By Sneha S K and Sriparna Roy
July 28 (Reuters) - Centene on Tuesday raised its annual profit and revenue forecasts after beating estimates for quarterly earnings, as the health insurer kept control of its costs.
The upbeat results and forecast, which sent the company's shares up 2% before the bell, come after high costs have pressured the health insurance industry for three years.
"Our second-quarter results and improved full-year outlook represent meaningful milestones on our path to restoring profitability
and increasing shareholder value," said CEO Sarah London.
The company's second-quarter medical loss ratio, the percentage of premiums spent on medical care, was 89.6%, lower than 93% last year and below analysts' estimates of 91.30%, as per data compiled by LSEG.
The company said the lower costs were due to improved pricing of its Obamacare plans, as well as a boost from risk-adjustment payments that reimburse insurers who cover a disproportionate share of sicker members.
"This was a solid quarter of progress in margin recovery," said Bernstein analyst Lance Wilkes.
The forecast raise should now shift investor focus to the pace and conviction of recovery in Medicaid and Marketplace for 2027 and beyond, he added.
Americans this year are dropping off Marketplace plans sold through Obamacare exchanges, established under former President Barack Obama's Affordable Care Act, as members struggle to make payments after the end of extra subsidies created during the COVID-19 pandemic.
The company raised its 2026 adjusted profit forecast to more than $4.80 per share, from above $3.40. Analysts were expecting a profit of $3.52 per share.
The health insurer also raised its full-year revenue forecast to a range of $193.5 billion to $197.5 billion. It was previously in the range of $187.5 billion to $191.5 billion.
Centene's quarterly adjusted profit per share was $2.51, surpassing estimates of $1.09.
(Reporting by Sneha S K and Sriparna Roy in Bengaluru; Editing by Maju Samuel)
