(Bloomberg) -- Centene Corp. shares fell the most in a year after the insurer released a projection for members in its Medicaid program that disappointed investors.
Membership in the joint state-federal health program for low-income people will be about 13 million this year, the insurer said at the Wells Fargo Healthcare Conference. The company had earlier forecast 13.6 million members by the end of 2024.
The drop means Centene will collect less in expected premiums to cover the medical costs of the people who remain on its plans. That’s driving pressure on a key gauge of expenses, called the medical-loss ratio, that investors watch closely.
Centene’s Medicaid business will have a higher medical-loss ratio in the third quarter than in the second, Chief Financial Officer Drew Asher said at the conference.
The shares fell as much as 9.3%, their biggest intraday loss since June 2023.
While the company also affirmed its guidance for 2024 adjusted earnings of greater than $6.80 a share, Asher said Wall Street’s view of the quarterly pace might be too optimistic. About 20 cents to 30 cents a share of earnings that analysts expect in the third quarter should be moved to the fourth quarter, he said.
Analysts currently expect Centene to report $1.60 a share in the third quarter, according to data compiled by Bloomberg.
Higher costs in the Medicaid business are being offset by strong performance in the company’s health insurance exchange segment, as well as reductions to other expenses and investment income, executives said.
(Updates with additional details from conference starting in fifth paragraph)
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