CENTENE CORP (CNC) Risk Factors

Recent key developments

Concrete developments — dated events, named agreements and instruments, legal proceedings — that CENTENE CORP surfaced in its latest filing.

• Late in the second quarter of 2025, data from an independent actuarial firm suggested materially higher implied aggregate morbidity of the Marketplace membership, resulting in a significant negative adjustment to expected net risk adjustment revenue for the 2025 plan year.Late Q2 2025
• During 2025, Medicaid membership had higher than expected medical costs, including unanticipated increased costs in behavioral health, home health, and high-cost drugs.2025
• In 2025, we had higher utilization than expected in several applied behavioral health services programs.2025
• As of December 2025, approximately 60% of our Medicare Advantage membership was associated with contracts rated 3.5 stars or better.December 2025
• Two of our Medicare Advantage contracts received notice of termination for plan year 2025.
• For calendar year 2026, CMS again applied a negative rate adjustment for risk model revisions and fee for service normalization.2026
• On January 26, 2026, CMS released its draft 2027 Medicare rate announcement.January 26, 2026
• CMS regulations will require beneficiaries dually enrolled in Medicare and in a Medicaid managed care plan to receive integrated care through the Medicaid company's Medicare Advantage D-SNPs beginning in 2030, with certain restrictions beginning in 2027.2030
• Some states have already moved or are planning to exclusively align dual-eligible enrollment under an aligned D-SNP before 2030.
• CMS announced the removal of the fee-for-service adjuster from the risk adjustment data validation audit methodology beginning for audit year 2018, which could increase our audit error scores.2018
• In 2025, CMS announced the intent to accelerate the timing and expand the scope of risk adjustment data validation audits.2025
• We are currently protesting the Texas and Georgia Medicaid reprocurements in which we were not a successful bidder.
• Centene's 2026 PDP bids were below benchmarks for all 34 CMS regions, compared to 2025 bids which were below benchmarks in 33 of 34 regions.2026
• As of January 1, 2026, Centene experienced an increase to over 8.7 million PDP members compared to 8.1 million in December 2025 due to its 2026 bid positioning.January 1, 2026
• The Inflation Reduction Act (IRA) substantially increased PDP plan costs by reducing member cost share (closing coverage gap, $2,000 cap on member out-of-pocket expenses) and decreasing federal reinsurance from 80% to 20%.
• The IRA offers Part D enrollees the option to defer payment of out-of-pocket costs monthly via the Medicare Prescription Payment Plan (M3P), potentially leading to increased bad debt exposure and challenges with collecting deductibles and cost-sharing amounts.
• Centene elected into the Part D Premium Stabilization Demonstration program, which subsidizes member premiums and provides risk corridor protection for unforeseen losses, but this election may not be sufficient to offset uncertainties from M3P and increased risk exposure.
• Change Healthcare, Inc. experienced a cybersecurity incident in 2024 that impacted Centene and some of its subsidiaries, though it did not have a material impact on Centene.2024
• Non-cash goodwill impairment of $6.7 billion recorded in the third quarter of 2025, following a quantitative impairment analysis triggered by OBBBA and stock price decline in July 2025.Q3 2025
• The expiration of the PHE and resumption of Medicaid redeterminations significantly reduced our membership in Medicaid programs, and we did not fully offset the loss with increased Health Insurance Marketplace enrollment.
• We experienced a higher Health Benefits Ratio (HBR) on remaining Medicaid members due to the acuity profile, and gaps in eligibility for rejoining members, with rate adjustments from states possibly delayed or insufficient.
• The Final Rule published June 25, 2025 repeals the Special Enrollment Period for those under 150% FPL beginning August 25, 2025.June 25, 2025
• Provisions of the Final Rule requiring certain consumers to be re-enrolled with a $5 premium until income verification, and exchanges to use trusted data sources instead of self-attestation, have been stayed by litigation.
• Enhanced APTCs for Marketplace members expired on December 31, 2025.December 31, 2025
• The OBBBA placed additional restrictions on APTC: beginning January 1, 2026, individuals must reimburse the IRS for full excess tax credit if mis-estimating income, and are prohibited from receiving APTCs if enrolling via a Special Enrollment Period due to income.January 1, 2026
• New York intends to terminate its Essentials Plan-5, for individuals 200–250% FPL, by July 1, 2026.July 1, 2026
• Medicare sequester of 2% under the Budget Control Act of 2011 is extended through 2029.2029
• The IRA enacted significant changes to the Medicare Part D program beginning January 1, 2025, creating uncertainty for 2025 bids; if bids are unprofitable or above benchmarks, membership/revenue/profitability could be materially reduced.January 1, 2025
• CMS indicated it would no longer approve new Section 1115 waivers for continuous care coverage or workforce assistance (July 2025).July 2025
• OBBBA includes requirements for work or community engagement by members and more frequent redetermination of member eligibility, adding cost sharing for certain medical services, increasing morbidity of the Medicaid Expansion population beginning in 2027.2027
• OBBBA adjustments to provider taxes and state directed payments beginning in 2028 may reduce federal funding for Medicaid, potentially changing program design.2028
• HHS finalized transparency requirements in 2023 for artificial intelligence and predictive algorithms in certified health IT.2023
• CMS issued final regulations in April 2016 establishing a minimum 85% MLR standard for Medicaid and strengthening network adequacy, access to care, enrollment protections, and other areas.April 2016
• In May 2024, CMS issued further revisions to Medicaid managed care regulations effective between July 2024 and July 2027, focusing on access to care, delivery system reform, MLR standards, and quality oversight.May 2024
• On November 14, 2025, CMS issued guidance implementing the OBBBA's requirement that states cannot impose higher tax rates on Medicaid MCOs than commercial insurance by the end of fiscal year 2026.November 14, 2025
• As of December 31, 2025, we had consolidated indebtedness of $17.4 billion.December 31, 2025