US managed care insurers to post lower Q4 2025 net income amid higher costs

Leading publicly traded US managed care insurers are expected to report both sequential and year-over-year declines in net income for the fourth quarter of 2025.

All eight of the largest publicly traded managed care insurers by market capitalization are projected to post lower net income in the fourth quarter compared to the third, according to an S&P Global Market Intelligence analysis of analyst forecasts. Additionally, all except The Cigna Group are expected to record year-over-year declines in net income for the period.

Over the past year, several factors have weighed on managed care earnings, including high costs associated with the senior-aimed Medicare Advantage plans, membership acuity shifts among government-subsidized Medicaid plans and changes to Affordable Care Act tax credits.

These challenges have prompted managed care insurers to reassess their priorities, and margin improvement is becoming more of a focus, according to Francesca Mannarino, a health insurance analyst with S&P Global Ratings.

"A lot of companies have highlighted the focus on margin over membership at this point, so we should expect to see some membership declines in some segments as they try to offset that pressure and start to improve margin slowly," Mannarino said in an interview.

Beyond operating costs, insurers are also keeping an eye on policy developments that may affect earnings.

In recent months, much attention has been paid to ACA tax credits, which have yet to be extended following disagreements in Congress and President Donald Trump's support for an alternative healthcare plan.

While the issue is expected to be a hot topic for fourth-quarter 2025 earnings, Mannarino said other legislative items are also on the docket, including efforts to reform pharmacy benefit managers (PBMs), which operate as intermediaries between insurers, drug manufacturers and pharmacies to manage cost.

"We're still on the lookout for PBM reform, which has the potential to go further than it has in the last few years and impact the sector," Mannarino said. "A lot of top health insurers own the top PBMs, so that will definitely be something on their radar."

While legislative efforts to change PBMs have not gained much traction in Congress, in recent years, the US Federal Trade Commission has taken action against managed care giants and their subsidiaries, alleging that their PBMs engaged in unfair pricing.

In addition to lower net income, analysts expect medical loss ratios to worsen for major publicly traded US managed care insurers. All eight companies in the analysis are projected to report higher medical loss ratios than in the previous quarter and prior-year period.

Earnings outlook for 2026
Despite the challenges facing managed care insurers, J.P. Morgan analysts remain hopeful about the sector, according to a research note released ahead of the fourth-quarter 2025 earnings season.

"We remain constructive on [managed care companies] as a group, with investor focus firmly on 2026/2027 opportunities as we believe most [managed care companies] will reach a trough in earnings in 2026 or have already reached a trough in earnings in 2025, with the potential for upward revisions going forward," the analysts wrote.

For the year ahead, the analysts expect steady performance from commercial insurance, caution in the government subsidized Medicaid plans and the ACA Exchanges and Medicare Advantage repricing.

"As Medicare Advantage remains in focus, we want to see who has successfully executed on their targeted enrollment goals," the analysts wrote.

The analysts are incrementally more positive on Elevance Health Inc.'s and UnitedHealth Group Inc.'s path to Medicare Advantage margin recovery. They also noted that Humana Inc.'s relative positioning with benefit stability versus other large Medicare Advantage payors is a potential driver of enrollment growth.

"With expectations for [full year 2026/2027] reset after [second-quarter 2025] results and the groundwork for [Medicare Advantage] margin growth laid via membership reductions/repricing, we see [UnitedHealth] as on track for an acceleration in our year earnings growth," the analysts wrote.

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Mixed revenue forecasts

Revenue forecasts for the fourth quarter of 2025 are mixed. Of the eight major publicly traded US managed care insurers, four — UnitedHealth, Cigna, Alignment Healthcare Inc. and Oscar Health Inc. — are anticipated to post sequential gains, while the other four are expected to report declines. All eight insurers, however, are projected to log higher revenues than in the fourth quarter of 2024.

UnitedHealth's projected increase in revenue comes after a year marked by a leadership change following an "unusual and unacceptable" first quarter and lowered 2025 earnings guidance after the second quarter.

UnitedHealth will kick off the earnings season Jan. 27.