The Ledger

Centene raised its 2026 profit floor while its ACA Marketplace book shrank by 2.4 million members in a year. The Medicaid and Marketplace insurer reported third-quarter results October 27. It ended September with 3,403,300 Marketplace members, down from 5,828,100 a year earlier (a 42% drop), after the enhanced premium tax credits expired at the end of 2025. It still lifted its full-year adjusted diluted earnings per share guidance to more than $5.20, per its 8-K earnings release. Total revenue was $50.6 billion, premium and service revenue rose 0.5% to $45.1 billion, and adjusted earnings per share were $0.58 against $0.50 a year ago. Commercial health benefits ratio (medical costs as a share of premiums) improved to 89.0% from 89.9%; Medicaid slipped to 93.6% from 93.4%; Medicare improved to 93.8% from 94.3%. Medicaid membership fell to 11,895,900 from 12,706,400, and prescription drug plan membership grew to 8,947,200 from 7,972,500. Who it hits: insurers and hospitals pricing 2027 exchange and Medicaid books. So what: the shrunken Marketplace book is repricing profitably, but the release gives no 2027 guidance, so the margin question moves to next year’s enrollment. Confidence: High on the figures; Med on the prior $4.80 guidance floor, which comes from trade coverage, not the release.

HCA says patients who lost exchange coverage cost it about $400 million of pretax income in the quarter. The largest U.S. hospital operator reported October 27 that third-quarter revenue rose 3.6% to $19.849 billion and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) rose 1.2% to $3.918 billion. Its 8-K earnings release attributes a payer mix shift to uninsured volume “primarily due to patients who lost coverage on the health insurance exchanges.” Net income fell 3.9% to $1.579 billion, yet diluted earnings per share rose 4.5% to $7.27 because buybacks cut the share count to 217.2 million from 236.2 million. Same-facility emergency room visits rose 5.1%, inpatient surgeries fell 1.4% and outpatient surgeries fell 3.7%. HCA now expects full-year 2026 results in the upper half of its July 14 ranges. Who it hits: every hospital operator with exchange exposure. So what: volume is growing while the payer mix is paying less, which is the subsidy cliff showing up on a provider income statement. Confidence: High.

HCA’s surgery center book shows the same exchange pressure as its hospitals, days after a $5.7 billion bid for Surgery Partners. Per an earnings call transcript (supplemental; we did not retrieve the audio or an HCA-hosted transcript), HCA’s finance chief tied the pressure to the exchanges in its ambulatory surgery center business, “very similar to the hospital side.” The same transcript summary says management expects $550 million to $650 million less net benefit from Medicaid state directed payments in 2027 than in 2026. HealthSpan Partners, a Bon Secours Mercy Health affiliate, agreed October 26 to buy Surgery Partners for about $5.7 billion including debt (see the Surgery Partners 8-K exhibit), with closing expected in the first quarter of 2027. Who it hits: surgery center operators and buyers underwriting commercial and exchange volume. So what: the buyer is paying for outpatient volume at the moment a large operator reports that volume weakening. Confidence: Med, because the exchange comment and the 2027 figure rest on a secondary transcript summary.

Horizon Blue Cross Blue Shield of New Jersey is reported to be buying Summit Health’s New Jersey operations, including its CityMD urgent care sites. A Lawrence, Evans & Co. deal roundup lists the target as Summit Health New Jersey, with 39 CityMD sites, and a reported value above $1 billion. Becker’s Payer Issues reported the agreement without disclosed terms, subject to regulatory review. Horizon’s 2022 reorganization into Horizon Mutual Holdings allowed it to form for-profit subsidiaries and buy providers. Who it hits: New Jersey commercial payers and independent physician groups that negotiate with Horizon. So what: an insurer owning care sites is payer-provider integration at the state level, and the review is where it gets tested. Confidence: Low to Med. Trade press only; no company release or regulatory filing was retrieved, the announcement date is not confirmed in the window, and the value is reported, not disclosed.

Still to come this week: Universal Health Services reports after the close tonight, Tenet on Thursday. Universal Health Services moved its third-quarter release to after the market close October 27, with its call at 8:00 a.m. Eastern October 28, per its calendar update (supplemental). Its numbers were not available when this issue was written, so we report none. The question to carry into the read: whether behavioral health, its other major business, offsets the exchange drag HCA just quantified. Confidence: High on timing.

THE DEAL SHEET

Scan covered SEC filings, company releases and trade press for October 26 and 27. No other new transaction dated in the window could be confirmed from a primary source, and no new health system bankruptcy, rating action, closure, or FTC or DOJ healthcare merger action was confirmed. Earlier deals, not new: HealthSpan and Surgery Partners (October 26), Cencora and American Oncology Network, Labcorp and Myriad’s prenatal unit.