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Centene Shares Fall as Medical Costs Top Estimates

The stock falls despite Centene's earnings topping analysts' forecasts.
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Centene  (CNC)  was falling Tuesday after the company’s medical costs exceeded analysts’ expectations and overshadowed earnings that beat analysts’ forecasts.

The stock traded at $61.93, down 6.17%, and has slumped 7% in the last six months, including Tuesday’s move.

Centene’s medical loss ratio, which reflects how much premium money goes to medical claims, hit 86.8% in the first quarter. While down from 88% a year earlier, the number surpassed analyst forecasts, said Evercore ISI analyst Michael Newshel.

Centene’s competitors topped estimates for this measure.

Still, the company registered profit of $699 million, or $1.19 a share, in the first quarter, up from $46 million, or 8 cents a share, last year.

Adjusted earnings for Centene totaled $1.63 a share in the latest quarter, besting the FactSet analyst consensus of $1.50 a share.

Centene's revenue gained 15% to $29.98 billion in the first quarter from $26.03 billion a year ago. The analyst consensus called for $29.5 billion in the latest quarter.

"Centene is off to a strong start in 2021, with solid revenue and earnings growth,” said CEO Michael Neidorff. “We are increasing our full-year guidance, driven by the positive first-quarter momentum and the tailwinds we expect to persist throughout the months ahead."

TheStreet’s Jim Cramer was bullish on Centene in February. "I always go with Centene. That's the one I prefer," he said on "Mad Money."

In January, the company said it agreed to buy Magellan Health for $95 a share in cash, giving the deal an enterprise value of $2.2 billion.