06:32 AM EDT, 07/02/2025 (MT Newswires) -- Centene's ( CNC ) shares plunged after the health insurer withdrew its full-year earnings outlook, citing lower-than-expected revenue from most states where it provides health insurance marketplace plans.

Preliminary data from 22 of the company's 29 marketplace states, representing about 72% of its marketplace membership, showed that overall growth was lower than anticipated and implied "significantly" higher-than-expected morbidity, Centene ( CNC ) said late Tuesday. The data was provided by independent actuarial firm Wakely, according to the company.

Centene ( CNC ) estimates a preliminary reduction of roughly $1.8 billion in its full-year risk adjustment revenue transfer, which balances costs for covering higher-risk patients. That represents a $2.75 per-share headwind to adjusted earnings. Shares of the company tumbled 27% in Wednesday premarket activity.

The health insurer issued an adjusted EPS outlook of more than $7.25 in April, while the current consensus on FactSet is for $7.30. The company is scheduled to release its latest quarterly results and provide additional information later this month.

The preliminary estimate includes a projection of the remaining eight months of the current year and is based on paid claims through April 30 from Wakely for the 22 states, Centene ( CNC ) said. Data for the remaining seven marketplace states, which the company doesn't currently have, could further impact the bottom line due to the morbidity trends observed in the 22 states, the company said.

For its 2026 marketplace plan, Centene ( CNC ) said it has begun the process of refiling rates to reflect higher projected morbidity than previously estimated. The firm also believes it will be able to implement "corrective pricing actions" next year in states that represent a substantial majority of its marketplace membership.

Meanwhile, the health insurer forecasts its second-quarter Medicaid health benefits ratio to be higher than previous three-month period. Medicaid business has seen an increase in cost trends in areas, including behavioral health and high-cost drugs, with the dynamics "more pronounced" in states including New York and Florida, the company said.

Centene's ( CNC ) Medicare advantage and Medicare prescription drug plan businesses are "performing better than expected" in the second quarter, and are continuing to generate robust selling, general and administrative expense leverage on its consolidated premium and service revenue growth, it said.