CENTENE CORP
For the period ended Jun 30, 2026. Filed Jul 28, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Jul 28, 2026
CNC$69.74-6.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-04-28.
0001071739-26-000098
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-07-28.
0001071739-26-000153
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 138 previous paragraphs and 173 current paragraphs.
79 unchanged; 50 reworded; 36 added; 9 removed; 0 previous and 8 current paragraphs rearranged.
Tables are not compared: 6 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (36)
Current report
Effective January 1, 2027, the State of California will transition the Medi-Cal Unsatisfactory Immigration Status (UIS) population from managed care to the fee-for-service delivery system. The transition was enacted through California budget legislation following federal guidance indicating that capitation payments for this population are not eligible for federal matching funds. Based on current projections, approximately 250,000 UIS members served through Health Net's Medi-Cal contracts are expected to be affected by this transition. As a result, we expect a reduction in California Medicaid membership and associated premium revenue beginning in 2027. The ultimate financial impact will depend on final implementation requirements, member transition timing, and any related operational or administrative actions taken by the State.
Current report
The 2027 Notice of Benefit and Payment Parameters (NBPP), was published in the Federal Register on May 20, 2026 and includes changes intended to strengthen Marketplace program integrity, modify eligibility verification requirements, expand certain catastrophic coverage eligibility provisions, revise special enrollment period verification processes, and provide additional flexibility with respect to Marketplace plan offerings. On July 16, 2026, the district court stayed certain provisions of the 2027 NBPP that would have imposed additional eligibility and enrollment restrictions on Marketplace coverage.
Current report
Second Quarter 2026 Highlights
Current report
•HBR of 89.6%, compared to 93.0% for the second quarter of 2025.
Current report
•SG&A expense ratio of 7.0%, compared to 7.1% for the second quarter of 2025.
Current report
•Adjusted SG&A expense ratio of 6.9%, compared to 7.1% for the second quarter of 2025.
Current report
•On June 30, 2026, the Centers for Medicare and Medicaid Services (CMS) published the final risk adjustment transfers for the 2025 benefit year. The final 2025 risk adjustment results, including offsetting increases in the Minimum Medical Loss Ratio (MLR) payable, Risk Adjustment Data Validation (RADV) accrual and other offsets, resulted in a pre-tax benefit of $481 million. The six months ended June 30, 2025, was impacted by lower Marketplace estimated risk adjustment revenue.
Current report
•Effective January 1, 2027, the State of California will transition the Medi-Cal Unsatisfactory Immigration Status (UIS) population from managed care to the fee-for-service delivery system. As a result, we expect a reduction in California Medicaid membership and associated premium revenue beginning in 2027.
Current report
•We are transitioning our Hawaii operations following the non-renewal of certain Hawaii Medicaid contracts. To support continuity of care for members, we agreed to a temporary extension of the Community Care Services (CCS) program through October 31, 2026, and entered into a transition services arrangement with the successor contractor. We are also supporting the transition of QUEST Integration members to new health plans effective January 1, 2027.
Current report
•In July 2026, our subsidiary, Meridian Health Plan of Illinois, Inc. (Meridian), was selected by the Illinois Department of Healthcare and Family Services to continue providing services for the HealthChoice Illinois Medicaid managed care program. Under the contract, Meridian will continue providing managed care for Medicaid enrollees, including access to integrated primary, maternal, and behavioral health care. The contract is expected to begin in January 2027 and has a four-year term.
Current report
•Enterprise optimization initiatives, including severance and third-party vendor costs, will impact our future results of operations.
Current report
Impairment
Current report
During the three months ended June 30, 2025, we recorded total impairment charges of $55 million, driven by an intangible asset impairment related to the wind-down of certain contracts in the Other segment.
Current report
For the three months ended June 30, 2026, we recorded income tax expense of $399 million on pre-tax earnings of $1.5 billion, or an effective tax rate of 26.9%. For the second quarter of 2026, our effective tax rate on adjusted earnings was 26.5%.
Current report
Total revenues decreased 2% in the three months ended June 30, 2026, compared to the corresponding period in 2025 primarily driven by the wind-down of certain contracts. Gross margin increased $25 million in the three months ended June 30, 2026, compared to the corresponding period in 2025 primarily driven by improved profitability.
Current report
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
Current report
Total Revenues
Current report
Total revenues increased 9% in the six months ended June 30, 2026, over the corresponding period in 2025, primarily driven by increased premium tax revenue driven by state pass-through payments, premium yield and membership growth in the PDP business, rate increases in Marketplace and in the Medicaid business to address medical trend, Marketplace risk adjustment revenue transfer for the 2025 and 2026 benefit years, and state directed payments. The increases were partially offset by lower Marketplace and Medicaid membership.
Current report
Operating Expenses
Current report
Medical Costs/HBR
Current report
The HBR for the six months ended June 30, 2026, was 88.4%, compared to 90.2% in the same period in 2025. The consolidated HBR benefited from a lower Marketplace HBR resulting from improved pricing and risk transfer reflecting the acuity of the Marketplace membership. The HBR also decreased due to rate and revenue increases and continued tangible progress in managing medical costs in the Medicaid business. The HBR was benefited by the favorable resolution of programmatic elements for the 2025 benefit year in Medicare. The decreases were partially offset by the decline in Marketplace and Medicaid membership and the corresponding impact on consolidated member mix.
Current report
Cost of Services
Current report
Cost of services increased by $92 million in the six months ended June 30, 2026, compared to the corresponding period in 2025. The cost of service ratio for the six months ended June 30, 2026, was 91.7%, compared to 89.0% in the same period in 2025.
Current report
Selling, General & Administrative Expenses
Current report
Impairment
Current report
During the six months ended June 30, 2025, we recorded total impairment charges of $55 million, driven by an intangible asset impairment related to the wind-down of certain contracts in the Other segment.
Current report
Other Income (Expense)
Current report
Income Tax Expense
Current report
For the six months ended June 30, 2026, we recorded income tax expense of $959 million on pre-tax earnings of $3.6 billion, or an effective tax rate of 26.8%. For the six months ended June 30, 2026, our effective tax rate on adjusted earnings was 26.5%.
Current report
For the six months ended June 30, 2025, we recorded income tax expense of $434 million on pre-tax earnings of $1.5 billion, or an effective tax rate of 29.1%. For the six months ended June 30, 2025, our effective tax rate on adjusted earnings was 28.1%.
Current report
Segment Results
Current report
Medicare
Current report
Total revenues decreased 6% in the six months ended June 30, 2026, compared to the corresponding period in 2025 primarily driven by reduced membership in the Marketplace business. Gross margin increased $817 million in the six months ended June 30, 2026, compared to the corresponding period in 2025 primarily driven by rate increases, the current 2026 risk adjustment revenue transfer estimate based on the first round of Wakely relative risk adjustment transfer data and final 2025 risk adjustment revenue transfer, partially offset by reduced membership in the Marketplace business.
Current report
Other
Current report
Total revenues decreased 5% in the six months ended June 30, 2026, compared to the corresponding period in 2025 primarily driven by the wind-down of certain contracts. Gross margin increased $35 million in the six months ended June 30, 2026, compared to the corresponding period in 2025 primarily driven by improved profitability.
Current report
Cash flows provided by operations in 2026 were primarily driven by net earnings and the timing of pass-through and other payments. Cash flows provided by operations in 2025 were primarily driven by net earnings and improved pharmacy rebate remittance timing.
Removed paragraphs (9)
Previous report
First Quarter 2026 Highlights
Previous report
•HBR of 87.3%, compared to 87.5% for the first quarter of 2025.
Previous report
•SG&A expense ratio of 7.6%, compared to 7.9% for the first quarter of 2025.
Previous report
•Adjusted SG&A expense ratio of 7.6%, compared to 7.9% for the first quarter of 2025.
Previous report
For the three months ended March 31, 2026, we recorded income tax expense of $560 million on pre-tax earnings of $2.1 billion, or an effective tax rate of 26.7%. For the first quarter of 2026, our effective tax rate on adjusted earnings was 26.5%.
Previous report
For the three months ended March 31, 2025, we recorded income tax expense of $432 million on pre-tax earnings of $1.7 billion, or an effective tax rate of 24.7%. For the first quarter of 2025, our effective tax rate on adjusted earnings was 24.7%.
Previous report
Total revenues decreased 8% in the three months ended March 31, 2026, compared to the corresponding period in 2025 driven by Magellan Health. Gross margin increased $10 million in the three months ended March 31, 2026, compared to the corresponding period in 2025 driven by rate increases.
Previous report
Cash flows provided by operations in 2026 were primarily driven by net earnings, the partial sale of the 2025 CMS PDP receivables, and the temporary benefit of the timing of payments, partially offset by the establishment of 2026 CMS PDP receivables and a delay in premium payments from one of our state partners subsequently received in April 2026.
Previous report
Cash flows provided by operations in 2025 were driven by net earnings and an increase in medical claims liabilities, partially offset by a delay in premium payments from one of our state partners subsequently received in April 2025.
Reworded paragraphs (50)
Previous wording
The COVID-19 pandemic impacted our business as it relates to Medicaid eligibility changes. From the onset of the public health emergency (PHE) through March 2023, our Medicaid membership increased by 3.6 million members (excluding new states North Carolina and Delaware and various state product expansions or managed care organization changes). Since March 31, 2023, eligibility redeterminations are the primary driver of our Medicaid membership decline. We anticipate that future reductions could occur resulting from ongoing state eligibility redetermination processes. We continue to work with our state partners to match rates to acuity post-redeterminations.
Current wording
The COVID-19 pandemic impacted our business as it relates to Medicaid eligibility changes. From the onset of the public health emergency (PHE) through March 2023, our Medicaid membership increased by 3.6 million members (excluding new states North Carolina and Delaware and various state product expansions or managed care organization changes). Since March 31, 2023, eligibility redeterminations have been the primary driver of our Medicaid membership decline. We anticipate that future reductions could occur resulting from ongoing state eligibility redetermination processes. We continue to work with our state partners to match rates to acuity post-redeterminations.
Previous wording
The OBBBA, passed in July 2025, includes requirements that may reduce the number of members eligible for state Medicaid Expansion programs by requiring work or community engagement by members and for state Medicaid agencies to redetermine member eligibility at more frequent intervals, along with adding a "Cost Sharing" or "Co-Pay" for certain medical services. These changes could have the effect of increasing the overall morbidity of the Medicaid Expansion population largely beginning in 2027, subject to state implementation plans. Several other provisions of the OBBBA, such as adjustments to provider taxes and state directed payments beginning in 2028, may have the effect of reducing the amount of federal funding for Medicaid, which could result in changes in the design of Medicaid programs, including coverage of benefits, eligibility, and/or provider payment rates. For example, New York will terminate its Essential Plan-5, which provided state-subsidized healthcare for individuals from 200% to 250% of the Federal Poverty Level (FPL). The OBBBA also includes a restriction against paying certain providers designated as "prohibited entities" as of October 1, 2025, which has the potential to create access to care issues and network gaps. The timing of regulatory guidance and other rulemaking changes will be critical to ensuring state and MCO implementation readiness.
Current wording
The OBBBA, passed in July 2025, includes requirements that may reduce the number of members eligible for state Medicaid Expansion programs by requiring work or community engagement by members and for state Medicaid agencies to redetermine member eligibility at more frequent intervals, along with adding a "Cost Sharing" or "Co-Pay" for certain medical services. These changes could have the effect of increasing the overall morbidity of the Medicaid Expansion population largely beginning in 2027, subject to state implementation plans. Several other provisions of the OBBBA, such as adjustments to provider taxes and state directed payments beginning in 2028, may have the effect of reducing the amount of federal funding for Medicaid, which could result in changes in the design of Medicaid programs, including coverage of benefits, eligibility, and/or provider payment rates. For example, in July 2026, New York terminated its Essential Plan-5, which provided state-subsidized healthcare for individuals from 200% to 250% of the Federal Poverty Level (FPL). The timing of regulatory guidance and other rulemaking changes will be critical to ensuring state and MCO implementation readiness. On June 29, 2026, a coalition of 26 states, including 24 Democratic attorney generals and two governors, challenged CMS' interim rule issued on June 3, 2026 implementing the work requirements. The lawsuit is asking the court to block certain provisions of the interim final rule that it alleges are unlawful. The lawsuit may create additional delays and uncertainty regarding the implementation and effect of work requirements on Medicaid beneficiary eligibility.
Previous wording
The Marketplace Integrity and Affordability Final Rule (Final Rule) was published in the Federal Register on June 25, 2025. The Final Rule makes changes to policies to strengthen program integrity measures in the Marketplace. For example, the Special Enrollment Period for those under 150% of the FPL was repealed beginning August 25, 2025. Several of the provisions of the Final Rule have been stayed due to ongoing litigation. These include a requirement for certain consumers who automatically re-enroll into a fully subsidized Marketplace plan to be re-enrolled into the same plan with a $5 premium until the consumer updates their exchange application to confirm APTC eligibility. Additionally, exchanges may no longer accept a consumer's self-attestation of projected annual household income when the Internal Revenue Service (IRS) cannot verify it due to lack of tax return data; rather, exchanges must verify household income using other trusted data sources.
Current wording
The Marketplace Integrity and Affordability Final Rule (Final Rule) was published in the Federal Register on June 25, 2025. The Final Rule included changes to policies intended to strengthen program integrity measures in the Marketplace. For example, the Special Enrollment Period for those under 150% of the FPL was repealed beginning August 25, 2025. The Final Rule also included several provisions that would have reduced eligibility for Marketplace coverage, which were stayed and ultimately vacated by the district court.
Previous wording
In addition, the OBBBA placed additional restrictions on APTC requirements. For example, beginning January 1, 2026, should individuals mis-estimate their projected income, the OBBBA requires them to reimburse the IRS for the full amount of excess tax credit received. In addition, as of January 1, 2026, the OBBBA prohibits individuals from receiving APTCs if they enroll in health coverage through a Special Enrollment Period associated with their income. The combined effect of the expiration of the Enhanced APTCs and the Final Rule reduced 2026 Marketplace membership in the first quarter compared to 2025 and we anticipate that the combined effects will continue to increase the overall morbidity of the Marketplace population. We continue to advocate for legislation and regulations aimed at leveraging Medicaid and the Health Insurance Marketplace to maintain health insurance coverage and affordability for consumers.
Current wording
In addition, the OBBBA placed additional restrictions on APTC requirements. For example, beginning January 1, 2026, should individuals mis-estimate their projected income, the OBBBA requires them to reimburse the IRS for the full amount of excess tax credit received. Further, as of January 1, 2026, the OBBBA prohibits individuals from receiving APTCs if they enroll in health coverage through a Special Enrollment Period associated with their income. The combined effect of the expiration of the Enhanced APTCs and the Final Rule reduced 2026 Marketplace membership in the first six months of 2026 compared to 2025 and we anticipate that the combined effects will continue to increase the overall morbidity of the Marketplace population. We continue to advocate for legislation and regulations aimed at leveraging Medicaid and the Health Insurance Marketplace to maintain health insurance coverage and affordability for consumers.
Previous wording
The IRA significantly changed Medicare Part D, impacting stand-alone Medicare PDPs as well as the Part D benefit in many of our Medicare Advantage plans beginning in 2025, most notably by eliminating the coverage gap and capping members' annual out-of-pocket costs at $2,100 in 2026 in order to provide more predictable and affordable prescription drug coverage for Medicare beneficiaries. The IRA changes effective for 2025 resulted in a meaningful shift in cost-sharing responsibilities between members, drug companies, Centers for Medicare and Medicaid Services (CMS), and PDPs and have resulted in a significant increase in our premiums in consideration for our PDPs' responsibility for a larger portion of total Part D benefit costs. To help mitigate significant premium impacts and address these changes, CMS introduced the Medicare Part D Premium Stabilization Demonstration program. This program began in calendar year 2025 and was intended by CMS to exist for three years. The parameters of the program are expected to be different each year. For example, in 2025, participating PDPs operated under narrowed risk corridor thresholds as part of the supports CMS introduced to limit market volatility. For 2026, CMS eliminated these narrowed risk corridors entirely, shifting PDPs back toward standard program financial risk‑sharing. Starting in 2026, CMS created a Drug Subsidy to compensate plans for the loss of the Manufacturer Discount Program (MDP) for maximum fair price drugs. We continue to advocate for policies that promote cost-effective, high-quality care for our PDP enrolled members. We have receivables due to us from CMS for Part D risk-sharing programs attributable to the 2025 plan year that we expect to be paid by CMS within a year after the plan year closes. If the payments from CMS are delayed, our cash flows may be materially adversely affected.
Current wording
The IRA significantly changed Medicare Part D, impacting stand-alone Medicare PDPs as well as the Part D benefit in many of our Medicare Advantage plans beginning in 2025, most notably by eliminating the coverage gap and capping members' annual out-of-pocket costs at $2,100 in 2026 in order to provide more predictable and affordable prescription drug coverage for Medicare beneficiaries. The IRA changes, which went into effect beginning in 2025, resulted in a meaningful shift in cost-sharing responsibilities between members, drug companies, Centers for Medicare and Medicaid Services (CMS), and PDPs and have resulted in a significant increase in our premiums in consideration for our PDPs' responsibility for a larger portion of total Part D benefit costs. To help mitigate significant premium impacts and address these changes, CMS introduced the Medicare Part D Premium Stabilization Demonstration program. This program began in calendar year 2025 and was intended by CMS to exist for three years. The parameters of the program are expected to be different each year. For example, in 2025, participating PDPs operated under narrowed risk corridor thresholds as part of the supports CMS introduced to limit market volatility. For 2026, CMS eliminated these narrowed risk corridors entirely, shifting PDPs back toward standard program financial risk‑sharing. Starting in 2026, CMS created a Drug Subsidy to compensate plans for the loss of the Manufacturer Discount Program (MDP) for maximum fair price drugs. We continue to advocate for policies that promote cost-effective, high-quality care for our PDP enrolled members. We have receivables due to us from CMS for Part D risk-sharing programs attributable to the 2025 plan year that we expect to be paid by CMS within a year after the plan year closes. If the payments from CMS are delayed, our cash flows may be materially adversely affected.
Previous wording
We remain focused on our promise of delivering high-quality healthcare services on behalf of states and the federal government to under-insured families and commercial organizations. Our decades of experience and deep industry knowledge have allowed us to deliver cost-effective services to our government partners and our members. With a focus on the personalization of healthcare technology, we continue the use of data and analytics to improve the provider and member experience. We continue to believe we have both the capacity and capability to successfully navigate industry changes to the benefit of our members, customers, providers and shareholders through program and bid design, product placement and other strategic factors.
Current wording
We remain focused on our promise of delivering high-quality healthcare services to our members on behalf of states and the federal government. Our decades of experience and deep industry knowledge have allowed us to deliver cost-effective services to our government partners and our members. With a focus on the personalization of healthcare technology, we continue the use of data and analytics to improve the provider and member experience. We continue to believe we have both the capacity and capability to successfully navigate industry changes to the benefit of our members, customers, providers and shareholders through program and bid design, product placement and other strategic factors.
Previous wording
Our financial performance for the first quarter of 2026 is summarized as follows:
Current wording
Our financial performance for the second quarter of 2026 is summarized as follows:
Previous wording
•Managed care membership of 26.3 million, a decrease of 1.7 million members, or (6)% year-over-year.
Current wording
•Managed care membership of 25.9 million, a decrease of 2.1 million members, or (8)% year-over-year.
Previous wording
•Total revenues of $49.9 billion, representing 7% growth year-over-year.
Current wording
•Total revenues of $53.6 billion, representing 10% growth year-over-year.
Previous wording
•Premium and service revenues of $44.7 billion, representing 5% growth year-over-year.
Current wording
•Premium and service revenues of $44.4 billion, representing 4% growth year-over-year.
Previous wording
•Operating cash flows provided cash of $4.4 billion in the first quarter of 2026.
Current wording
•Operating cash flows provided cash of $3.6 billion in the second quarter of 2026.
Previous wording
•GAAP diluted earnings per share (EPS) of $3.11 for the first quarter of 2026.
Current wording
•GAAP diluted earnings per share (EPS) of $2.19 for the second quarter of 2026.
Previous wording
•Adjusted diluted EPS of $3.37 for the first quarter of 2026.
Current wording
•Adjusted diluted EPS of $2.51 for the second quarter of 2026.
Previous wording
A reconciliation from GAAP diluted EPS to adjusted diluted EPS is highlighted below, and additional detail is provided above under the heading "Non-GAAP Financial Presentation":
Current wording
A reconciliation from GAAP diluted earnings (loss) per share to adjusted diluted earnings (loss) per share is highlighted below, and additional detail is provided above under the heading "Non-GAAP Financial Presentation":
Previous wording
(a) enterprise optimization costs of $13 million, or $0.03 per share ($0.02 after-tax), gain on sale of a provider network in the Other segment of $10 million, or $0.02 per share ($0.01 after-tax), net loss on debt extinguishment of $5 million, or $0.01 per share ($0.01 after-tax), a net gain on real estate transactions of $4 million, or $0.01 per share ($0.01 after-tax), and severance costs due to enterprise optimization and contract exits of $3 million, or $0.00 per share ($0.00 after-tax).
Current wording
(a) enterprise optimization costs of $37 million, or $0.07 per share ($0.06 after-tax), severance costs due to enterprise optimization and contract exits of $15 million, or $0.03 per share ($0.02 after-tax) and net gain on debt extinguishment of $6 million, or $0.01 per share ($0.01 after-tax).
Previous wording
(a) a reduction to the previously reported gain on the sale of Magellan Rx of $10 million, or $0.02 per share ($0.02 after-tax) and a net gain on real estate transactions of $7 million, or $0.01 per share ($0.01 after-tax).
Current wording
(a) intangible asset impairment related to the wind-down of certain contracts in the Other segment of $55 million, or $0.11 per share ($0.08 after-tax), and a reduction to the previously reported gain on real estate transactions of $3 million, or $0.01 per share ($0.01 after-tax).
Previous wording
•The combined effect of ongoing, post-PHE state eligibility redeterminations and regulatory policy changes reduced our Medicaid membership in the first quarter compared to 2025.
Current wording
•The combined effect of ongoing, post-PHE state eligibility redeterminations and regulatory policy changes reduced our Medicaid membership in the second quarter compared to 2025.
Previous wording
•In December 2024, we recorded a premium deficiency reserve of $92 million related to the 2025 Medicare Advantage contract year, which was increased to $270 million in the first quarter of 2025 based on the progression of earnings during the year (with higher earnings at the beginning of the year and lower at the end of the year, given cost sharing progression). No premium deficiency reserve related to the 2026 Medicare Advantage contract year has been recorded.
Current wording
•In December 2024, we recorded a premium deficiency reserve of $92 million related to the 2025 Medicare Advantage contract year, which was increased to $270 million in the first quarter of 2025 and to $389 million in the second quarter of 2025 based on the progression of earnings during the year (with higher earnings at the beginning of the year and lower at the end of the year, given cost sharing progression). No premium deficiency reserve related to the 2026 Medicare Advantage contract year has been recorded.
Previous wording
•The combined effect of the expiration of the Enhanced APTCs and the Final Rule led to a higher projected baseline of Marketplace morbidity and, as a result, we took corrective pricing actions for 2026 covering 95% of Marketplace membership. This dynamic contributed to the Marketplace membership decline in the first quarter of 2026 compared to 2025.
Current wording
•The combined effect of the expiration of the Enhanced APTCs and the Final Rule led to a higher projected baseline of Marketplace morbidity and, as a result, we took corrective pricing actions for 2026 covering 95% of Marketplace membership. This dynamic contributed to the Marketplace membership decline in 2026 compared to 2025.
Previous wording
•New York will terminate its Essential Plan-5, which provides state-subsidized healthcare for individuals from 200% to 250% of the federal poverty line by July 1, 2026.
Current wording
•In July 2026, New York terminated its Essential Plan-5, which provided state-subsidized healthcare for individuals from 200% to 250% of the federal poverty line.
Previous wording
•The determination of the final balance of the 2025 net risk adjustment payable will be made as of June 2026. Further, the 2026 risk adjustment estimate will continue to be updated as industry relative member morbidity data is received from Wakely, an independent actuarial firm, throughout 2026.
Current wording
•The 2026 risk adjustment revenue transfer estimate will continue to be updated as industry relative member morbidity data is received from Wakely, an independent actuarial firm, throughout 2026 and 2027.
Previous wording
From March 31, 2025 to March 31, 2026, our managed care membership decreased by 1.7 million, or (6)%. The following table sets forth our membership by line of business:
Current wording
From June 30, 2025 to June 30, 2026, our managed care membership decreased by 2.1 million, or (8)%. The following table sets forth our membership by line of business:
Previous wording
The following discussion and analysis is based on our Consolidated Statements of Operations, which reflect our results of operations for the three months ended March 31, 2026 and 2025, prepared in accordance with generally accepted accounting principles in the United States (GAAP).
Current wording
The following discussion and analysis is based on our Consolidated Statements of Operations, which reflect our results of operations for the three and six months ended June 30, 2026 and 2025, prepared in accordance with generally accepted accounting principles in the United States (GAAP).
Previous wording
Summarized comparative financial data for the three months ended March 31, 2026 and 2025 is as follows ($ in millions, except per share data in dollars):
Current wording
Summarized comparative financial data for the three and six months ended June 30, 2026 and 2025 is as follows ($ in millions, except per share data in dollars):
Previous wording
Total revenues increased 7% in the three months ended March 31, 2026, over the corresponding period in 2025, primarily driven by premium yield and membership growth in the PDP business, state-directed payments, and rate increases to address medical trend in the Medicaid business along with increased premium tax revenue, partially offset by lower Marketplace and Medicaid membership.
Current wording
Total revenues increased 10% in the three months ended June 30, 2026, over the corresponding period in 2025, primarily driven by increased premium tax revenue driven by state pass-through payments, premium yield and membership growth in the PDP business, rate increases in Marketplace and in the Medicaid business to address medical trend, Marketplace risk adjustment revenue transfer for the 2025 and 2026 benefit years, and state directed payments. The increases were partially offset by lower Marketplace and Medicaid membership.
Previous wording
The HBR for the three months ended March 31, 2026, was 87.3%, compared to 87.5% in the same period in 2025. The Medicaid HBR decreased by 50 basis points primarily driven by rate and revenue increases, continued tangible progress in managing medical costs and moderate flu costs. The consolidated HBR decrease was also driven by an increase to the premium deficiency reserve (PDR) in 2025 versus no PDR in 2026 for our Medicare Advantage business as a result of our progression towards profitability. The decreases were partially offset by the decline in Marketplace membership and the corresponding impact on consolidated member mix.
Current wording
The HBR for the three months ended June 30, 2026, was 89.6%, compared to 93.0% in the same period in 2025. The consolidated HBR benefited from a lower Marketplace HBR resulting from improved pricing and risk transfer reflecting the acuity of the Marketplace membership. The HBR also decreased due to rate and revenue increases and continued tangible progress in managing medical costs in the Medicaid business. The HBR benefited by the favorable resolution of programmatic elements for the 2025 benefit year in Medicare and was also driven by an increase to the premium deficiency reserve (PDR) in 2025 versus no PDR in 2026 for our Medicare Advantage business as a result of our progression towards profitability.
Previous wording
Cost of services increased by $4 million in the three months ended March 31, 2026, compared to the corresponding period in 2025. The cost of service ratio for the three months ended March 31, 2026, was 91.4%, compared to 89.8% in the same period in 2025.
Current wording
Cost of services increased by $88 million in the three months ended June 30, 2026, compared to the corresponding period in 2025. The cost of service ratio for the three months ended June 30, 2026, was 91.9%, compared to 88.2% in the same period in 2025.
Previous wording
The SG&A expense ratio was 7.6% for the first quarter of 2026, compared to 7.9% in the first quarter of 2025. The adjusted SG&A expense ratio was 7.6% for the first quarter of 2026, compared to 7.9% in the first quarter of 2025. The decreases were primarily driven by strong cost management, leveraging of expenses over higher revenues and reduced Marketplace membership, which operates at a meaningfully higher SG&A expense ratio, as well as overall discipline in Marketplace SG&A. The decreases were also driven by growth in the PDP business, which operates at a meaningfully lower SG&A expense ratio as compared to the overall company.
Current wording
The SG&A expense ratio was 7.0% for the second quarter of 2026, compared to 7.1% in the second quarter of 2025. The adjusted SG&A expense ratio was 6.9% for the second quarter of 2026, compared to 7.1% in the second quarter of 2025. The decreases were primarily driven by strong cost management, leveraging of expenses over higher revenues and reduced Marketplace membership, which operates at a meaningfully higher SG&A expense ratio, as well as overall discipline in Marketplace SG&A. The decreases were also driven by growth in the PDP business, which operates at a meaningfully lower SG&A expense ratio as compared to the overall company.
Previous wording
Investment and other income. Investment and other income increased by $25 million in the three months ended March 31, 2026, compared to the corresponding period in 2025, primarily driven by higher average investment balances during the quarter partially offset by lower interest rates.
Current wording
Investment and other income. Investment and other income increased by $64 million in the three months ended June 30, 2026, compared to the corresponding period in 2025, primarily driven by higher average investment balances during the quarter partially offset by lower interest rates.
Previous wording
Debt extinguishment. During the three months ended March 31, 2026, we repurchased $1.0 billion of par value Senior Notes due 2027 through the senior note debt repurchase program, resulting in a $5 million pre-tax loss on the repurchase of the notes.
Current wording
Debt extinguishment. During the three months ended June 30, we repurchased $260 million of par value Senior Notes due 2027 and 2028 through the senior note debt repurchase program, resulting in a $6 million pre-tax gain on the repurchase of the notes.
Previous wording
Interest expense. Interest expense decreased by $6 million in the three months ended March 31, 2026, compared to the corresponding period in 2025.
Current wording
Interest expense. Interest expense decreased by $17 million in the three months ended June 30, 2026, compared to the corresponding period in 2025.
Previous wording
Total revenues increased 9% in the three months ended March 31, 2026, compared to the corresponding period in 2025. The increase in total revenues was primarily driven by state directed payments and rate increases, partially offset by lower membership primarily due to eligibility redeterminations. Gross margin increased $186 million in the three months ended March 31, 2026, compared to the corresponding period in 2025 primarily driven by rate and revenue increases and continued tangible progress in managing medical costs.
Current wording
Total revenues increased 14% in the three months ended June 30, 2026, compared to the corresponding period in 2025. The increase in total revenues was primarily driven by pass-through payments and rate increases, partially offset by lower membership primarily due to eligibility redeterminations. Gross margin increased $271 million in the three months ended June 30, 2026, compared to the corresponding period in 2025 primarily driven by rate and revenue increases and continued tangible progress in managing medical costs.
Previous wording
Total revenues increased 18% in the three months ended March 31, 2026, compared to the corresponding period in 2025 primarily driven by increased PDP premiums and membership, partially offset by lower Medicare Advantage membership. Gross margin increased $350 million in the three months ended March 31, 2026, compared to the corresponding period in 2025 primarily driven by rate increases and an increase to the PDR for our Medicare Advantage business in 2025 versus no PDR in 2026 as a result of our progression towards profitability, partially offset by medical and pharmacy costs.
Current wording
Total revenues increased 17% in the three months ended June 30, 2026, compared to the corresponding period in 2025 primarily driven by increased PDP premiums and membership, partially offset by lower Medicare Advantage membership. Gross margin increased $302 million in the three months ended June 30, 2026, compared to the corresponding period in 2025 primarily driven by the favorable resolution of programmatic elements for the 2025 benefit year, rate increases, and an increase to the PDR for our Medicare Advantage business in 2025 versus no PDR in 2026 as a result of our progression towards profitability, partially offset by medical and pharmacy costs.
Previous wording
Total revenues decreased 6% in the three months ended March 31, 2026, compared to the corresponding period in 2025 primarily driven by reduced membership in the Marketplace business. Gross margin decreased $184 million in the three months ended March 31, 2026, compared to the corresponding period in 2025 primarily driven by reduced membership in the Marketplace business.
Current wording
Total revenues decreased 7% in the three months ended June 30, 2026, compared to the corresponding period in 2025 primarily driven by reduced membership in the Marketplace business. Gross margin increased $1.0 billion in the three months ended June 30, 2026, compared to the corresponding period in 2025 primarily driven by rate increases, the current 2026 risk adjustment revenue transfer estimate based on the first round of Wakely relative risk adjustment transfer data and final 2025 risk adjustment revenue transfer, partially offset by reduced membership in the Marketplace business.
Previous wording
Normal operations are funded primarily through operating cash flows and borrowings under our Revolving Credit Facility. Operating activities provided cash of $4.4 billion in the three months ended March 31, 2026, compared to providing cash of $1.5 billion in the comparable period in 2025.
Current wording
Normal operations are funded primarily through operating cash flows and borrowings under our Revolving Credit Facility. Operating activities provided cash of $8.0 billion in the six months ended June 30, 2026, compared to providing cash of $3.3 billion in the comparable period in 2025.
Previous wording
Cash Flows Provided by (Used in) Investing Activities
Current wording
Cash Flows (Used in) Investing Activities
Previous wording
Investing activities provided cash of $89 million in the three months ended March 31, 2026, compared to using cash of $529 million in the comparable period in 2025. Cash flows provided by investing activities in the three months ended March 31, 2026 were driven primarily by net reductions to the investment portfolio of our regulated subsidiaries (including transfers to and from cash and cash equivalents to long-term investments) partially offset by capital expenditures. Cash flows used in investing activities in the three months ended March 31, 2025 were driven primarily by net additions to the investment portfolio of our regulated subsidiaries (including transfers to and from cash and cash equivalents to long-term investments) and capital expenditures.
Current wording
Investing activities used cash of $264 million in the six months ended June 30, 2026, compared to using cash of $1.4 billion in the comparable period in 2025. Cash flows used by investing activities in the six months ended June 30, 2026 were driven primarily by capital expenditures partially offset by net reductions to the investment portfolio of our regulated subsidiaries (including transfers to and from cash and cash equivalents to long-term investments). Cash flows used in investing activities in the six months ended June 30, 2025 were driven primarily by net additions to the investment portfolio of our regulated subsidiaries (including transfers to and from cash and cash equivalents to long-term investments) and capital expenditures.
Previous wording
We spent $200 million and $135 million in the three months ended March 31, 2026 and 2025, respectively, on capital expenditures, the majority of which was driven by system enhancements and computer hardware.
Current wording
We spent $374 million and $343 million in the six months ended June 30, 2026 and 2025, respectively, on capital expenditures, the majority of which was driven by system enhancements and computer hardware.
Previous wording
As of March 31, 2026, our investment portfolio consisted primarily of fixed-income securities with an average duration of 3.3 years. At March 31, 2026, we had unregulated cash and investments of $1.5 billion, including $593 million of cash and cash equivalents and $940 million of investments. Of the $593 million unregulated cash and cash equivalents, $437 million was available for general corporate use at March 31, 2026. Unregulated cash and investments at December 31, 2025, was $1.5 billion, including $553 million of cash and cash equivalents and $925 million of investments. Of the $553 million unregulated cash and cash equivalents, $400 million was available for general corporate use at December 31, 2025.
Current wording
As of June 30, 2026, our investment portfolio consisted primarily of fixed-income securities with an average duration of 3.2 years. At June 30, 2026, we had unregulated cash and investments of $1.8 billion, including $885 million of cash and cash equivalents and $946 million of investments. Of the $885 million unregulated cash and cash equivalents, $715 million was available for general corporate use at June 30, 2026. Unregulated cash and investments at December 31, 2025, was $1.5 billion, including $553 million of cash and cash equivalents and $925 million of investments. Of the $553 million unregulated cash and cash equivalents, $400 million was available for general corporate use at December 31, 2025.
Previous wording
Financing activities used cash of $1.1 billion in the three months ended March 31, 2026, compared to using cash of $250 million in the comparable period in 2025. Financing activities in 2026 were primarily driven by debt repurchases of $1.0 billion.
Current wording
Financing activities used cash of $1.3 billion in the six months ended June 30, 2026, compared to using cash of $1.4 billion in the comparable period in 2025. Financing activities in 2026 were primarily driven by debt repurchases of $1.3 billion.
Showing the first 40 of 50 pairs. Open the source sections for the rest.
Rearranged current paragraphs (8)
Current report — wording carried from elsewhere
The SG&A expense ratio for the six months ended June 30, 2026, was 7.3%, compared to 7.5% for the corresponding period in 2025. The adjusted SG&A expense ratio for the six months ended June 30, 2026, was 7.2%, compared to 7.5% for the six months ended June 30, 2025. The decreases were primarily driven by strong cost management, leveraging of expenses over higher revenues and reduced Marketplace membership, which operates at a meaningfully higher SG&A expense ratio, as well as overall discipline in Marketplace SG&A. The decreases were also driven by growth in the PDP business, which operates at a meaningfully lower SG&A expense ratio as compared to the overall company.
Current report — wording carried from elsewhere
The following table summarizes the components of other income (expense) for the six months ended June 30, ($ in millions):
Current report — wording carried from elsewhere
Investment and other income. Investment and other income increased by $89 million in the six months ended June 30, 2026, compared to the corresponding period in 2025 primarily driven by higher average investment balances during 2026 partially offset by lower interest rates.
Current report — wording carried from elsewhere
Debt extinguishment. During the six months ended June 30, we repurchased $1.3 billion of par value Senior Notes due 2027 and 2028 through the senior note debt repurchase program, resulting in a $1 million pre-tax gain on the repurchase of the notes.
Current report — wording carried from elsewhere
Interest expense. Interest expense decreased by $23 million in the six months ended June 30, 2026, compared to the corresponding period in 2025.
Current report — wording carried from elsewhere
The following table summarizes our consolidated operating results by segment for the six months ended June 30, ($ in millions):
Current report — wording carried from elsewhere
Total revenues increased 12% in the six months ended June 30, 2026, compared to the corresponding period in 2025. The increase in total revenues was primarily driven by pass-through payments and rate increases, partially offset by lower membership primarily due to eligibility redeterminations. Gross margin increased $457 million in the six months ended June 30, 2026, compared to the corresponding period in 2025 primarily driven by rate and revenue increases and continued tangible progress in managing medical costs.
Current report — wording carried from elsewhere
Total revenues increased 17% in the six months ended June 30, 2026, compared to the corresponding period in 2025, primarily driven by increased PDP premiums and membership, partially offset by lower Medicare Advantage membership. Gross margin increased $652 million in the six months ended June 30, 2026, compared to the corresponding period in 2025 primarily driven by the favorable resolution of programmatic elements for the 2025 benefit year, rate increases, and an increase to the PDR for our Medicare Advantage business in 2025 versus no PDR in 2026 as a result of our progression towards profitability, partially offset by medical and pharmacy costs.