Jim Cramer on Centene: “Very Painful Story”

Centene Corporation (NYSE:CNC) is one of the 22 stocks Jim Cramer recently talked about. Cramer expressed a bearish sentiment toward managed care companies, including Centene, and said:

“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.”

A doctor holding a clipboard in a hospital ward, discussing patient treatment plan with the nurses.

Centene (NYSE:CNC) provides healthcare services to underserved populations and commercial clients. The company’s operations include Medicaid, Medicare, commercial health plans, clinical services, and administrative support.

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