We recently published Jim Cramer’s Fresh 14 Stocks & Thoughts About Market Performance. Centene Corporation (NYSE:CNC) is one of the stocks Jim Cramer recently discussed.
Centene Corporation (NYSE:CNC) is another healthcare benefits management company. The firm’s shares were decimated in July after they fell by an unbelievable 41%. The stock was obliterated after Centene Corporation (NYSE:CNC) stunned investors by pulling its fiscal year 2025 guidance. The firm explained that weaker enrollments and higher-than-expected illnesses among patients had fueled the decision. Safe to say, “brutal” might be an understatement for the blow dealt to Centene Corporation (NYSE:CNC):
“Centene was so brutal. Brutal because the late Michael Neidorff, who was just a regular guest on Mad Money, he figured out how to provide high care, good care for HCA. But if you’re not going to get paid, it’s the worst possible combination.
“No I mean look it’s not the hospitals which always win and it’s certainly not the middlemen. . . . .Centene is a remarkable company that was just great for people that are really in need. And that was their stock and trade. But they’re not going to be compensated for it? Or compensated less? It’s just unfathomable how bad that is for individuals. It’s terrible for individuals. I mean I know that we talk a lot about shareholders . . .I’m certainly guilty of that but there’s bad for individuals and I think people should recognize that they saved money at the wrong place I think when it comes to this. I don’t want to be judgemental, because then you say, oh Jim well you got more money, no, no, it was bad for individuals.”
A doctor holding a clipboard in a hospital ward, discussing patient treatment plan with the nurses.
Previously, Cramer discussed Centene Corporation (NYSE:CNC)’s business after the 40% crash:
“Today, some of the biggest losers in the market were a handful of managed care companies led by a company called Centene… That stock plunged over 40%. This is the worst single-day performance on record because last night after the close, the company withdrew its full-year forecast…
Now, after its preliminary analysis of the data, Centene told us that it now expects a $1.8 billion reduction in its expected risk adjustment revenue transfers from the federal government, and that is a huge hit, people. As a result, management expects a $2 and 75 cents hit to earnings per share this year, which is horrifying given that as of the most recent update in late April, Centene was looking to earn more than $7 and 25 cents per share for 2025. So what are we talking? We’re talking about a 35 to 40% hit to their numbers. No wonder the stock was eviscerated…
What last night’s announcement from Centene indicates is that there’s already some attrition in healthcare exchange enrollment… And worse, what they’re finding out is that the population that’s remaining for the Obamacare exchanges is less healthy… Basically, the people who are leaving the healthcare exchanges are actually some of the people that insurers want to cover, healthier people who pay their premiums but don’t require much medical care.
And what’s left now that the more healthy people are no longer enrolling is a less healthy population, which, of course, is bad news for the insurers. Because Centene’s the largest player in the healthcare exchange space, they’re getting the hardest hit, okay? Unfortunately, I think the situation’s only going to get worse. In order to account for the new situation, Centene will likely have to raise its premiums, which will lead to fewer people enrolling…
… So here’s the bottom line: Given this news from Centene, I think the whole managed care industry is borderline uninvestible right now, and unfortunately, things will get worse for the sector before they get better. So I just can’t justify telling you to own these stocks right now, even after they’ve already come down so dramatically. Very painful story, very.”
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Disclosure: None. This article is originally published at Insider Monkey.
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