Yahoo Finance Centene (CNC) Wins Medi-Cal Contracts but Loses 3 Counties
Centene Corporation CNC recently received a contract from California's health care services department, which enables the company to continue serving in nine counties. However, CNC lost a chunk from its contract as the Department of Health Care Services decided to award Los Angeles, Sacramento and Kern counties to its competitors.
California’s Medicaid program (largest in the country), called Medi-Cal, is awarding 28 contracts to Centene-owned Health Net, Molina Healthcare, Inc. MOH and Anthem Blue Cross Partnership Plan, owned by Elevance Health Inc. ELV. Scheduled to commence in 2024, these companies will serve in 21 counties through five-year contracts. UnitedHealth Group Incorporated UNH, which had a contract to serve San Diego at 2021-end, did not win any Medi-Cal contracts this time.
One of the largest Medicaid insurers in the country, Centene, lost Los Angeles and Sacramento counties’ contracts to Molina Healthcare and Kern to Elevance Health. Among these three counties, Los Angeles is a significant one and is mentioned as the “crown jewel” by Wells Fargo, which downgraded CNC from overweight to equal weight.
Investors reacted to the situation on Friday when Centene shares lost 6.1% while Molina Healthcare climbed 3.4%. Disappointed Centene is likely to appeal the decision to avoid disruption in services and it has time until Sep 1, 2022, to do so. Missing the lucrative Medi-Cal awards can affect this Zacks Rank #3 (Hold) company’s revenues.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Last year, Centene’s Health Net reported a net income of $651.3 million, per the state’s financial summary of Medi-Cal Managed Care Plans. Molina Healthcare reported a net income of $215.2 million during this time.
Price Performance
Centene’s shares have increased 42.3% in the past year compared with the industry’s 26.2% rise.
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