By Sriparna Roy
(Reuters) -Centene shares gained more than 11% in early trading on Thursday after the health insurer reaffirmed its annual profit forecast and said quality ratings for its Medicare plans were in line with expectations.
Preliminary data for Star or quality ratings for Medicare Advantage showed a slightly higher percentage of members in four-star plans, CEO Sarah London shared at the Deutsche Bank Healthcare conference.
The Centers for Medicare and Medicaid Services scores health plans between one to five stars, which can influence enrollees’ plan choices while increasing government reimbursement levels for higher-rated plans.
The ratings, typically expected in October, will also impact insurers’ revenues in 2027.
London also pointed to stronger-than-expected Medicaid results in July and August, supporting a rebound in the second half of the year.
The update on Medicaid is better than feared, said Barclays analyst Andrew Mok. By contrast, trends in the Obamacare marketplace and Medicare remain steady.
Separately, Centene said in a filing that results through August were consistent with its 2025 adjusted earnings forecast of about $1.75 per share, above analysts’ average estimate of $1.69, according to data compiled by LSEG.
Investors appeared pleased that Centene reiterated its 2025 forecast and made comments that set the company up for material earnings growth in 2026, said Morningstar analyst Julie Utterback.
The comment also lifted shares of other health insurers, with Molina Healthcare gaining more than 5% and Elevance rising 2%.
In July, Centene said it expects to be able to raise rates charged to states for 2026 health plans for low-income Americans and strengthen profit margins.
Centene said on Thursday that it has successfully refiled rates for the plans under the Affordable Care Act covering 95% of its footprint with the state approval process expected to run through the end of the month.
For the remaining 5% of membership, the company did not receive the desired rates and is reducing services to limit exposure.
(Reporting by Sriparna Roy in Bengaluru; Editing by Vijay Kishore)
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