Centene pulled back its guidance for the year after receiving an actuarial report suggesting its growth in the Affordable Care Act marketplaces will be lower than expected.
The insurer said an analysis from Wakely predicted that market growth in 22 of its states will fall short of expectations, and "aggregate market mobility" in those regions will not align with Centene's expectations around risk adjustment revenue transfers.
Based on the report, Centene said it expects the 2025 risk adjustment transfer to be about $1.8 billion lower than its expectations, making for a $2.75 impact on earnings per share.
Centene added that while it does not have data from the other seven states in its marketplace footprint, it expects to see similar morbidity trends in those regions.
At the same time, the company said it is reassessing and resubmitting its 2026 marketplace rates given the higher-than-expected morbidity trend.
"The company currently expects to be able to take corrective pricing actions for 2026 in states representing a substantial majority of its Marketplace membership," Centene said in its release.
The announcement also notes that Centene has seen a "step-up" in costs in Medicaid and expects a higher benefits ratio in its second-quarter results compared to the first quarter of 2025.
Medicare Advantage and Part D, however, are a likely bright spot for the second quarter, according to the company.
Centene's stock took a nosedive following the news, with shares down by nearly 40%. The announcement also dragged down other insurance companies, with Elevance Health, UnitedHealth Group and Molina Healthcare all trending down as of about 12:30 p.m. ET on Wednesday.