Centene Stock Plunges After Pulling 2025 Guidance On $1.8B ACA Blow; Retail Traders Smell ‘Tremendous Discount’

Centene Corp shares fell 25% in after-market trading on Tuesday after the health insurer withdrew its 2025 earnings guidance due to a $1.8 billion shortfall in expected risk adjustment revenue associated with its Affordable Care Act (ACA) Marketplace business.

The company based the revision on preliminary industry data from the actuarial firm Wakely, which covered 22 of Centene’s 29 ACA Marketplace states, accounting for about 72% of its membership. 

The data, compiled from paid claims through April 30, showed lower-than-expected market growth and significantly higher aggregate morbidity, a measure of the overall health status of the insured population.

Centene said the findings result in an estimated $2.75 reduction to its adjusted diluted earnings per share for 2025. 

The company does not yet have data for the remaining seven Marketplace states but expects a further negative adjustment based on similar morbidity trends.

In response, Centene has begun refiling its 2026 ACA Marketplace rates to reflect the higher morbidity baseline and stated that it expects to implement pricing changes in states that represent a majority of its exchange enrollment.

The company also disclosed a rise in medical cost trends within its Medicaid business, particularly in behavioral health, home health, and high-cost drugs. 

These trends were more pronounced in states such as New York and Florida, where service carve-ins occurred without sufficient rate or risk adjustments. 

As a result, Centene expects its Medicaid health benefits ratio (HBR) in the second quarter to exceed the first quarter’s figure.

Additionally, the company said final 2024 risk adjustment results released by the Centers for Medicare and Medicaid Services (CMS) were in line with its expectations, though it noted a potential for new information related to another insurer’s late submission.

Centene also said its Medicare Advantage and Medicare Prescription Drug Plan (PDP) businesses are performing better than expected.

On Stocktwits, retail sentiment was ‘extremely bullish’ amid a 2,360% surge in 24-hour message volume.

One user called the pullback in Centene shares a buying opportunity, describing it as a "tremendous discount" and suggesting that the pullback in guidance signaled the company had visibility and flexibility to adjust its strategy. 

Another user said that they were "loving these health-care company discounts."

Centene’s stock has declined 6.4% so far in 2025.

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