This quarter's premium and service revenues blew past expectations due to strong membership growth and expansion in California, Massachusetts, Ohio, and Washington. The company's higher annual guidance was based on this quarter's strong results, new business awards in Illinois and Mississippi, and two recently completed acquisitions.
The stock traded up on the results and pushed several analysts to raise their price targets as the stock broke out to a new 52-week high.
Prior to reporting its earnings results, Centene's stock price had also been rising on speculation that Ascension Health might be interested in acquiring the company.
But I am not focused on M&A speculation, but rather on the growth prospects for the Medicaid segment of the market.
Centene's management team has been delivering performance for a long time. The company has more than two decades of experience and expertise with Medicaid. As seen below, the stock has consistently delivered returns in excess of the market over a three-, five- and 10-year period and earns a performance grade of A-.