CNC — Centene Corporation

Deep-value analysis — CNC (Centene Corporation, NYSE) · REDO / REFRESH

Date: September 11, 2026 · Price: … · Market cap: … · Shares: 493.987 mil. outstanding / 497.6 mil. diluted (10-Q Q2 2026) Sector: Healthcare Plans — government-sponsored managed care (Medicaid / Medicare / ACA Marketplace) Regime: REFRESH over the thesis from 08/19/2026 (23 days). Trigger: two mechanically unverifiable falsifiers (pe, revenue_growth_yoy), not a new filing. Primary sources: FY2025 10-K (02/17/2026), Q1 2026 10-Q (04/28/2026), Q2 2026 10-Q (07/28/2026), FY2021–FY2024 10-Ks; XBRL data pack 09/11/2026; Monte Carlo simulation mc-CNC-20260911.json; research brief research-CNC-20260911.md; delta package delta-CNC-20260909.md; reference report 2026-08-19-deep-CNC.md.

Executive summary

What I inherit, explicitly. No new SEC filing has appeared between 08/19/2026 and today — the next report is on 10/27/2026. I therefore inherit unchanged: the business and moat description; the 2021–H1 2026 capital allocation history; the FCF bridge and the normalized owner earnings definition of …; Sarah London’s Outsider score of 1.5/5; the bear DCF (…), bull DCF (…) and Greenwald EPV (…) models; the structure of the three pre-mortem scenarios. I re-derive only what has moved: the two falsifiers, three balance-sheet lines that a targeted re-reading of the Q2 10-Q brought to light and that weren’t in the August report, five extra-filing events that occurred between 08/17 and 09/11, and — as a consequence — the phase-1 growth assumption and two of the five triangulation multiples.

The thesis stays the same and is confirmed on substance: the 2026 recovery is real, but it is repricing and deliberate contraction, not growth. Members 25.885 mil. at 06/30/2026, −2.1 mil. YoY (…); Marketplace 3,494,700 versus 5,862,800 (…); Medicaid 12,110,700 versus 12,819,700 (…); the only expanding segment is PDP, 8,803,000 versus 7,845,800 (…). Consolidated HBR Q2 2026 89.6% versus 93.0%, consolidated gross margin … versus … (…), adjusted EPS … versus −… (10-Q Q2 2026, pp. 22 and 27).

Falsifier 1 — revenue growth — holds on the letter and fails on substance. I derived the two missing quarters directly from the consolidated statement: Q1 2026 total revenue … versus … (…), Q2 2026 … versus … (…). Two consecutive quarters of growth on a membership base shrinking 8% — the claim holds. But 60.6% of the … growth in Q2 is premium tax pass-through (… versus …, …), a line that shows up nearly identically in expenses (… versus …) and produces no profit at all. Premium and service revenue — the only economically relevant base — grew 4% in Q2 and 5% over the half-year. And that 4% growth comes from PDP and Medicaid rates, not from Marketplace: Commercial revenue fell 7% in Q2 and 6% over the half-year. Correctly reformulated, the falsifier should track premium and service revenue, not total revenue.

Falsifier 2 — P/E — is not mechanically computable, and I have reconstructed it. TTM GAAP EPS is −… (the tracker), because the window includes Q3 2025 (−…) and Q4 2025 (−…). The real anchors: TTM adjusted EPS = −… (H2 2025) + … (H1 2026) = … → trailing adjusted P/E 12.5x; the FY2026 guidance floor of >… → 13.6x; normalized owner earnings of …/share → 13.9x. All three cluster around 13x, exactly the anchor the August verdict rested on. But I found something the previous report missed: the guidance floor of … sits … below the adjusted EPS already realized in the half-year (…), and the full-year HBR guidance (90.5…) versus the HBR realized in the half-year (88.4%) implies a second-half HBR of roughly 92.7…. 2026’s profit is massively front-loaded, and the company says so itself through guidance. Any multiple calculated on annualized H1 (5.6x) is fictional.

The FCF bridge remains where the verdict lives, and it has gotten qualitatively worse. The data pack again shows a “simple FCF” TTM of … and a yield of …%; I reject it for the same reasons as before (float) and for two new reasons found on re-reading: (a) in February 2026 the company signed an agreement to sell up to … of receivables and monetized … of Part D receivables from CMS in March for … net, with a … loss booked to SG&A; (b) in H1 2026 it received a net tax refund of … against a book tax expense of … The three non-recurring sources (… state pass-through, … receivables sale, … tax timing gap) sum to ~… over a net working-capital swing of +… — meaning underlying working capital was actually a use of about …. Normalized owner earnings remain … (…/share, 7.2% yield).

Estimated value: range … – …, median …. Median MOS of the five models: …. Monte Carlo over 20,000 scenarios with my updated assumptions gives a median intrinsic value of …, P(undervalued) = …% — a coin flip — and P(margin ≥30%) = …%, down from …%. EPV with no growth: … 21.5% below price.

Verdict: WATCH, with more conviction than in August — no position at …; the buy zone remains below ~… The price has barely moved (… → … …), but the distribution has shifted down because I lowered the phase-1 growth assumption from 4.0% to 3.0%, and I declare this an opinion move, not a facts move: between 08/19 and today, the probable loss of the Georgia contract materialized (Peach State, ~700,000 members, protest rejected at first instance), along with the Hawaii non-renewal, the termination of Essential Plan-5 in New York, and Health Net’s exit from the California and Oregon commercial group markets — four contractions the August thesis did not contain. On the other side, three real good facts: the final risk-adjustment transfer for plan year 2025, published by CMS in June 2026, brought a definitive pre-tax benefit of … (not an estimate); days in claims payable stabilized around ~47 instead of continuing the 54→46 compression; and Illinois was recaptured in July 2026 for four years.