Health coverage company Centene (NYSE: CNC) beat Wall Street’s revenue expectations in Q1 CY2026, with sales up 7.1% year on year to $49.94 billion. The company expects the full year’s revenue to be around $189.5 billion, close to analysts’ estimates. Its non-GAAP profit of $3.37 per share was 57.9% above analysts’ consensus estimates.

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"We continue to make tangible progress in our margin recovery efforts while strengthening the fundamental operations of each of our businesses," said Chief Executive Officer of Centene, Sarah M. London.

Company Overview

Serving nearly 1 in 15 Americans through its government healthcare programs, Centene (NYSE: CNC) is a healthcare company that manages government-sponsored health insurance programs like Medicaid and Medicare for low-income and complex-needs populations.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Centene’s 11.5% annualized revenue growth over the last five years was decent. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Centene’s annualized revenue growth of 12.9% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

Centene also reports its number of customers, which reached 26.27 million in the latest quarter. Over the last two years, Centene’s customer base averaged 1.8% year-on-year declines. Because this number is lower than its revenue growth, we can see the average customer spent more money each year on the company’s products and services.

This quarter, Centene reported year-on-year revenue growth of 7.1%, and its $49.94 billion of revenue exceeded Wall Street’s estimates by 6.2%.

Looking ahead, sell-side analysts expect revenue to decline by 5.3% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies its products and services will face some demand challenges.

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Adjusted Operating Margin

Adjusted operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D. It also removes various one-time costs to paint a better picture of normalized profits.

Centene was profitable over the last five years but held back by its large cost base. Its average adjusted operating margin of 2.3% was weak for a healthcare business.

Looking at the trend in its profitability, Centene’s adjusted operating margin decreased by 3 percentage points over the last five years. The company’s two-year trajectory also shows it failed to get its profitability back to the peak as its margin fell by 2.4 percentage points. This performance was poor no matter how you look at it - it shows its expenses were rising and it couldn’t pass those costs onto its customers.

This quarter, Centene generated an adjusted operating margin profit margin of 3.9%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Centene, its EPS declined by 15.2% annually over the last five years while its revenue grew by 11.5%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

We can take a deeper look into Centene’s earnings to better understand the drivers of its performance. As we mentioned earlier, Centene’s adjusted operating margin was flat this quarter but declined by 3 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q1, Centene reported adjusted EPS of $3.37, up from $2.90 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Centene’s full-year EPS of $2.52 to grow 32.2%.

Key Takeaways from Centene’s Q1 Results

It was good to see Centene beat analysts’ EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 1.2% to $44.14 immediately after reporting.

Centene may have had a good quarter, but does that mean you should invest right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).