On Monday, stock markets rallied to erase some of last week’s declines. The government made a breakthrough decision: the Democrats would not seek an extension of Affordable Care Act tax credits. They are set to expire at the end of this year.
President Trump also characterized health insurers as money sucking companies. Those events led to a steep drop in Medicare stocks. Centene (CNC) dropped by 8.81%. Oscar Health (OSCR) lost 17.55%, Elevance Health (ELV) fell by 4.4%, and Humana declined by 5.4%.
The president’s idea to give money directly to the people would not work. People might not use the money to buy health insurance.
The negative view of medicare companies creates headwinds for the sector.
Last month, Centene posted an earnings per share of $0.50. Revenue increased by 18.3% Y/Y to $49.69 billion. The firm increased its 2025 full-year adjusted diluted EPS forecast by $0.25. It expects to earn $2.00 per share or more.
Humana reported Q3 revenue of $32.65 billion (+11.1% Y/Y) to earn $3.24/share. However, its GAAP EPS estimate this year of $12.26 is disappointing. The company had expected $13.77. Investors should brace for both Humana and UnitedHealth facing margin pressure.
The government’s pressure to lower health insurance costs will likely continue. Investors should expect the aforementioned stocks to underperform, at least in the near term.
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