Shares of health insurer Centene (NYSE:CNC) fell 2% to $60.35 in premarket trading Friday, as the company's medical spending slightly exceeded Wall Street estimates, primarily driven by high costs within its government-backed Medicaid plans for lower-income individuals.
Centene reported a first-quarter medical loss ratio (MLR) of 87.5%, a key metric representing the percentage of premiums spent on medical care.
This figure came in slightly above analysts' expectations of 87.44%, according to data compiled by LSEG.
The higher MLR reflects the ongoing challenge of managing healthcare costs within the Medicaid population.
Despite the pressure from Medicaid costs, the insurer did offer some positive outlook, stating it expects costs to ease as the disparity between its spending on care for Medicaid members and the reimbursement rates from states is narrowed.
In a brighter spot for the company, Centene posted a first-quarter adjusted profit of $2.90 per share, surpassing analysts' estimates of $2.54 per share.
This beat was attributed in part to the strong performance of its commercial health insurance plans.
As of the last market close, Centene's shares were up 1.7% year-to-date.