London: Centene forecast third-quarter profit below Wall Street estimates on Tuesday as the health insurer anticipated an increase in medical costs in the government-backed Medicaid program.
States began reassessing eligibility for enrollment in Medicaid last year, following the termination of a policy that required insurers to keep low-income Americans enrolled through the COVID-19 pandemic.
The reassessment led to a shift to sicker patients in its plans and a fall in memberships.
At a healthcare conference last week, Centene said the third-quarter medical loss ratio – the percentage of premiums spent on medical care – would be “a little bit higher than” the second quarter for Medicaid.
In July, the company said it expected medical costs to improve next year as states complete their reassessments of Medicaid enrollments.
The Medicaid-focused insurer also provides commercial insurance plans and Medicare plans covering older adults.
In its forecast on Tuesday, Centene said it sees 20 to 30 cents of profit per share shifting to the fourth quarter from the third.
It also forecast third-quarter adjusted profit per share between $1.31 and $1.41, below analysts’ estimates of $1.51 per share, according to LSEG data.
Still, the company reaffirmed its annual profit forecast of more than $6.80 per share. Analysts expect a 2024 profit of $6.83 per share. (Reporting by Sriparna Roy in Bengaluru; Editing by Janane Venkatraman)