filings.toolsItem 1. Financial Statements.
101K characters. Original on sec.gov · Markdown
Item 1. Financial Statements.
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except shares in thousands and per share data in dollars)
| September 30, 2025 | December 31, 2024 | ||||||||||
| (Unaudited) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 17,058 | $ | 14,063 | |||||||
| Premium and trade receivables | 23,109 | 19,713 | |||||||||
| Short-term investments | 2,179 | 2,622 | |||||||||
| Other current assets | 1,716 | 1,601 | |||||||||
| Total current assets | 44,062 | 37,999 | |||||||||
| Long-term investments | 18,180 | 17,429 | |||||||||
| Restricted deposits | 1,416 | 1,390 | |||||||||
| Property, software and equipment, net | 2,161 | 2,067 | |||||||||
| Goodwill | 10,835 | 17,558 | |||||||||
| Intangible assets, net | 4,840 | 5,409 | |||||||||
| Other long-term assets | 593 | 593 | |||||||||
| Total assets | $ | 82,087 | $ | 82,445 | |||||||
| LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Medical claims liability | $ | 21,493 | $ | 18,308 | |||||||
| Accounts payable and accrued expenses | 16,875 | 13,174 | |||||||||
| Return of premium payable | 1,568 | 2,008 | |||||||||
| Unearned revenue | 656 | 661 | |||||||||
| Current portion of long-term debt | 38 | 110 | |||||||||
| Total current liabilities | 40,630 | 34,261 | |||||||||
| Long-term debt | 17,545 | 18,423 | |||||||||
| Deferred tax liability | 810 | 684 | |||||||||
| Other long-term liabilities | 2,047 | 2,567 | |||||||||
| Total liabilities | 61,032 | 55,935 | |||||||||
| Commitments and contingencies | |||||||||||
| Redeemable noncontrolling interests | 23 | 10 | |||||||||
| Stockholders' equity: | |||||||||||
| Preferred stock, $0.001 par value; authorized 10,000 shares; no shares issued or outstanding at September 30, 2025 and December 31, 2024 | — | — | |||||||||
| Common stock, $0.001 par value; authorized 800,000 shares; 623,120 issued and 491,414 outstanding at September 30, 2025, and 620,195 issued and 495,907 outstanding at December 31, 2024 | 1 | 1 | |||||||||
| Additional paid-in capital | 20,713 | 20,562 | |||||||||
| Accumulated other comprehensive (loss) | (100) | (504) | |||||||||
| Retained earnings | 9,775 | 15,348 | |||||||||
| Treasury stock, at cost (131,706 and 124,288 shares, respectively) | (9,441) | (8,997) | |||||||||
| Total Centene stockholders' equity | 20,948 | 26,410 | |||||||||
| Nonredeemable noncontrolling interest | 84 | 90 | |||||||||
| Total stockholders' equity | 21,032 | 26,500 | |||||||||
| Total liabilities, redeemable noncontrolling interests and stockholders' equity | $ | 82,087 | $ | 82,445 |
The accompanying notes to the consolidated financial statements are an integral part of these statements.
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except shares in thousands and per share data in dollars)
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Premium | $ | 44,126 | $ | 36,115 | $ | 127,578 | $ | 106,784 | |||||||||||||||
| Service | 772 | 784 | 2,276 | 2,425 | |||||||||||||||||||
| Premium and service revenues | 44,898 | 36,899 | 129,854 | 109,209 | |||||||||||||||||||
| Premium tax | 4,792 | 5,124 | 15,198 | 13,057 | |||||||||||||||||||
| Total revenues | 49,690 | 42,023 | 145,052 | 122,266 | |||||||||||||||||||
| Expenses: | |||||||||||||||||||||||
| Medical costs | 40,902 | 32,201 | 116,213 | 93,898 | |||||||||||||||||||
| Cost of services | 651 | 692 | 1,990 | 2,041 | |||||||||||||||||||
| Selling, general and administrative expenses | 3,145 | 3,057 | 9,534 | 9,169 | |||||||||||||||||||
| Depreciation expense | 147 | 140 | 430 | 408 | |||||||||||||||||||
| Amortization of acquired intangible assets | 170 | 173 | 516 | 519 | |||||||||||||||||||
| Premium tax expense | 4,886 | 5,095 | 15,449 | 13,218 | |||||||||||||||||||
| Impairment | 6,743 | — | 6,798 | 13 | |||||||||||||||||||
| Total operating expenses | 56,644 | 41,358 | 150,930 | 119,266 | |||||||||||||||||||
| Earnings (loss) from operations | (6,954) | 665 | (5,878) | 3,000 | |||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Investment and other income | 450 | 432 | 1,203 | 1,440 | |||||||||||||||||||
| Interest expense | (170) | (176) | (510) | (530) | |||||||||||||||||||
| Earnings (loss) before income tax | (6,674) | 921 | (5,185) | 3,910 | |||||||||||||||||||
| Income tax (benefit) expense | (42) | 211 | 392 | 896 | |||||||||||||||||||
| Net earnings (loss) | (6,632) | 710 | (5,577) | 3,014 | |||||||||||||||||||
| Loss attributable to noncontrolling interests | 1 | 3 | 4 | 8 | |||||||||||||||||||
| Net earnings (loss) attributable to Centene Corporation | $ | (6,631) | $ | 713 | $ | (5,573) | $ | 3,022 | |||||||||||||||
| Net earnings (loss) per common share attributable to Centene Corporation: | |||||||||||||||||||||||
| Basic earnings (loss) per common share | $ | (13.50) | $ | 1.37 | $ | (11.29) | $ | 5.71 | |||||||||||||||
| Diluted earnings (loss) per common share | $ | (13.50) | $ | 1.36 | $ | (11.29) | $ | 5.69 | |||||||||||||||
| Weighted average number of common shares outstanding: | |||||||||||||||||||||||
| Basic | 491,141 | 521,965 | 493,644 | 528,912 | |||||||||||||||||||
| Diluted | 491,141 | 523,542 | 493,644 | 530,915 | |||||||||||||||||||
The accompanying notes to the consolidated financial statements are an integral part of these statements.
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)
(In millions, unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net earnings (loss) | $ | (6,632) | $ | 710 | $ | (5,577) | $ | 3,014 | |||||||||||||||
| Change in unrealized gain on investments | 172 | 549 | 524 | 442 | |||||||||||||||||||
| Change in unrealized gain on investments, tax effect | (41) | (130) | (123) | (109) | |||||||||||||||||||
| Change in unrealized gain on investments, net of tax | 131 | 419 | 401 | 333 | |||||||||||||||||||
| Reclassification adjustment, net of tax | — | 1 | 3 | 93 | |||||||||||||||||||
| Other comprehensive earnings | 131 | 420 | 404 | 426 | |||||||||||||||||||
| Comprehensive earnings (loss) | (6,501) | 1,130 | (5,173) | 3,440 | |||||||||||||||||||
| Comprehensive loss attributable to noncontrolling interests | 1 | 3 | 4 | 8 | |||||||||||||||||||
| Comprehensive earnings (loss) attributable to Centene Corporation | $ | (6,500) | $ | 1,133 | $ | (5,169) | $ | 3,448 |
The accompanying notes to the consolidated financial statements are an integral part of these statements.
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In millions, except shares in thousands and per share data in dollars)
(Unaudited)
Three and Nine Months Ended September 30, 2025
| Centene Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $0.001 Par Value Shares | Amt | Additional Paid-in Capital | Accumulated Other Comprehensive Earnings (Loss) | Retained Earnings | $0.001 Par Value Shares | Amt | Noncontrolling Interest | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | 620,195 | $ | 1 | $ | 20,562 | $ | (504) | $ | 15,348 | 124,288 | $ | (8,997) | $ | 90 | $ | 26,500 | ||||||||||||||||||||||||||||||||||||||||
| Comprehensive Earnings: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | 1,311 | — | — | 1 | 1,312 | |||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive earnings, net of $50 tax | — | — | — | 167 | — | — | — | — | 167 | |||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for employee benefit plans | 2,316 | — | 10 | — | — | — | — | — | 10 | |||||||||||||||||||||||||||||||||||||||||||||||
| Common stock repurchases | — | — | — | — | — | 705 | (41) | — | (41) | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock compensation expense | — | — | 59 | — | — | — | — | — | 59 | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2025 | 622,511 | $ | 1 | $ | 20,631 | $ | (337) | $ | 16,659 | 124,993 | $ | (9,038) | $ | 91 | $ | 28,007 | ||||||||||||||||||||||||||||||||||||||||
| Comprehensive Earnings (Loss): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings (loss) | — | — | — | — | (253) | — | — | (5) | (258) | |||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive earnings, net of $33 tax | — | — | — | 106 | — | — | — | — | 106 | |||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for employee benefit plans | 340 | — | 9 | — | — | — | — | — | 9 | |||||||||||||||||||||||||||||||||||||||||||||||
| Common stock repurchases | (17) | — | (4) | — | — | 6,713 | (403) | — | (407) | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock compensation expense | — | — | 35 | — | — | — | — | — | 35 | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2025 | 622,834 | $ | 1 | $ | 20,671 | $ | (231) | $ | 16,406 | 131,706 | $ | (9,441) | $ | 86 | $ | 27,492 | ||||||||||||||||||||||||||||||||||||||||
| Comprehensive Earnings (Loss): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings (loss) | — | — | — | — | (6,631) | — | — | (2) | (6,633) | |||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive earnings, net of $40 tax | — | — | — | 131 | — | — | — | — | 131 | |||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for employee benefit plans | 297 | — | 10 | — | — | — | — | — | 10 | |||||||||||||||||||||||||||||||||||||||||||||||
| Common stock repurchases | (11) | — | (1) | — | — | — | — | — | (1) | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock compensation expense | — | — | 52 | — | — | — | — | — | 52 | |||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of redeemable noncontrolling interests | — | — | (19) | — | — | — | — | — | (19) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2025 | 623,120 | $ | 1 | $ | 20,713 | $ | (100) | $ | 9,775 | 131,706 | $ | (9,441) | $ | 84 | $ | 21,032 |
Three and Nine Months Ended September 30, 2024
| Centene Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| $0.001 Par Value Shares | Amt | Additional Paid-in Capital | Accumulated Other Comprehensive Earnings (Loss) | Retained Earnings | $0.001 Par Value Shares | Amt | Noncontrolling Interest | Total | |||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | 615,291 | $ | 1 | $ | 20,304 | $ | (652) | $ | 12,043 | 80,807 | $ | (5,856) | $ | 97 | $ | 25,937 | |||||||||||||||||||||||||||||||||||||
| Comprehensive Earnings: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings (loss) | — | — | — | — | 1,163 | — | — | (4) | 1,159 | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive earnings, net of $(12) tax | — | — | — | 22 | — | — | — | — | 22 | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for employee benefit plans | 3,882 | — | 14 | — | — | — | — | — | 14 | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock repurchases | — | — | — | — | — | 1,983 | (151) | — | (151) | ||||||||||||||||||||||||||||||||||||||||||||
| Stock compensation expense | — | — | 70 | — | — | — | — | — | 70 | ||||||||||||||||||||||||||||||||||||||||||||
| Divestiture of non-controlling interest | — | — | — | — | — | — | — | (3) | (3) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | 619,173 | $ | 1 | $ | 20,388 | $ | (630) | $ | 13,206 | 82,790 | $ | (6,007) | $ | 90 | $ | 27,048 | |||||||||||||||||||||||||||||||||||||
| Comprehensive Earnings: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | 1,146 | — | — | — | 1,146 | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of $(5) tax | — | — | — | (16) | — | — | — | — | (16) | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for employee benefit plans | 322 | — | 11 | — | — | — | — | — | 11 | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock repurchases | — | — | — | — | — | 10,704 | (810) | — | (810) | ||||||||||||||||||||||||||||||||||||||||||||
| Stock compensation expense | — | — | 62 | — | — | — | — | — | 62 | ||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | 619,495 | $ | 1 | $ | 20,461 | $ | (646) | $ | 14,352 | 93,494 | $ | (6,817) | $ | 90 | $ | 27,441 | |||||||||||||||||||||||||||||||||||||
| Comprehensive Earnings: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings (loss) | — | — | — | — | 713 | — | — | (1) | 712 | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive earnings, net of $131 tax | — | — | — | 420 | — | — | — | — | 420 | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for employee benefit plans | 450 | — | 12 | — | — | — | — | — | 12 | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock repurchases | — | — | — | — | — | 16,373 | (1,238) | — | (1,238) | ||||||||||||||||||||||||||||||||||||||||||||
| Stock compensation expense | — | — | 49 | — | — | — | — | — | 49 | ||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2024 | 619,945 | $ | 1 | $ | 20,522 | $ | (226) | $ | 15,065 | 109,867 | $ | (8,055) | $ | 89 | $ | 27,396 |
The accompanying notes to the consolidated financial statements are an integral part of these statements.
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions, unaudited)
| Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net earnings (loss) | $ | (5,577) | $ | 3,014 | |||||||
| Adjustments to reconcile net earnings (loss) to net cash provided by operating activities | |||||||||||
| Depreciation and amortization | 946 | 927 | |||||||||
| Stock compensation expense | 146 | 181 | |||||||||
| Impairment | 6,798 | 13 | |||||||||
| Deferred income taxes | 13 | 14 | |||||||||
| (Gain) loss on divestitures, net | 10 | (103) | |||||||||
| Changes in assets and liabilities | |||||||||||
| Premium and trade receivables | (3,338) | (2,737) | |||||||||
| Other assets | (245) | 78 | |||||||||
| Medical claims liabilities | 3,176 | (5) | |||||||||
| Unearned revenue | (5) | (58) | |||||||||
| Accounts payable and accrued expenses | 2,681 | (503) | |||||||||
| Other long-term liabilities | 38 | (84) | |||||||||
| Other operating activities, net | 8 | 4 | |||||||||
| Net cash provided by operating activities | 4,651 | 741 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | (554) | (490) | |||||||||
| Purchases of investments | (3,765) | (5,770) | |||||||||
| Sales and maturities of investments | 4,131 | 4,147 | |||||||||
| Divestiture proceeds, net of divested cash | — | 959 | |||||||||
| Net cash (used in) investing activities | (188) | (1,154) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from long-term debt | 750 | 350 | |||||||||
| Payments and repurchases of long-term debt | (1,708) | (594) | |||||||||
| Common stock repurchases | (473) | (2,181) | |||||||||
| Proceeds from common stock issuances | 29 | 37 | |||||||||
| Purchase of noncontrolling interest | (19) | — | |||||||||
| Other financing activities, net | (13) | (5) | |||||||||
| Net cash (used in) financing activities | (1,434) | (2,393) | |||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | — | 7 | |||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents | 3,029 | (2,799) | |||||||||
| Cash and cash equivalents reclassified (to) from held for sale | — | (3) | |||||||||
| Cash, cash equivalents and restricted cash and cash equivalents, beginning of period | 14,156 | 17,452 | |||||||||
| Cash, cash equivalents and restricted cash and cash equivalents, end of period | $ | 17,185 | $ | 14,650 | |||||||
| Supplemental disclosures of cash flow information: | |||||||||||
| Interest paid | $ | 458 | $ | 495 | |||||||
| Income taxes paid, net | $ | 540 | $ | 821 | |||||||
| The following table provides a reconciliation of cash, cash equivalents and restricted cash and cash equivalents reported within the Consolidated Balance Sheets to the totals above: | |||||||||||
| September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash and cash equivalents | $ | 17,058 | $ | 14,577 | |||||||
| Restricted cash and cash equivalents, included in restricted deposits | 127 | 73 | |||||||||
| Total cash, cash equivalents and restricted cash and cash equivalents | $ | 17,185 | $ | 14,650 |
The accompanying notes to the consolidated financial statements are an integral part of these statements.
CENTENE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Organization and Operations
Basis of Presentation
The accompanying interim financial statements have been prepared under the presumption that users of the interim financial information have either read or have access to the audited financial statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The unaudited interim financial statements herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, footnote disclosures that would substantially duplicate the disclosures contained in the December 31, 2024 audited financial statements have been omitted from these interim financial statements, where appropriate. In the opinion of management, these financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the results of the interim periods presented.
Certain 2024 amounts in the consolidated financial statements and notes to the consolidated financial statements have been reclassified to conform to the 2025 presentation. These reclassifications have no effect on net earnings or stockholders' equity as previously reported.
Recent Accounting Guidance Not Yet Adopted
In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03 – Income Statement – Reporting Comprehensive Income: Disaggregation of Income Statement Expenses which expands disclosures about specific expense categories presented on the face of the Statement of Operations. The new standard is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The Company is currently evaluating the effect of the new disclosure requirements.
In September 2025, the FASB issued ASU 2025-06 – Intangibles –Goodwill and Other – Internal-Use Software. The guidance modernizes and clarifies the threshold for when an entity is required to start capitalizing software costs by removing stage-based and linear capitalization rules and is based on when (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. The new standard is effective for fiscal years and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this standard.
2. Short-term and Long-term Investments, Restricted Deposits
Short-term and long-term investments and restricted deposits by investment type consist of the following ($ in millions):
| September 30, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||||||||||||||||||||||||||||||||
| Debt securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 522 | $ | 3 | $ | (1) | $ | 524 | $ | 593 | $ | 2 | $ | (4) | $ | 591 | ||||||||||||||||||||||||||||||||||
| Corporate securities | 11,230 | 172 | (175) | 11,227 | 10,820 | 47 | (360) | 10,507 | ||||||||||||||||||||||||||||||||||||||||||
| Restricted certificates of deposit | 1 | — | — | 1 | 4 | — | — | 4 | ||||||||||||||||||||||||||||||||||||||||||
| Restricted cash equivalents | 127 | — | — | 127 | 93 | — | — | 93 | ||||||||||||||||||||||||||||||||||||||||||
| Short-term time deposits | 19 | — | — | 19 | 425 | — | — | 425 | ||||||||||||||||||||||||||||||||||||||||||
| Municipal securities | 3,988 | 36 | (81) | 3,943 | 4,174 | 7 | (151) | 4,030 | ||||||||||||||||||||||||||||||||||||||||||
| Asset-backed securities | 1,807 | 23 | (12) | 1,818 | 1,820 | 13 | (21) | 1,812 | ||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage-backed securities | 1,808 | 16 | (79) | 1,745 | 1,807 | 1 | (129) | 1,679 | ||||||||||||||||||||||||||||||||||||||||||
| Commercial mortgage-backed securities | 1,264 | 10 | (37) | 1,237 | 1,298 | 3 | (62) | 1,239 | ||||||||||||||||||||||||||||||||||||||||||
| Equity securities | 13 | — | — | 13 | 14 | — | — | 14 | ||||||||||||||||||||||||||||||||||||||||||
| Private equity investments | 908 | — | — | 908 | 851 | — | — | 851 | ||||||||||||||||||||||||||||||||||||||||||
| Life insurance contracts | 213 | — | — | 213 | 196 | — | — | 196 | ||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 21,900 | $ | 260 | $ | (385) | $ | 21,775 | $ | 22,095 | $ | 73 | $ | (727) | $ | 21,441 | ||||||||||||||||||||||||||||||||||
The Company's investments are debt securities classified as available-for-sale with the exception of equity securities, certain private equity investments and life insurance contracts. Private equity investments include direct investments in private equity securities as well as private equity funds. The Company's investment policies are designed to provide liquidity, preserve capital and maximize total return on invested assets with a focus on high credit quality securities. The Company limits the size of investment in any single issuer other than U.S. treasury securities and obligations of U.S. government corporations and agencies. As of September 30, 2025, 99% of the Company's investments in rated securities carry an investment grade rating by nationally recognized statistical rating organizations. At September 30, 2025, the Company held certificates of deposit, equity securities, private equity investments and life insurance contracts, which did not carry a credit rating. Accrued interest income on available-for-sale debt securities was $183 million and $178 million at September 30, 2025 and December 31, 2024, respectively, and is included in other current assets in the Consolidated Balance Sheets.
The Company's residential mortgage-backed securities are primarily issued by the Federal National Mortgage Association, Government National Mortgage Association or Federal Home Loan Mortgage Corporation, which carry implicit or explicit guarantees of the U.S. government. The Company's commercial mortgage-backed securities are primarily senior tranches with a weighted average rating of AA+ and a weighted average duration of 3 years at September 30, 2025.
The fair value of available-for-sale debt securities with gross unrealized losses by investment type and length of time that individual securities have been in a continuous unrealized loss position were as follows ($ in millions):
| September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Less Than 12 Months | 12 Months or More | Less Than 12 Months | 12 Months or More | ||||||||||||||||||||||||||||||||||||||||||||
| Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | ||||||||||||||||||||||||||||||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | — | $ | 36 | $ | (1) | $ | 58 | $ | (1) | $ | 60 | $ | (3) | $ | 144 | |||||||||||||||||||||||||||||||
| Corporate securities | (2) | 465 | (173) | 3,724 | (41) | 2,621 | (319) | 4,782 | |||||||||||||||||||||||||||||||||||||||
| Municipal securities | (1) | 231 | (80) | 1,740 | (16) | 1,217 | (135) | 2,073 | |||||||||||||||||||||||||||||||||||||||
| Asset-backed securities | (2) | 50 | (10) | 235 | (4) | 301 | (17) | 331 | |||||||||||||||||||||||||||||||||||||||
| Residential mortgage-backed securities | (1) | 148 | (78) | 720 | (18) | 786 | (111) | 738 | |||||||||||||||||||||||||||||||||||||||
| Commercial mortgage-backed securities | — | 85 | (37) | 545 | (4) | 210 | (58) | 666 | |||||||||||||||||||||||||||||||||||||||
| Total | $ | (6) | $ | 1,015 | $ | (379) | $ | 7,022 | $ | (84) | $ | 5,195 | $ | (643) | $ | 8,734 |
As of September 30, 2025, the gross unrealized losses were generated from 3,513 positions out of a total of 6,459 positions. The change in fair value of available-for-sale debt securities is primarily a result of movement in interest rates subsequent to the purchase of the security.
For each security in an unrealized loss position, the Company assesses whether it intends to sell the security or if it is more likely than not the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes. If the security meets this criterion, the decline in fair value is recorded in earnings. The Company does not intend to sell these securities prior to maturity and it is not likely that the Company will be required to sell these securities prior to maturity; therefore, the Company did not record an impairment for these securities.
In addition, the Company monitors available-for-sale debt securities for credit losses. Certain investments have experienced a decline in fair value due to changes in credit quality, market interest rates and/or general economic conditions. The Company recognizes an allowance when evidence demonstrates that the decline in fair value is credit related. Evidence of a credit-related loss may include rating agency actions, adverse conditions specifically related to the security or failure of the issuer of the security to make scheduled payments.
The contractual maturities of short-term and long-term debt securities and restricted deposits are as follows ($ in millions):
| September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Investments | Restricted Deposits | Investments | Restricted Deposits | ||||||||||||||||||||||||||||||||||||||||||||
| Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||||||||||||||||||||||||||||
| One year or less | $ | 1,971 | $ | 1,958 | $ | 556 | $ | 556 | $ | 2,383 | $ | 2,365 | $ | 477 | $ | 475 | |||||||||||||||||||||||||||||||
| One year through five years | 8,023 | 7,956 | 517 | 507 | 7,799 | 7,563 | 610 | 593 | |||||||||||||||||||||||||||||||||||||||
| Five years through ten years | 4,339 | 4,380 | 310 | 315 | 4,343 | 4,172 | 301 | 291 | |||||||||||||||||||||||||||||||||||||||
| Greater than ten years | 133 | 131 | 38 | 38 | 165 | 160 | 31 | 31 | |||||||||||||||||||||||||||||||||||||||
| Asset-backed securities | 4,879 | 4,800 | — | — | 4,925 | 4,730 | — | — | |||||||||||||||||||||||||||||||||||||||
| Total | $ | 19,345 | $ | 19,225 | $ | 1,421 | $ | 1,416 | $ | 19,615 | $ | 18,990 | $ | 1,419 | $ | 1,390 |
Actual maturities may differ from contractual maturities due to call or prepayment options. Equity securities, private equity investments and life insurance contracts are excluded from the table above because they do not have a contractual maturity. The Company has an option to redeem substantially all of the securities included in the greater than ten years category listed above at amortized cost.
3. Fair Value Measurements
Assets and liabilities recorded at fair value in the Consolidated Balance Sheets are categorized based upon observable or unobservable inputs used to estimate fair value. Level inputs are as follows:
| Level Input: | Input Definition: | |||||||
| Level I | Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date. | |||||||
| Level II | Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date. | |||||||
| Level III | Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. |
The following table summarizes fair value measurements by level at September 30, 2025, for assets and liabilities measured at fair value on a recurring basis ($ in millions):
| Level I | Level II | Level III | Total | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 17,058 | $ | — | $ | — | $ | 17,058 | |||||||||||||||
| Investments: | |||||||||||||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 56 | $ | — | $ | — | $ | 56 | |||||||||||||||
| Corporate securities | — | 11,217 | — | 11,217 | |||||||||||||||||||
| Municipal securities | — | 3,133 | — | 3,133 | |||||||||||||||||||
| Short-term time deposits | — | 19 | — | 19 | |||||||||||||||||||
| Asset-backed securities | — | 1,818 | — | 1,818 | |||||||||||||||||||
| Residential mortgage-backed securities | — | 1,745 | — | 1,745 | |||||||||||||||||||
| Commercial mortgage-backed securities | — | 1,237 | — | 1,237 | |||||||||||||||||||
| Equity securities | 12 | 1 | — | 13 | |||||||||||||||||||
| Total investments | $ | 68 | $ | 19,170 | $ | — | $ | 19,238 | |||||||||||||||
| Restricted deposits: | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 127 | $ | — | $ | — | $ | 127 | |||||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | 468 | — | — | 468 | |||||||||||||||||||
| Corporate securities | — | 10 | — | 10 | |||||||||||||||||||
| Certificates of deposit | — | 1 | — | 1 | |||||||||||||||||||
| Municipal securities | — | 810 | — | 810 | |||||||||||||||||||
| Total restricted deposits | $ | 595 | $ | 821 | $ | — | $ | 1,416 | |||||||||||||||
| Total assets at fair value | $ | 17,721 | $ | 19,991 | $ | — | $ | 37,712 | |||||||||||||||
The following table summarizes fair value measurements by level at December 31, 2024, for assets and liabilities measured at fair value on a recurring basis ($ in millions):
| Level I | Level II | Level III | Total | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 14,063 | $ | — | $ | — | $ | 14,063 | |||||||||||||||
| Investments: | |||||||||||||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 58 | $ | — | $ | — | $ | 58 | |||||||||||||||
| Corporate securities | — | 10,505 | — | 10,505 | |||||||||||||||||||
| Municipal securities | — | 3,272 | — | 3,272 | |||||||||||||||||||
| Short-term time deposits | — | 425 | — | 425 | |||||||||||||||||||
| Asset-backed securities | — | 1,812 | — | 1,812 | |||||||||||||||||||
| Residential mortgage-backed securities | — | 1,679 | — | 1,679 | |||||||||||||||||||
| Commercial mortgage-backed securities | — | 1,239 | — | 1,239 | |||||||||||||||||||
| Equity securities | 13 | 1 | — | 14 | |||||||||||||||||||
| Total investments | $ | 71 | $ | 18,933 | $ | — | $ | 19,004 | |||||||||||||||
| Restricted deposits: | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 93 | $ | — | $ | — | $ | 93 | |||||||||||||||
| U.S. Treasury securities and obligations of U.S. government corporations and agencies | 533 | — | — | 533 | |||||||||||||||||||
| Corporate securities | — | 2 | — | 2 | |||||||||||||||||||
| Certificates of deposit | — | 4 | — | 4 | |||||||||||||||||||
| Municipal securities | — | 758 | — | 758 | |||||||||||||||||||
| Total restricted deposits | $ | 626 | $ | 764 | $ | — | $ | 1,390 | |||||||||||||||
| Total assets at fair value | $ | 14,760 | $ | 19,697 | $ | — | $ | 34,457 | |||||||||||||||
The Company utilizes matrix-pricing services to estimate fair value for securities which are not actively traded on the measurement date. The Company designates these securities as Level II fair value measurements. In addition, the aggregate carrying amount of the Company's private equity investments and life insurance contracts, which approximates fair value, was $1,121 million and $1,047 million as of September 30, 2025 and December 31, 2024, respectively.
4. Goodwill and Intangible Assets
The passage of the One Big Beautiful Bill Act in July 2025 had various implications for the Company, including potential membership impacts to the Company's Medicaid reporting unit as well as the non-renewal of Marketplace enhanced Advance Premium Tax Credits. As a result of these market conditions along with the decline in the Company's stock price, the Company performed a quantitative impairment analysis during the third quarter to determine whether goodwill, intangibles or other assets were impaired.
The goodwill impairment analysis utilized a weighted discounted cash flow model and guideline public company market approach to measure the fair value of the Company's reporting units. As a result of the analysis, the Company recorded a $6,723 million impairment to goodwill.
The following table summarizes the changes in goodwill by operating segment ($ in millions):
| Medicaid | Medicare | Commercial | Other | Consolidated Total | |||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | 10,198 | $ | 1,592 | $ | 5,424 | $ | 344 | $ | 17,558 | |||||||||||||||||||
| Impairments | (6,186) | — | (212) | (325) | (6,723) | ||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | 4,012 | $ | 1,592 | $ | 5,212 | $ | 19 | $ | 10,835 |
5. Medical Claims Liability
The following table summarizes the change in medical claims liability for the nine months ended September 30, 2025 ($ in millions):
| Medicaid | Medicare | Commercial | Other | Consolidated Total | |||||||||||||||||||||||||
| Balance, January 1, 2025 | $ | 10,299 | $ | 3,358 | $ | 4,463 | $ | 188 | $ | 18,308 | |||||||||||||||||||
| Less: Reinsurance recoverable | 18 | — | 47 | — | 65 | ||||||||||||||||||||||||
| Balance, January 1, 2025, net | 10,281 | 3,358 | 4,416 | 188 | 18,243 | ||||||||||||||||||||||||
| Incurred related to: | |||||||||||||||||||||||||||||
| Current year | 64,181 | 25,306 | 27,111 | 1,597 | 118,195 | ||||||||||||||||||||||||
| Prior years | (1,143) | (501) | (504) | (24) | (2,172) | ||||||||||||||||||||||||
| Total incurred | 63,038 | 24,805 | 26,607 | 1,573 | 116,023 | ||||||||||||||||||||||||
| Paid related to: | |||||||||||||||||||||||||||||
| Current year | 53,764 | 21,544 | 22,201 | 1,426 | 98,935 | ||||||||||||||||||||||||
| Prior years | 8,229 | 2,461 | 3,250 | 161 | 14,101 | ||||||||||||||||||||||||
| Total paid | 61,993 | 24,005 | 25,451 | 1,587 | 113,036 | ||||||||||||||||||||||||
| Plus: Premium deficiency reserve | — | 190 | — | — | 190 | ||||||||||||||||||||||||
| Balance, September 30, 2025, net | 11,326 | 4,348 | 5,572 | 174 | 21,420 | ||||||||||||||||||||||||
| Plus: Reinsurance recoverable | 17 | — | 56 | — | 73 | ||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | 11,343 | $ | 4,348 | $ | 5,628 | $ | 174 | $ | 21,493 |
The following table summarizes the change in medical claims liability for the nine months ended September 30, 2024 ($ in millions):
| Medicaid | Medicare | Commercial | Other | Consolidated Total | |||||||||||||||||||||||||
| Balance, January 1, 2024 | $ | 10,814 | $ | 3,612 | $ | 3,460 | $ | 114 | $ | 18,000 | |||||||||||||||||||
| Less: Reinsurance recoverable | 5 | — | 44 | — | 49 | ||||||||||||||||||||||||
| Balance, January 1, 2024, net | 10,809 | 3,612 | 3,416 | 114 | 17,951 | ||||||||||||||||||||||||
| Incurred related to: | |||||||||||||||||||||||||||||
| Current year | 59,327 | 16,134 | 19,211 | 1,216 | 95,888 | ||||||||||||||||||||||||
| Prior years | (1,247) | (439) | (306) | 7 | (1,985) | ||||||||||||||||||||||||
| Total incurred | 58,080 | 15,695 | 18,905 | 1,223 | 93,903 | ||||||||||||||||||||||||
| Paid related to: | |||||||||||||||||||||||||||||
| Current year | 50,198 | 13,006 | 15,773 | 1,040 | 80,017 | ||||||||||||||||||||||||
| Prior years | 8,543 | 2,713 | 2,523 | 120 | 13,899 | ||||||||||||||||||||||||
| Total paid | 58,741 | 15,719 | 18,296 | 1,160 | 93,916 | ||||||||||||||||||||||||
| Plus: Premium deficiency reserve | — | (5) | — | — | (5) | ||||||||||||||||||||||||
| Balance, September 30, 2024, net | 10,148 | 3,583 | 4,025 | 177 | 17,933 | ||||||||||||||||||||||||
| Plus: Reinsurance recoverable | 20 | — | 42 | — | 62 | ||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | 10,168 | $ | 3,583 | $ | 4,067 | $ | 177 | $ | 17,995 |
Reinsurance recoverables related to medical claims are included in premium and trade receivables. Changes in estimates of incurred claims for prior years are primarily attributable to reserving under moderately adverse conditions. Additionally, as a result of development within "Incurred related to: Prior years," the Company recorded $86 million and $236 million as a reduction to premium revenue in the nine months ended September 30, 2025 and 2024, respectively, for minimum medical loss ratio (MLR) and other return of premium programs.
Incurred but not reported (IBNR) plus expected development on reported claims as of September 30, 2025 was $13,947 million. Total IBNR plus expected development on reported claims represents estimates for claims incurred but not reported, development on reported claims and estimates for the costs necessary to process unpaid claims at the end of each period. The Company estimates its liability using actuarial methods that are commonly used by health insurance actuaries and meet Actuarial Standards of Practice. These actuarial methods consider factors such as historical data for payment patterns, cost trends, product mix, seasonality, utilization of healthcare services and other relevant factors.
The Company reviews actual and anticipated experience compared to the assumptions used to establish medical costs. The Company establishes premium deficiency reserves if actual and anticipated experience indicates that existing policy liabilities together with the present value of future gross premiums will not be sufficient to cover the present value of future benefits, settlement and maintenance costs. For purposes of determining premium deficiencies, contracts are grouped in a manner consistent with the method of acquiring, servicing and measuring the profitability of such contracts and expected investment income is excluded. In December 2024, the Company recorded a premium deficiency reserve of $92 million related to the 2025 Medicare Advantage contract year. The premium deficiency reserve was increased to $270 million in the first quarter of 2025, to $389 million in the second quarter of 2025 and decreased by $107 million to $282 million in the third quarter of 2025 based on the progression of earnings during the year (with higher earnings at the beginning of the year and lower at the end of the year, given cost sharing progression), including anticipated impacts of the Inflation Reduction Act to the Part D benefit within the Company's Medicare Advantage business. In December 2023, the Company recorded a premium deficiency reserve of $250 million related to the 2024 Medicare Advantage contract year, which was increased to $300 million in the first quarter of 2024, to $335 million in the second quarter of 2024 and decreased by $90 million to $245 million in the third quarter of 2024 consistent with the progression of earnings during the year.
6. Affordable Care Act
The Affordable Care Act established risk spreading premium stabilization programs as well as a minimum annual MLR and cost sharing reductions.
The Company's net receivables (payables) for each of the programs are as follows ($ in millions):
| September 30, 2025 | December 31, 2024 | ||||||||||
| Risk adjustment receivable | $ | 1,871 | $ | 1,434 | |||||||
| Risk adjustment payable | (1,960) | (1,605) | |||||||||
| Minimum medical loss ratio | (246) | (688) | |||||||||
| Cost sharing reduction receivable | 21 | 305 | |||||||||
| Cost sharing reduction payable | (11) | (74) |
In June 2025, the Centers for Medicare and Medicaid Services (CMS) announced the final risk adjustment transfers for the 2024 benefit year. CMS announced an update to the final risk adjustment transfer in July 2025, and the risk adjustment net receivable was increased by $14 million in the third quarter of 2025, for a total increase of $504 million in the nine months ended September 30, 2025. After consideration of minimum MLR and other related impacts, the net pre-tax benefit recognized was $191 million in the nine months ended September 30, 2025.
As of September 30, 2025, the Company's 2025 benefit year net risk adjustment payable was $919 million.
7. Debt
Debt consists of the following ($ in millions):
| September 30, 2025 | December 31, 2024 | ||||||||||
| $2,500 million 4.25% Senior Notes due December 15, 2027 | $ | 2,400 | $ | 2,398 | |||||||
| $2,300 million 2.45% Senior Notes due July 15, 2028 | 2,302 | 2,302 | |||||||||
| $3,500 million 4.625% Senior Notes due December 15, 2029 | 3,277 | 3,277 | |||||||||
| $2,000 million 3.375% Senior Notes due February 15, 2030 | 2,000 | 2,000 | |||||||||
| $2,200 million 3.00% Senior Notes due October 15, 2030 | 2,200 | 2,200 | |||||||||
| $2,200 million 2.50% Senior Notes due March 1, 2031 | 2,200 | 2,200 | |||||||||
| $1,300 million 2.625% Senior Notes due August 1, 2031 | 1,300 | 1,300 | |||||||||
| Total senior notes | 15,679 | 15,677 | |||||||||
| Term Loan Facility | 2,000 | 2,006 | |||||||||
| Revolving Credit Agreement | — | 950 | |||||||||
| Debt issuance costs | (96) | (100) | |||||||||
| Total debt | 17,583 | 18,533 | |||||||||
| Less: current portion | (38) | (110) | |||||||||
| Long-term debt | $ | 17,545 | $ | 18,423 |
Revolving Credit Facility and Term Loan Credit Facility
On March 5, 2025, the Company entered into a new Credit Agreement (New Credit Agreement) and terminated all outstanding commitments and repaid all outstanding obligations under the Fourth Amended and Restated Credit Agreement, dated as of August 16, 2021 (as amended).
The New Credit Agreement provides for (i) a revolving credit facility in the principal amount of $4,000 million (the Revolving Credit Facility) and (ii) a term loan facility in the principal amount of $2,000 million (the Term Loan Facility). The maturity date for the New Credit Agreement is March 5, 2030. Loans under the Revolving Credit Facility may be denominated in U.S. dollars, Euros, Sterling, Swiss Francs, Yen, Australian dollars and Canadian dollars and each other currency which has been approved under the terms of the New Credit Agreement.
Borrowings under the New Credit Agreement will bear interest at a fluctuating rate per annum equal to a benchmark rate applicable to the currency composing such borrowing plus an applicable margin. The applicable margin is in each case based on the rating of Centene's corporate debt obligations by S&P and Moody's and is primarily a linear progression corresponding to the Company's credit rating as defined in the New Credit Agreement. The applicable margin for base rate loans changes in increments of 0.25% increasing or decreasing between pricing levels at the corresponding rating level.
The Company is subject to a financial covenant under the New Credit Agreement, tested quarterly, whereby the debt-to-capital ratio may not exceed 0.60 to 1.00, with a step-up, upon the Company's election, following the consummation of a material acquisition, to 0.65 to 1.00 during certain specified periods.
8. Stockholders' Equity
The Company's Board of Directors has authorized a stock repurchase program of the Company's common stock from time to time on the open market or through privately negotiated transactions. The Company is authorized to repurchase up to $10,000 million, inclusive of past authorizations. As of September 30, 2025, the Company had a remaining amount of $1,830 million available under the stock repurchase program.
The following represents the Company's share repurchase activity ($ in millions, shares in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| Shares | Cost | Shares | Cost | Shares | Cost | Shares | Cost | ||||||||||||||||||||||||||||||||||||||||
| Share buybacks | — | $ | — | 16,254 | $ | 1,218 | 6,713 | $ | 400 | 27,595 | $ | 2,069 | |||||||||||||||||||||||||||||||||||
| Income tax withholding | 11 | 1 | 119 | 9 | 733 | 46 | 1,465 | 112 | |||||||||||||||||||||||||||||||||||||||
| Total share repurchases (1) | 11 | $ | 1 | 16,373 | $ | 1,227 | 7,446 | $ | 446 | 29,060 | $ | 2,181 | |||||||||||||||||||||||||||||||||||
| (1) | Excludes year-to-date share repurchase excise tax of approximately $3 million and $18 million accrued as of September 30, 2025 and 2024, respectively. |
Prior to the adoption of the 2025 Stock Incentive Plan in May 2025, shares repurchased for income tax withholding were shares withheld in connection with employee stock plans to meet applicable tax withholding requirements. These shares were typically included in the Company's treasury stock. After the adoption of the 2025 Stock Incentive Plan, shares repurchased for income tax withholding are typically recorded as a reduction to additional paid-in capital.
9. Earnings Per Share
The following table sets forth the calculation of basic and diluted net earnings (loss) per common share ($ in millions, except per share data in dollars and shares in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Earnings (loss) attributable to Centene Corporation | $ | (6,631) | $ | 713 | $ | (5,573) | $ | 3,022 | ||||||||||||||||||
| Shares used in computing per share amounts: | ||||||||||||||||||||||||||
| Weighted average number of common shares outstanding | 491,141 | 521,965 | 493,644 | 528,912 | ||||||||||||||||||||||
| Common stock equivalents (as determined by applying the treasury stock method) | — | 1,577 | — | 2,003 | ||||||||||||||||||||||
| Weighted average number of common shares and potential dilutive common shares outstanding | 491,141 | 523,542 | 493,644 | 530,915 | ||||||||||||||||||||||
| Net earnings (loss) per common share attributable to Centene Corporation: | ||||||||||||||||||||||||||
| Basic earnings (loss) per common share | $ | (13.50) | $ | 1.37 | $ | (11.29) | $ | 5.71 | ||||||||||||||||||
| Diluted earnings (loss) per common share | $ | (13.50) | $ | 1.36 | $ | (11.29) | $ | 5.69 |
The calculation of diluted loss per common share for the three months ended September 30, 2025 excludes 6,930 thousand shares related to stock options, restricted stock and restricted stock units as their effect would have been anti-dilutive due to the net loss for the quarter. The calculation of diluted earnings per common share for the three months ended September 30, 2024 excludes 273 thousand shares related to anti-dilutive stock options, restricted stock and restricted stock units.
The calculation of diluted loss per common share for the nine months ended September 30, 2025 excludes 5,302 thousand shares related to stock options, restricted stock and restricted stock units as their effect would have been anti-dilutive due to the net loss for the quarter. The calculation of diluted earnings per common share for the nine months ended September 30, 2024 excludes 266 thousand shares related to anti-dilutive stock options, restricted stock, and restricted stock units.
10. Segment Information
The Company operates in four segments: (1) a Medicaid segment, (2) a Medicare segment, (3) a Commercial segment and (4) an Other segment. The Medicaid, Medicare and Commercial segments primarily represent the government-sponsored or subsidized programs under which the Company offers managed healthcare services. The Other segment includes the Company's pharmacy operations, vision and dental services, clinical healthcare, behavioral health, and corporate management company, among others.
Factors used in determining the reportable business segments include the nature of operating activities, the existence of separate senior management teams and the type of information presented to the Company's chief operating decision-maker (CODM) to evaluate all results of operations. The Company's CODM is its Chief Executive Officer. The Company's CODM focuses primarily on each segment's ability to generate sufficient revenues and manage expenses associated with health benefits and cost of services (including estimated costs incurred). As such, the CODM measures operating performance at the segment level based on gross margin, including evaluation of budget to actual variances, to determine the allocation of financial and capital resources for each segment. The Company does not report total assets by segment since this is not a metric used by the Company's CODM to allocate resources or evaluate segment performance.
Segment information for the three months ended September 30, 2025, is as follows ($ in millions):
| Medicaid | Medicare | Commercial | Other/Eliminations | Consolidated Total | ||||||||||||||||||||||||||||||||||
| Premium | $ | 23,146 | $ | 9,391 | $ | 10,991 | $ | 598 | $ | 44,126 | ||||||||||||||||||||||||||||
| Service | 25 | — | 1 | 746 | 772 | |||||||||||||||||||||||||||||||||
| Premium and service revenues | 23,171 | 9,391 | 10,992 | 1,344 | 44,898 | |||||||||||||||||||||||||||||||||
| Premium tax | 4,792 | — | — | — | 4,792 | |||||||||||||||||||||||||||||||||
| Total external revenues | 27,963 | 9,391 | 10,992 | 1,344 | 49,690 | |||||||||||||||||||||||||||||||||
| Internal revenues | — | — | — | 4,194 | 4,194 | |||||||||||||||||||||||||||||||||
| Eliminations | — | — | — | (4,194) | (4,194) | |||||||||||||||||||||||||||||||||
| Total revenues | $ | 27,963 | $ | 9,391 | $ | 10,992 | $ | 1,344 | $ | 49,690 | ||||||||||||||||||||||||||||
| Medical costs | $ | 21,614 | $ | 8,853 | $ | 9,876 | $ | 559 | $ | 40,902 | ||||||||||||||||||||||||||||
| Cost of services | 25 | — | — | 626 | 651 | |||||||||||||||||||||||||||||||||
| Other operating expenses (1) | 15,091 | |||||||||||||||||||||||||||||||||||||
| Other income (expense) (2) | 280 | |||||||||||||||||||||||||||||||||||||
| Loss before income tax | $ | (6,674) | ||||||||||||||||||||||||||||||||||||
| Segment gross margin (3) | $ | 1,532 | $ | 538 | $ | 1,116 | $ | 159 | $ | 3,345 | ||||||||||||||||||||||||||||
| (1) | Other operating expenses include selling, general and administrative expenses, depreciation, amortization, premium tax expense and impairment. | |||||||||||||||||||||||||||||||||||||
| (2) | Other income (expense) includes investment and other income, debt extinguishment and interest expense. | |||||||||||||||||||||||||||||||||||||
| (3) | Segment gross margin represents premium and service revenues less medical costs and cost of services. |
Segment information for the three months ended September 30, 2024, is as follows ($ in millions):
| Medicaid | Medicare | Commercial | Other/Eliminations | Consolidated Total | ||||||||||||||||||||||||||||||||||
| Premium | $ | 21,291 | $ | 5,643 | $ | 8,693 | $ | 488 | $ | 36,115 | ||||||||||||||||||||||||||||
| Service | 25 | — | — | 759 | 784 | |||||||||||||||||||||||||||||||||
| Premium and service revenues | 21,316 | 5,643 | 8,693 | 1,247 | 36,899 | |||||||||||||||||||||||||||||||||
| Premium tax | 5,124 | — | — | — | 5,124 | |||||||||||||||||||||||||||||||||
| Total external revenues | 26,440 | 5,643 | 8,693 | 1,247 | 42,023 | |||||||||||||||||||||||||||||||||
| Internal revenues | — | — | — | 4,290 | 4,290 | |||||||||||||||||||||||||||||||||
| Eliminations | — | — | — | (4,290) | (4,290) | |||||||||||||||||||||||||||||||||
| Total revenues | $ | 26,440 | $ | 5,643 | $ | 8,693 | $ | 1,247 | $ | 42,023 | ||||||||||||||||||||||||||||
| Medical costs | $ | 19,818 | $ | 4,968 | $ | 6,957 | $ | 458 | $ | 32,201 | ||||||||||||||||||||||||||||
| Cost of services | 23 | — | — | 669 | 692 | |||||||||||||||||||||||||||||||||
| Other operating expenses (1) | 8,465 | |||||||||||||||||||||||||||||||||||||
| Other income (expense) (2) | 256 | |||||||||||||||||||||||||||||||||||||
| Earnings before income tax | $ | 921 | ||||||||||||||||||||||||||||||||||||
| Segment gross margin (3) | $ | 1,475 | $ | 675 | $ | 1,736 | $ | 120 | $ | 4,006 | ||||||||||||||||||||||||||||
| (1) | Other operating expenses include selling, general and administrative expenses, depreciation, amortization, premium tax expense and impairment. | |||||||||||||||||||||||||||||||||||||
| (2) | Other income (expense) includes investment and other income, debt extinguishment and interest expense. | |||||||||||||||||||||||||||||||||||||
| (3) | Segment gross margin represents premium and service revenues less medical costs and cost of services. |
Segment information for the nine months ended September 30, 2025, is as follows ($ in millions):
| Medicaid | Medicare | Commercial | Other/Eliminations | Consolidated Total | ||||||||||||||||||||||||||||||||||
| Premium | $ | 67,118 | $ | 27,600 | $ | 31,209 | $ | 1,651 | $ | 127,578 | ||||||||||||||||||||||||||||
| Service | 75 | — | 2 | 2,199 | 2,276 | |||||||||||||||||||||||||||||||||
| Premium and service revenues | 67,193 | 27,600 | 31,211 | 3,850 | 129,854 | |||||||||||||||||||||||||||||||||
| Premium tax | 15,198 | — | — | — | 15,198 | |||||||||||||||||||||||||||||||||
| Total external revenues | 82,391 | 27,600 | 31,211 | 3,850 | 145,052 | |||||||||||||||||||||||||||||||||
| Internal revenues | — | — | — | 12,325 | 12,325 | |||||||||||||||||||||||||||||||||
| Eliminations | — | — | — | (12,325) | (12,325) | |||||||||||||||||||||||||||||||||
| Total revenues | $ | 82,391 | $ | 27,600 | $ | 31,211 | $ | 3,850 | $ | 145,052 | ||||||||||||||||||||||||||||
| Medical costs | $ | 63,038 | $ | 24,995 | $ | 26,607 | $ | 1,573 | $ | 116,213 | ||||||||||||||||||||||||||||
| Cost of services | 74 | — | — | 1,916 | 1,990 | |||||||||||||||||||||||||||||||||
| Other operating expenses (1) | 32,727 | |||||||||||||||||||||||||||||||||||||
| Other income (expense) (2) | 693 | |||||||||||||||||||||||||||||||||||||
| Loss before income tax | $ | (5,185) | ||||||||||||||||||||||||||||||||||||
| Segment gross margin (3) | $ | 4,081 | $ | 2,605 | $ | 4,604 | $ | 361 | $ | 11,651 | ||||||||||||||||||||||||||||
| (1) | Other operating expenses include selling, general and administrative expenses, depreciation, amortization, premium tax expense and impairment. | |||||||||||||||||||||||||||||||||||||
| (2) | Other income (expense) includes investment and other income, debt extinguishment and interest expense. | |||||||||||||||||||||||||||||||||||||
| (3) | Segment gross margin represents premium and service revenues less medical costs and cost of services. |
Segment information for the nine months ended September 30, 2024, is as follows ($ in millions):
| Medicaid | Medicare | Commercial | Other/Eliminations | Consolidated Total | ||||||||||||||||||||||||||||||||||
| Premium | $ | 62,958 | $ | 17,556 | $ | 24,977 | $ | 1,293 | $ | 106,784 | ||||||||||||||||||||||||||||
| Service | 68 | — | 2 | 2,355 | 2,425 | |||||||||||||||||||||||||||||||||
| Premium and service revenues | 63,026 | 17,556 | 24,979 | 3,648 | 109,209 | |||||||||||||||||||||||||||||||||
| Premium tax | 13,057 | — | — | — | 13,057 | |||||||||||||||||||||||||||||||||
| Total external revenues | 76,083 | 17,556 | 24,979 | 3,648 | 122,266 | |||||||||||||||||||||||||||||||||
| Internal revenues | — | — | — | 12,451 | 12,451 | |||||||||||||||||||||||||||||||||
| Eliminations | — | — | — | (12,451) | (12,451) | |||||||||||||||||||||||||||||||||
| Total revenues | $ | 76,083 | $ | 17,556 | $ | 24,979 | $ | 3,648 | $ | 122,266 | ||||||||||||||||||||||||||||
| Medical costs | $ | 58,080 | $ | 15,690 | $ | 18,905 | $ | 1,223 | $ | 93,898 | ||||||||||||||||||||||||||||
| Cost of services | 66 | — | — | 1,975 | 2,041 | |||||||||||||||||||||||||||||||||
| Other operating expenses (1) | 23,327 | |||||||||||||||||||||||||||||||||||||
| Other income (expense) (2) | 910 | |||||||||||||||||||||||||||||||||||||
| Earnings before income tax | $ | 3,910 | ||||||||||||||||||||||||||||||||||||
| Segment gross margin (3) | $ | 4,880 | $ | 1,866 | $ | 6,074 | $ | 450 | $ | 13,270 | ||||||||||||||||||||||||||||
| (1) | Other operating expenses include selling, general and administrative expenses, depreciation, amortization, premium tax expense and impairment. | |||||||||||||||||||||||||||||||||||||
| (2) | Other income (expense) includes investment and other income, debt extinguishment and interest expense. | |||||||||||||||||||||||||||||||||||||
| (3) | Segment gross margin represents premium and service revenues less medical costs and cost of services. |
11. Contingencies
The Company is routinely subjected to legal and regulatory proceedings in the normal course of business. These matters can include, without limitation:
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periodic compliance and other reviews and investigations by various federal and state regulatory agencies with respect to requirements applicable to the Company's business, including, without limitation, those related to payment of out-of-network claims, compliance with the CMS Medicare and Marketplace regulations, including risk adjustment, prior authorizations and broker compensation, compliance with the False Claims Act, the calculation of minimum MLR and rebates related thereto, submissions to state agencies related to payments or state false claims acts, pre-authorization penalties, timely review of grievances and appeals, timely and accurate payment of claims, provider directory accuracy, cybersecurity issues, including those related to the Company's or the Company's third-party vendors' information systems, and the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and other federal and state fraud, waste and abuse laws;
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litigation arising out of general business activities, such as tax matters, disputes related to healthcare benefits coverage or reimbursement, putative securities class actions, and medical malpractice, privacy, real estate, intellectual property, vendor disputes and employment-related claims; and
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disputes regarding reinsurance arrangements, claims arising out of the acquisition or divestiture of various assets, class actions and claims relating to the performance of contractual and non-contractual obligations to providers, members, employer groups, vendors and others, including, but not limited to, the alleged failure to properly pay claims and challenges to the manner in which the Company processes claims, claims related to network adequacy and claims alleging that the Company has engaged in unfair business practices.
Among other things, these matters may result in corrective action plans, awards of damages, fines or penalties, which could be substantial, and/or could require changes to the Company's business and cause reputational harm. The Company intends to vigorously defend itself against legal and regulatory proceedings to which it is currently a party; however, these proceedings are subject to many uncertainties. In some of the cases pending against the Company, substantial non-economic or punitive damages are being sought.
The Company records reserves and accrues costs for certain legal proceedings and regulatory matters to the extent that it determines an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. While such reserves and accrued costs reflect the Company's best estimate of the probable loss for such matters, the recorded amounts may differ materially from the actual amount of any such losses. In some cases, no estimate of the possible loss or range of loss in excess of amounts accrued, if any, can be made because of the inherently unpredictable nature of legal and regulatory proceedings, which may be exacerbated by various factors, including but not limited to, they may involve indeterminate claims for monetary damages or may involve fines, penalties or punitive damages; present novel legal theories or legal uncertainties; involve disputed facts; represent a shift in regulatory policy; involve a large number of parties, claimants or regulatory bodies; are in the early stages of the proceedings; involve a number of separate proceedings and/or a wide range of potential outcomes; or result in a change of business practices.
As of the date of this report, amounts accrued for legal proceedings and regulatory matters were not material. Except for the matters discussed below, the Company believes that the ultimate outcome of any of the regulatory and legal proceedings that are currently pending against it should not have a material adverse effect on financial condition, results of operations, cash flow or liquidity. However, it is possible that in a particular quarter or annual period the Company's financial condition, results of operations, cash flow and/or liquidity could be materially adversely affected by an ultimate unfavorable resolution of or development in legal and/or regulatory proceedings.
Federal Securities Class Action and Derivative Lawsuits
On July 9, 2025, a putative federal securities class action, Brock Lunstrum v. Centene Corp., et al. (the Securities Action), was filed against the Company and certain of its executives in the U.S. District Court for the Southern District of New York. The plaintiffs in the lawsuits allege that the Company made false and misleading statements with respect to the Company's 2025 earnings guidance in violation of federal securities laws. Four related derivative lawsuits were subsequently filed — Franchi v. London, et al. (filed July 31, 2025), Keippel v. London, et al. (filed August 14, 2025), and Shipon v. London, et al. (filed August 26, 2025) in the Southern District of New York, and Nante v. London, et al. (filed September 30, 2025) in the Eastern District of Missouri (together, the Derivative Actions) — against the Company, as nominal defendant, members of the board of directors, and certain officers. The plaintiffs in the Derivative Actions allege that the individual defendants breached their fiduciary duties and committed other alleged misconduct in connection with the statements at issue in the Securities Action. The Company denies any wrongdoing and is vigorously defending itself against the claims in the Securities Action and Derivative Actions. Nevertheless, these matters are subject to many uncertainties and the Company cannot predict how long these lawsuits will last, whether additional litigation will be filed with similar claims, or what the ultimate outcome will be, and an adverse outcome in any of these matters could potentially have a materially adverse impact on the Company's financial position and results of operations, cash flow or liquidity.
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