Centene Narrows Medicare Advantage Footprint as Costs Remain Elevated
Centene Corporation CNC is reshaping its Medicare Advantage (MA) business for 2027 as unfavorable economics prompt insurers to reassess market participation. Its Wellcare unit plans to discontinue certain MA offerings and reduce its presence in several counties, signaling a more disciplined approach to a business facing persistent medical-cost pressure.
Per Becker’s, Centene is pulling standard MA plans from 344 counties for 2027 and exiting Hawaii, Oklahoma and Tennessee. Wellcare is also reducing its plan lineup, particularly standard MA offerings, while retaining a stronger presence in Special Needs Plans. CNC is placing greater emphasis on dual-eligible members, who account for roughly 40% of Wellcare’s MA membership, while D-SNP products represent nearly half of its 2027 MA offerings.
The retrenchment comes as the MA industry faces elevated healthcare utilization and pressure on plan economics. The Centers for Medicare & Medicaid Services expects weighted average monthly MA premiums to decline 16.5% in 2027, while projected enrollment stands at 34 million. Insurers are adjusting benefits, networks and geographic coverage as they work to manage medical costs and preserve profitability. Centene’s large standalone Part D platform also provides another channel to serve Medicare beneficiaries outside traditional MA.
The revised strategy could have mixed effects. Lower exposure to less attractive markets may support operating performance by concentrating resources on products and areas with stronger economics. However, a smaller MA footprint also limits a potential source of membership growth. For CNC, stronger execution in remaining markets, along with continued emphasis on dual-eligible members and Part D, could help improve the durability of its Medicare business.
How Are Competitors Faring?
Some of CNC’s major competitors in the healthcare service provider space are UnitedHealth Group Incorporated UNH and Humana Inc. HUM.
Per Becker’s, UnitedHealth is also refining its 2027 Medicare Advantage footprint, pulling standard plans from 140 counties while adding more Special Needs Plans. UNH’s changes reflect a more selective approach as medical and pharmacy costs continue to pressure plan economics. Meanwhile, Humana plans to exit 57 counties and Minnesota for 2027 while reducing certain PPO offerings. HUM is also adding select HMO and Special Needs Plans, maintaining a targeted approach to Medicare Advantage growth.
Centene’s Price Performance, Valuation & Estimates
Shares of CNC have surged 56.3% in the year-to-date period compared with the industry’s growth of 16.7%.
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From a valuation standpoint, Centene trades at a forward price-to-earnings ratio of 12.28, below the industry average of 15.20. CNC carries a Value Score of A.
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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.
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CNC stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
