Numbers
The Numbers
Centene trades at 0.13x revenue and roughly 16x its own 2026 adjusted earnings guidance — the cheapest valuation in managed care. The stock is priced as if the FY2025 earnings collapse ($6.7B goodwill impairment, adj EPS $2.08 vs. $7.17 in FY2024) represents a new normal rather than a cyclical trough in HBR. The single metric most likely to rerate this stock: quarterly HBR progression. Every 100bps of improvement drives ~$1.7B in pretax income at this revenue scale.
Share Price (Apr 30)
Market Cap ($B)
Revenue TTM ($B)
Adj EPS FY2025
Adj EPS Guide FY26
Quality Score, Fair Value, Piotroski F, Altman Z, and Beneish M data are not available for this company in the current dataset. Analysis relies on reported financials and derived ratios.
Revenue and Earnings Power
Revenue compounded at 28% annually from 2010–2025, but this overstates organic growth — the WellCare acquisition (2020) added ~$30B and the IRA-driven PDP premium expansion inflated FY2025. The FY2025 operating loss is entirely the $6.7B goodwill impairment; adjusted operating income was positive.
Operating margins have never been wide — the 10-year normal range is 1–3%. The post-WellCare integration period (FY2021–2022) compressed margins to under 1%, recovery began in FY2023–2024, then FY2025 impairments cratered GAAP results. The adjusted operating margin for FY2025 was roughly 1.5%.
Revenue has plateaued near $50B/quarter as PDP premium inflation offsets Marketplace membership loss. The Q1 2026 beat ($3.11 GAAP EPS, $3.37 adjusted) signals margin recovery is tracking.
Cash Generation — Are the Earnings Real?
Cash generation is far more durable than GAAP earnings suggest. FY2025 produced $5.1B in operating cash flow despite the GAAP net loss, because the $6.7B goodwill impairment and $513M Magellan impairment were non-cash charges. FY2024's anemic $154M operating CF was a timing anomaly (CMS Part D receivable timing). Over FY2020–2025, cumulative OCF was $27.8B vs. cumulative net income of $3.9B — a 7:1 ratio reflecting the non-cash nature of impairments and the business's fundamentally strong cash conversion.
Capital intensity is low — capex runs $0.6–1.0B annually on a $195B revenue base (under 0.5% of revenue). FCF generation is strong when the CMS receivable timing normalizes.
Capital Allocation
The capital allocation story has shifted dramatically. FY2019–2020 was acquisition-driven (WellCare for ~$17B). FY2022–2024 pivoted to aggressive buybacks ($7.9B total), reducing shares from 582M to 493M — a 15% reduction. FY2025 pulled back on buybacks ($475M) as the balance sheet tightened. SBC is negligible at $200M/year (0.1% of revenue).
The WellCare acquisition (2020) diluted shares from 413M to 571M. Buybacks have clawed back 15% since the peak, but shares are still 19% higher than pre-acquisition levels.
Balance Sheet Health
Debt-to-equity spiked to 0.87x in FY2025 (from 0.70x in FY2024) — but this is entirely a denominator effect from the goodwill impairment shrinking equity, not from increased borrowing. Actual debt declined by $1.1B. The $17.9B cash position (largely restricted for insurance operations) provides adequate liquidity. Debt-to-cap improved to 43.2% in Q1 2026 from 46.5% at year-end after selling Part D receivables and repaying $1B in notes.
Valuation — CNC vs Its Own History
P/E 15yr Median
Fwd P/E (FY26 Guide)
Current P/B
At $53.69, CNC trades at 15.8x its FY2026 adjusted EPS guidance of more than $3.40 — well below the 15-year GAAP P/E median of 20.3x. On a price-to-book basis, 1.01x is the lowest in over a decade (5-year average: 1.88x). The stock is trading near tangible book after the goodwill write-down reduced book value by $6.5B.
EV/EBITDA of 7.2x (FY2024) is near the low end of the historical range, which spans 6.5x to 17.8x. Excluding the anomalous FY2021–2022 period (WellCare integration with compressed earnings), the 10-year average is ~10x.
Peer Comparison
CNC's 0.13x P/S is less than half of the next cheapest peer (HUM at 0.25x, MOH at 0.26x). The discount reflects FY2025's negative GAAP results and margin uncertainty. If CNC's adjusted net margin recovers to the 1.5–2.0% range (Elevance territory), the stock would re-rate meaningfully at current revenue.
Fair Value and Scenarios
At $53.69, the stock is priced at the base case — the guided FY2026 recovery year. The asymmetry is notable: the bear case has limited downside (~$30, -44%), while the bull case — a return to FY2024-type adjusted earnings of $6–7 EPS — implies roughly 100% upside. The key variable is the speed and magnitude of HBR normalization.
What the Numbers Say
The numbers confirm that Centene is a cash-generative, low-margin, high-revenue business whose economic engine (capitated government premiums minus medical costs) is fundamentally intact — FY2025's $5.1B operating cash flow proves the GAAP loss is a write-down event, not an operational crisis. What the numbers contradict: the popular narrative that FY2025 represents structural deterioration. Adjusted EPS of $2.08 was a trough driven by elevated behavioral health costs and Marketplace repricing, not a permanent step-change. What to watch: Q2–Q3 2026 HBR progression in Medicaid (management targets beating 93.7%) and the June Wakely risk adjustment data for Marketplace — these two data points alone could move FY2026 adjusted EPS from $3.40 to $4.50+, catalyzing a re-rating from the current 16x toward the historical 20x.