(Bloomberg) -- Centene Corp. shares jumped the most since 2022 as the health insurer’s second-quarter results appeared to ease investors’ concerns that Medicaid costs would strain the industry’s profits.
The stock rose as much as 8.3% after Centene executives said they were confident states would increase payments to meet the medical needs of patients in their Medicaid programs. Centene is the largest seller of Medicaid managed care plans.
Investors have been alert for trouble in the sector since the government started terminating people from Medicaid, a process that was suspended during Covid. That took millions of members off plans administered by Centene and its rivals, and raised the risk that Medicaid payments from states wouldn’t be sufficient to meet the costs for those who remained.
Health insurance stocks fell in May after insurers including Centene raised concerns that Medicaid payments might lag the costs of care for members. In the second quarter, Centene saw elevated Medicaid expenses, but that was made up for by stronger performance in its health insurance exchange business.
On Friday, management projected confidence that the company would get the required funding from state Medicaid programs. “All states have acknowledged the need and intent to match rates” with patient medical needs, Chief Financial Officer Drew Asher said on a call with analysts, and all but one has acted, he said.
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