Centene Corp.

Strong Q2 results + major upgrade to full-year EPS outlook (good/surprising): - Q2 adjusted diluted EPS: $2.51 (exceeded prior expectations). - Enterprise guidance upgrade: Full-year 2026 adjusted diluted EPS > $4.80, raised from > $3.40 in the April update. - Consolidated HBR (medical + services loss ratio) 89.6%, down from 93% in Q2 2025. - ~$0.50 of the Q2 EPS strength reflects one-time 2025 settlement items (Marketplace risk adjustment ~$180M, Medicare ~$160M), which company flags as non-recurring vs 2027 for later bridging.

Medicaid: on-track HBR but margin recovery constrained by enrollment/acuity and OB3 preparation (mixed/good + risk): - Q2 Medicaid HBR: 93.9%, in line with forecast; expecting full-year Medicaid HBR ~93.5% (slightly worse than original 93.7% expectation). - Membership: ended Q2 at ~12.1M, slightly worse step-down than expected; attrition increased in part due to state eligibility/enrollment tightening and OB3-related preparation activity. - Rates improved: 7/1 rates better than expected, raising full-year 2026 composite rate forecast from ~4.5% to ~5% (trend still “mid-4s” fundamental). - Key challenge/risk: back-half 2026 assumes additional attrition impacting acuity, and they reduced rate benefit by ~50 bps to account for worse membership/acuity. - OB3 opportunity to mitigate disruption: near real-time eligibility/exemption data exchange and a nationwide community engagement/workforce playbook to reduce coverage disruption.

Medicare: continued profitability improvement; PDP margin raised (good): - Medicare segment outperformance again in Q2. - Medicare HBR 89.5% (including the discussed 2025 item). - PDP: full-year 2026 pretax margin >3%, improved from 2% guided earlier; management attributes to execution + product positioning + post-IRA stability. - Medicare Advantage: approaching breakeven for full-year 2026; D-SNP ~40% of MA book and performing favorably. - STARS: year-over-year improvement in raw performance, but headwinds from artificial cut point increases, methodology changes, and uncertainty about the program’s future. Company says it has already derisked STARS exposure by focusing strategy on more complex/dual populations.