Most managed care insurers expected to see Q2 2025 drops in revenue, net income

A majority of publicly traded US health insurers are expected to post quarter-over-quarter declines in revenue and net income in the second quarter, according to an S&P Global Market Intelligence analysis of sell-side analyst forecasts.

Of the eight largest publicly traded US managed care insurers, all but two — UnitedHealth Group Inc. and Alignment Healthcare Inc. — are projected to report lower revenue compared with the first quarter of 2025, while all eight are forecast to log higher revenue than the second quarter of 2024.

Costs, uncertainty mount

Over the last few years, high costs associated with the senior-aimed Medicare Advantage plans and changes to Medicaid membership have complicated earnings figures for major managed care insurers, a trend that has continued to now, according to James Sung, director of insurance ratings for S&P Global Ratings.

In July, Centene Corp. joined UnitedHealth in pulling its 2025 earnings guidance, with the magnitude of its earnings misestimation and risk adjustment proving to be a surprise, Sung said.

"I think some of the large companies pulling guidance partially provides some cover for the other companies to be a little bit more conservative with the guidance," Sung said. "We might see this play out for the other companies, but since first-quarter earnings, a lot of companies have already kind of hinted at some pressures."

The pressures already facing Medicaid are likely to be further complicated by President Donald Trump's budget bill, also referred to as the One Big Beautiful Bill Act, which cuts some federal support for the subsidized health plans aimed at low-income individuals.

Health insurers still face challenges related to the post-COVID-19 resumption of redetermination, the process by which states decide who qualifies for Medicaid, and the shift toward a sicker, more costly membership mix that followed.

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The legislation includes a requirement that states redetermine the eligibility of Medicaid expansion members at least twice a year and adds work requirements for the Medicaid expansion population, according to a report from S&P Global Ratings.

Even with all these changes set to go into effect in the coming years, the full impact may not be commented on for several quarters, Sung said.

"A lot of the Medicaid cuts and changes, like adding work requirements and a double redetermination, won't start until maybe 2027, at the earliest," Sung said. "A lot of it is delayed and creates an extended overhang for the sector that people will be monitoring and asking about every quarter."

Net income drops

In the second quarter, all eight of the largest publicly traded US managed care insurers, except The Cigna Group, are expected to log lower net income sequentially, while all eight are forecast to report lower net income year over year.

Second-quarter earnings will not put recent debates or investor concerns to bed but could provide an opportunity for some approximation of clarity, J.P. Morgan analysts Lisa Gill, John Stansel, Benjamin Rossi and Cole Harris wrote in a July 13 research note.

"Across the group, we believe expectations are low with the potential to see some better-than-feared quarters," the analysts wrote. "Overall, our near-term bias remains towards [Cigna] and CVS with cleaner stories with less exposure to government insurance and larger healthcare services businesses, where we feel comfortable that guidance is attainable."

Medical losses climb

Analysts additionally expect medical-loss-ratio deterioration for all but one publicly traded US managed care insurer in the second quarter.

All but Molina Healthcare Inc. are expected to see their medical loss ratios rise from the first quarter. Medical loss ratios for seven of the eight are also projected to increase year over year. The eighth company, Alignment, is not expected to see a change in medical loss ratio year over year.

In previous quarters, various insurers have pointed to cost pressures from the senior-aimed Medicare Advantage plans, specifically citing care delayed by COVID-19 as a factor.

However, recent changes, including rate adjustments, may help offset this impact, the J.P. Morgan analysts wrote.

"Most [managed care insurers] have indicated to date that [Medicare Advantage] is performing in line with or better than expectations, a positive after a challenging 2024, with minimal updates to guidance in [the first quarter] out of an abundance of caution," the analysts wrote. "With minimal shifts in enrollment [quarter over quarter], we think that [the second quarter] provides a relatively consistent baseline and opportunity for [managed care insurers] to frame whether utilization has continued to progress in line with expectations."

The second-quarter managed care earnings season will begin July 17, with Elevance Health Inc. presenting its figures at 8:30 a.m. ET.