaningful receivable for 2026 risk adjustment. The settlement and improved risk adjustment position contribute to the revised full-year margin outlook for the exchanges. Q: How is Centene approaching pricing for the ACA market in 2027, and do you expect the market to grow? A: Sarah London stated that Centene is taking a state-by-state approach to pricing, aiming for a competitive and balanced portfolio. The focus remains on margin restoration, and the company expects the ACA market to return to normalized growth after policy changes. The market remains popular, providing access to affordable healthcare, and Centene is monitoring potential impacts from ongoing legal challenges. Q: How are AI investments and enterprise optimization initiatives impacting Centene's cost structure and SG&A ratio? A: Sarah London highlighted that Centene is strategically deploying AI with a focus on high ROI use cases and foundational capabilities like data management. The company is optimizing its enterprise to improve efficiency and member experience, aiming for an industry-leading cost structure. Andrew Asher added that the SG&A improvements reflect substantive execution and are expected to support long-term margin restoration. For the complete transcript of the earnings call, please refer to the full earnings call transcript.