CNC · Centene
Conviction · Medium · more likely to lead the S&P 500 over the next three months, by a modest margin
Wrong if: a daily close below $62
Note written ·
Price against the kill line
15.0% clear of its kill line on the 13 November 2026 close.
How to read this
The red mark is the price level of the published kill line: a close through it (a weekly close, on a weekly line) would prove the research note wrong on price. The dot is where the stock closed on 13 November 2026; a dot left of the mark has closed through its line.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close below $62.00, on record since 10 November 2026. The shares are up 10.7% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close below $62, which would erase the rebound that began after the 30 September 2026 close; a cut or withdrawal of 2026 adjusted EPS guidance of more than $5.20 would also show the case failing.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Health Care
Quarter to 30 September 2026, filed 27 October 2026; valuation at the 13 November 2026 close
- Net income, latest quarter ($M)
- −71.0
- Net income, four quarters ($M)
- 1,460
- Shareholders' equity ($M)
- 22,207
- Price to earnings (×)
- 24.2
- Price to book value (×)
- 1.6
- Revenue, latest quarter ($M)total revenues, including investment gains and losses
- 50,647
- Revenue, change on a year (%)
- +1.9
- Market value ($M)
- 35,284
Centene is an insurer: net cash, enterprise value and free cash flow are not shown, because a bank's or insurer's cash and investments back its deposits and policies.
All filed numbers
What Centene reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 50,647 | +1.9 | 6.5 | −0.6 |
| first filed | 53,579 | +9.9 | 8.6 | 2.2 |
| first filed | 49,944 | +7.1 | 11.3 | 3.7 |
| first filed | 49,725 | +21.9 | 5.1 | −3.5 |
| first filed | 49,690 | +18.2 | 6.7 | −14.0 |
| first filed | 48,742 | +22.4 | 6.2 | −0.9 |
| Pre-tax income ($M) | −122 |
| Net income ($M) four quarters: 1,460 | −71.0 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +0.6 |
| Operating cash flow ($M) | 4,724 |
| Capital spending ($M) | 781 |
| Free cash flow ($M) | Not meaningful |
Not meaningful: a bank's or insurer's operating cash flow moves with its deposits, loans and policy reserves, so it is not cash free for its owners.
| Cash and short-term investments ($M) | 23,586 |
| Debt ($M) | 15,542 |
| Net cash, cash less debt ($M) | Not meaningful |
| Deferred revenue ($M) +3.7% on a year | 680 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | Not reported |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 22,207 |
Not meaningful: a bank's or insurer's cash and investments back its deposits and policies.
| Market value ($M) | 35,284 |
| Enterprise value, market value plus net debt ($M) | Not meaningful |
| Enterprise value to sales (×) | Not meaningful |
| Enterprise value to operating income (×) | Not meaningful |
| Price to earnings (×) | 24.2 |
| Price to book value (×) | 1.6 |
| Free-cash-flow yield (%) | Not meaningful |
Not meaningful: a bank's or insurer's cash and investments back its deposits and policies.
Not meaningful: a bank's or insurer's operating cash flow moves with its deposits, loans and policy reserves, so it is not cash free for its owners.
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 2.2% of shares outstanding sold short, 2.5 days of average trading to cover, +4.0% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $6.9M |
| 12 monthsfrom | $0 | $14.6M |
The thesis
Centene is more likely to beat the S&P 500 over the next three months, because its raised 2026 guidance of more than $5.20 in adjusted earnings per share (EPS) shows medical costs coming under control. The fourth-quarter 2026 report, expected in February 2027, settles whether that guidance holds. The date is not yet confirmed by the company.
The company raised adjusted EPS guidance by $0.40 on 27 October 2026 and narrowed the full-year health benefits ratio (medical costs as a share of premium revenue) to 90.4% to 91.1% (Form 8-K, 27 October 2026). The shares closed at $74.17 on 5 November 2026, the day a headline reported the US Department of Justice (DOJ) intervening in a whistleblower suit against Centene. They closed at $69.74 the next session and at $70.27 on 12 November 2026.
That close is 4.1% above the level three months earlier and 10.0% below the 52-week high of $78.08 set intraday on 5 November 2026. The price already reflects a recovery from the 52-week closing low of $31.80 on 30 March 2026. It also reflects most of the guidance raise, since the shares trade above their 50-day average.
Bullish and bearish views on Centene Corporation
The bull case on Centene Corporation (CNC), in brief: guidance raised by $0.40. The bear case: DOJ intervened in a whistleblower suit.
Bull case
- Guidance raised by $0.40. The 27 October 2026 release lifted adjusted EPS guidance to more than $5.20 and GAAP (generally accepted accounting principles) EPS guidance to more than $3.46. Third-quarter adjusted EPS was $0.58 on revenue of $50.6 billion.
- Medical costs improved. The consolidated health benefits ratio was 92.7% in the third quarter of 2026. Medicaid was 93.6%, against 93.9% in the second quarter, and Commercial was 89.0%.
- Debt came down. Total debt was $15.5 billion on 30 September 2026, which the company reported as $1.1 billion lower than on 30 June 2026. Interest expense guidance fell to $600–$620 million.
- Analysts lifted targets after the report. Between 28 October 2026 and 2 November 2026 Deutsche Bank set $87, Barclays $82, Truist $82, Cantor Fitzgerald $79, UBS $78, Wells Fargo $75, J.P. Morgan $75 and Morgan Stanley $71. All sit above the 12 November 2026 close.
- Peer Medicaid costs held. Molina reported a 93.0% Medicaid medical care ratio on 21 October 2026 and kept full-year adjusted EPS guidance at no less than $5.25.
- Marketplace footprint is being rebuilt locally. Company news on 12 November 2026 reported Ambetter from Meridian returning to metro Detroit for 2027 open enrollment.
Bear case
- DOJ intervened in a whistleblower suit. A company-news headline on 5 November 2026 reported the US Department of Justice joining a whistleblower lawsuit against Centene. Any damages claim or settlement charge would come on top of guidance of more than $5.20.
- Congress is asking about ACA terminations. Thirteen Senate Democrats sent letters on 26 October 2026 to ten insurers, Centene among them, about their role in ending Affordable Care Act coverage for 760,000 enrollees, with answers requested by 6 November 2026 (Fierce Healthcare). A 10 November 2026 company-news headline reported the inquiry into Centene's role.
- Membership is shrinking. Total at-risk membership was 25.7 million on 30 September 2026 against 28.0 million a year earlier. Marketplace fell to 3.4 million from 5.8 million, and Medicaid to 11.9 million from 12.7 million.
- The quarter's quality was mixed. The third quarter produced a GAAP net loss of $71 million, including $276 million of pre-tax severance and contract-exit costs. The selling, general and administrative expense ratio rose to 7.2%, and operating cash flow was negative $3.7 billion.
- Medicare quality ratings fell. Fierce Healthcare reported on 8 October 2026 that 9% of Centene's Medicare Advantage members are in plans rated four stars or higher for 2027, down from 18% for 2026.
- Targets are far apart. Deutsche Bank's $87 target compares with Goldman Sachs' target, set on 2 November 2026, which sits below the 12 November 2026 close.
Price setup
The shares closed at $70.27 on 12 November 2026. The 50-day average is $67.01 and the 200-day average is $56.49, both as of that close. The 52-week high is $78.08, set intraday on 5 November 2026.
The close fell from $74.17 on 5 November 2026 to $69.74 on 6 November 2026 and has held between $68.54 and $70.48 since. The 9 November 2026 close of $68.54 is the low of that range, and the 50-day average sits just under it.
Among SEC Form 4 filings, the last open-market transaction was the General Counsel's sale of 56,500 shares at $66.90 on 26 August 2026, before the third-quarter report. Filings since then are tax withholding on vested stock and director share awards.
Catalysts ahead
- ~November 2026 (est.): Launch of Centene's national Gold Card prior-authorization program for more than 160,000 qualifying providers. Tests management's claim that administrative friction with providers is easing; execution shows in later commentary.
- 31 December 2026: Ohana Health Plan exits Hawaii's Med-QUEST Medicaid program, about 24,000 members. Shows Centene walking away from contracts it judges underpriced, at the cost of membership.
- ~February 2027 (est.): Fourth-quarter 2026 results and 2027 guidance. Settles whether guidance of more than $5.20 holds, whether any DOJ-related charge appears, and how Medicaid and Marketplace pricing carry into 2027.
What would change the view
A daily close below $62, which would erase the rebound that began after the 30 September 2026 close; a cut or withdrawal of 2026 adjusted EPS guidance of more than $5.20 would also show the case failing.
The risks this note tracks, each with what would confirm it:
- The DOJ intervention in a whistleblower suit creates legal exposure or a settlement charge not in guidance. Confirmed by: a court filing or Centene disclosure quantifying alleged damages, or a reserve or settlement charge in the fourth-quarter report.
- Medicaid cost trend outruns state rate updates, eroding the margin-repair case. Confirmed by: a Medicaid health benefits ratio above the second quarter's 93.9% attributed to trend rather than timing in the next quarterly report.
- Marketplace membership keeps falling as federal enrollment clean-up and pricing take effect. Confirmed by: Marketplace membership below the 3.4 million reported on 30 September 2026, or a formal CMS action removing more enrollments.
- Congressional scrutiny of ACA coverage terminations widens into subpoenas, hearings or rule changes affecting Centene. Confirmed by: a committee hearing, document demand or CMS rule naming Centene's Marketplace practices.
- Lower 2027 star ratings reduce Medicare Advantage quality bonuses for 2028. Confirmed by: management quantifying a star-ratings revenue headwind or Medicare membership losses.
What it trades with
Centene trades with the managed-care group. UnitedHealth, Elevance, Humana and Molina results move the shares together, as do federal rules on Medicaid and Affordable Care Act subsidies. Molina is the closest read on Medicaid cost trend.
Medicaid expansion news also reaches the stock. STAT News reported on 10 November 2026 that Democratic wins in state elections make expansion possible for more than a million people.
The evidence, claim by claim (8)
- Centene raised 2026 adjusted diluted EPS guidance to more than $5.20 (up $0.40) and GAAP EPS guidance to more than $3.46; the full-year health benefits ratio range narrowed to 90.4%–91.1%. Centene Form 8-K, third-quarter 2026 press release · as of
- Third-quarter 2026 revenue was $50.6 billion, adjusted diluted EPS $0.58, GAAP diluted EPS a loss of $0.14, consolidated health benefits ratio 92.7% (Medicaid 93.6%, Medicare 93.8%, Commercial 89.0%). Centene Form 8-K, third-quarter 2026 press release · as of
- Total at-risk membership was 25.7 million versus 28.0 million a year earlier; Marketplace 3.4 million versus 5.8 million; Medicaid 11.9 million versus 12.7 million. Centene Form 8-K, third-quarter 2026 press release · as of
- The third quarter included $276 million of pre-tax severance and contract-exit costs; operating cash flow was negative $3.7 billion; total debt was $15.5 billion. Centene Form 8-K, third-quarter 2026 press release · as of
- Post-report price targets: Deutsche Bank $87, Barclays $82, Truist $82, Cantor Fitzgerald $79, UBS $78, Wells Fargo $75, J.P. Morgan $75, Morgan Stanley $71. Analyst target updates reported 28 October to 2 November 2026 · as of
- Thirteen Senate Democrats sent letters to ten insurers, including Centene, about their role in terminating ACA coverage for 760,000 enrollees, requesting answers by 6 November 2026. Fierce Healthcare, Becker's Hospital Review · as of
- 9% of Centene's Medicare Advantage members are in plans rated four stars or higher for 2027, down from 18% for 2026. Fierce Healthcare, 2027 Medicare Advantage star ratings · as of
- General Counsel Christopher Koster sold 56,500 shares in the open market at $66.90. SEC Form 4 filed 27 August 2026 · as of
Sources
- CENTENE CORP - Form 8-K - FY2026 · sec.gov ·
- Democratic senators probe insurers' role in canceling ACA coverage for 760K · fiercehealthcare.com
- Senators probe 10 insurers over role in terminating ACA coverage for 760,000 people · beckershospitalreview.com
- Centene posts $71M loss, $50.6B in revenue for Q3 · fiercehealthcare.com
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