US health insurers raise EPS estimates after strong Q1'26, higher Medicare rates

The first quarter proved to be a boon for many major US managed care insurers, as earnings results exceeded consensus estimates, leading to rises in stock prices and higher full-year earnings estimates.

Many of the top publicly traded US managed care insurers' medical costs fell during the first quarter of 2026 after notable rises throughout 2025, resulting in raised full-year earnings estimates and generally positive responses from investors.

Additionally, the Centers for Medicare & Medicaid Services (CMS) released higher-than-expected 2027 rates for Medicare Advantage plans that are aimed at seniors, assuaging some investor concerns.

In the wake of first-quarter earnings releases, several major managed care insurers raised their full-year earnings estimates and saw their stock prices steadily rise.

The shift followed a dour fourth quarter, during which managed care insurers' earnings calls pointed to ongoing cost pressure, primarily related to government-subsidized Medicaid and Medicare Advantage plans.

Estimates on the rise

A year after UnitedHealth Group Inc. released "unusual and unacceptable" first-quarter 2025 earnings results, setting off a series of internal changes, the sector leader began 2026's earnings season in a stronger position.

The first major health insurer to report first-quarter 2026 earnings on April 21, UnitedHealth raised its full-year adjusted earnings-per-share guidance to $18.25 from $17.75.

Like many managed care insurers, UnitedHealth's insurance arm, UnitedHealthcare, has been plagued by rising costs and slowly shifting rates for its government-subsidized plans. Some of these concerns were addressed earlier in April when CMS released higher-than-expected 2027 rates for Medicare Advantage plans aimed at seniors. The nearly 2.5% rate increase greatly exceeded the agency's previous indications that it would keep rates nearly flat.

Tim Noel, CEO of UnitedHealthcare, pointed to these new rates during the call, which he said "better align funding with increasing healthcare costs."

"It's an important step to preserving stability for the millions of seniors who rely on [Medicare Advantage] and toward ensuring this vital program's long-term sustainability," Noel said.

Elevance Health Inc. also raised its full-year earnings estimate following the CMS Medicare rate changes, increasing its adjusted EPS guidance to at least $26.75 per share, up from $25.50 per share.

The company has taken steps to reposition its senior-aimed Medicare Advantage business, CEO Gail Boudreaux said during an earnings call, and was encouraged to see CMS address some of the funding challenges in its final rates for 2027.

However, Boudreaux pushed back against a notice the company received from CMS in February that claimed Elevance is noncompliant with Medicare Advantage risk adjustment data submission requirements.

"We are engaging constructively with the agency and making steady progress toward resolution," Boudreaux said. "We stand firmly behind the integrity of our risk adjustment program, supported by rigorous oversight and governance."

Centene Corp. also raised its 2026 full-year EPS estimate from greater than $3 to greater than $3.40, following better-than-expected membership shifts among its Affordable Care Act (ACA) plans. Among insurers that raised full-year estimates, Centene's stock price rose the most.

Following the loss of ACA tax credits in the fourth quarter of 2025 amid political pressure in Congress, Centene experienced significant membership contraction due to its higher relative concentration of members who bought ACA plans through the public marketplace, CEO Sarah London said. However, the shift also drove some members to drop from higher Silver-tier plans to lower-cost Bronze-tier plans, altering the risk pool and leading to higher costs in the Silver tier, London said during an earnings call.

Still, London said the nature of the ACA marketplace plans abates some of this concern.

"Now, it is important to note that in other insurance markets, the concept of adverse selection can be scary, but that's not actually the case in Marketplace because, as you know, the risk adjustment mechanism is specifically designed to counteract adverse selection," London said. "And often, it can actually be a profitable strategy to care for sicker members in this market."

The Cigna Group also raised its full-year earnings estimate, albeit modestly, from $30.25 to at least $30.35 a share. Unlike some of its peers, Cigna will end its ACA business by year-end, according to its incoming CEO and current COO Brian Evanko.

"Looking to the future, there's no question that the status quo in healthcare is unsustainable," Evanko said. "Costs continue to rise as does demand for healthcare services, an untenable equation."

Cautious estimates

Despite being one of the few managed care insurers not to raise its 2026 earnings outlook, Humana Inc. saw some of the most significant stock gains after CMS raised Medicare rates.

The Kentucky-based managed care insurer has faced a tumultuous couple of years, as its senior-aimed Medicare plans have been adversely impacted by lower CMS scores. The government body annually issues quality "Stars ratings" of Medicare Advantage offerings, which impact bonus payments insurers receive from the US government.

According to Humana CEO Jim Rechtin, the company is on track to raise the ratings in the coming years, buoyed in part CMS' decision to raise Medicare rates in 2027.

Molina Healthcare Inc. also maintained its full-year 2026 earnings projections as CEO Joseph Zubretsky warned of high but stabilizing medical cost trends.

Following a fourth quarter that fell "well below" expectations, Zubretsky said during an April 23 earnings call that the first quarter of 2026 was "strong when compared to internal and external expectations." However, Molina opted to reaffirm its 2026 adjusted earnings guidance rather than raise it, Zubretsky said.

"We are keenly aware that medical cost trend and earnings came in modestly favorable to expectations in the quarter," Zubretsky said. "That being said, merely reaffirming our prior full-year guidance is a prudent approach at this early point in the year and in this current environment."

Molina's stock price rose from the start of earnings season, but its trajectory has been more varied than that of other managed care insurers.

Oscar Health Inc., the last of the major managed care insurers to report first-quarter figures, maintained its 2026 earnings estimate following a period that saw both revenue and membership grow year-over-year.