(Reuters) -Centene raised its full-year forecast for health insurance premiums and revenue after beating Wall Street’s first-quarter profit estimates on Friday, helped by strength in its commercial health insurance plans.
The insurer said its new forecast accounted for $5 billion in premium revenue from the commercial plans it sells under the Affordable Care Act, also known as Obamacare, as it outperformed enrolment estimates for the first quarter.
Those plans helped Centene soften the blow after its medical spending came in slightly above Street estimates, as it faces elevated costs in its government-backed Medicaid plans for lower-income groups.
Insurers who offer Medicaid plans have seen elevated costs over the past few quarters after the end of a pandemic-era policy. As states re-determined eligibility for the plans, healthier members fell off the rolls, leaving behind those who require more medical services.
Centene’s total Medicaid memberships fell 2.5% to about 13 million members during the reported quarter from a year earlier, while its commercial plan memberships grew 27.3% to 6.07 million.
It reported a medical loss ratio — the percentage of premiums spent on medical care — of 87.5%, compared to analysts’ average estimate of 87.44%, according to data compiled by LSEG.
The company said its premium and services revenue increased 17% to $42.5 billion during the quarter, above estimates of $39.56 billion, driven by membership growth in its commercial plans.
On an adjusted basis, it reported a profit of $2.90 per share, compared with analysts’ estimate of $2.54 per share, according to data compiled by LSEG.
Centene raised its 2025 forecast for premium and service revenue to a range of $164 billion to $166 billion, from between $158.0 billion and $160.0 billion previously.
(Reporting by Sneha S K in Bengaluru; Editing by Pooja Desai)
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