(Reuters) -Centene Corp beat Wall Street estimates for fourth-quarter revenue on Tuesday, on the back of higher premiums in its commercial insurance business.
The health insurer's quarterly profit, however, only narrowly beat estimates as medical costs were slightly higher than expectations.
Centene (NYSE:CNC), which earns a significant part of its revenue through government-backed Medicaid plans for low-income people, is "less exposed" to increased medical care utilization by older adults through Medicare Advantage compared to other health insurers, analysts say.
A recovery in elective surgeries, such as joint replacements, that were deferred during the pandemic led to an increase in utilization of Medicare, the federal health insurance program for people aged 65 and over.
Centene had said at an investor conference last month that although Medicare utilization was running at elevated levels, it was consistent with expectations and planned for in the outlook.
The company's quarterly medical loss ratio (MLR), or the percentage of premiums paid out for medical services, was 89.5%, compared with analysts' estimates of 89.49%, according to LSEG data.
"Overall, this MLR print is a positive given the misses by some other MCOs (managed care organizations)," Bernstein analyst Lance Wilkes wrote in a note.
The insurer earned $7.41 billion in revenue from its commercial business offering private health insurance plans to individuals and families, up 68% year-over-year.
Commercial unit memberships jumped nearly 72% to 4.3 million, as of Dec. 31.
Betting on continued growth in the commercial unit, Centene raised its full-year 2024 premium and service revenue outlook to $134.5 billion-$137.5 billion, an increase of more than $2.5 billion at the mid-point from its previous forecast.
Centene posted quarterly revenue of $39.46 billion, above analysts' estimates of $36.14 billion.
On an adjusted basis, Centene earned 45 cents per share in the quarter, above estimates of 44 cents.