Q3 2025 Consolidated Earning Insights
Payers: UnitedHealth, CVS Health, Elevance, Humana, Molina, Centene, Alignment Healthcare
- November 12, 2025
- Consolidated Earnings Release Q3 2025
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Table of Contents
Key Industry Insight
2026 = Industry Trough Year
Medicare Advantage at inflection point: 7-10% medical cost acceleration, Stars recovery through 2028, margin pressure driving strategic exits
Five Universal Industry Themes
Critical dynamics shaping the Medicare Advantage landscape in Q3 2025
Theme 1
MA Margin Compression
All major payers at/near break-even in MA for 2025
Key Data Point
1M+ members shed collectively in 2026
Strategic Impact
Payers choosing margin discipline over volume growth
Theme 2
Medicaid Rate Crisis
7% medical trend vs 5.5% rate updates = 150 bps gap
Key Data Point
Every 100 bps = $4.50 EPS impact (Molina scale)
Strategic Impact
Unsustainable economics requiring aggressive advocacy
Theme 3
Marketplace Volatility
EAPTC expiration driving strategic retreats
Key Data Point
Molina: $5 EPS swing from 10% of revenue
Strategic Impact
Mid-30% pricing increases, 20-30% footprint reduction
Theme 4
Stars Multi-Year Recovery
Low performers facing BY2028 timelines
Key Data Point
CVS 81%, Alignment 100% have competitive moats
Strategic Impact
$150M+ annual investment with 2-3 year payback
Theme 5
2026 = Trough Year
Industry accepting near-term pain for sustainable margins
Key Data Point
All major payers set 2026 as ‘low point’
Strategic Impact
Recovery trajectory expected 2027-2028
Strategic Imperative
These five themes are interconnected and demand coordinated responses. Payers that successfully navigate the 2026 trough by maintaining Stars performance, advocating for adequate Medicaid rates, and demonstrating clinical excellence will emerge stronger. Those that fail risk multi-year margin compression and market share erosion.
Critical Executive Quotes by Theme
Direct insights from CEO and CFO earnings calls revealing strategic thinking and market dynamics
Theme 1
Medical Cost Trend - The Universal Challenge
“Medicare Advantage medical cost trend remains elevated at the 7.5% level for 2025, and we’re assuming 10% for 2026 as we construct our bids. This is being driven by inpatient utilization recovery, specialty pharmacy, and behavioral health.”
“Our Medicaid medical cost trend is running at 7% while our average rate updates are 5.5%. That 150 basis point gap equals approximately $4.50 in EPS impact annually at our scale. This rate-trend mismatch is unsustainable.”
Theme 2
Medicaid Rate Advocacy - Getting States to Pay
“We engaged in constructive dialogue with the state and shared real-time data throughout the summer. In September, the state moved to address the underfunding of the CMS program going back to February 1, providing a $150 million revenue adjustment. Additionally, the state provided a rate update for the coming year that better reflects the underlying medical demand.”
“With all scheduled rate adjustments now finalized, we expect the 2025 composite rate adjustment to be roughly 5.5%, up from our July assumption of 5%. This provides some tailwind annualizing into 2026, but we still have the critical January and April cohorts to finalize.”
Theme 3
2026 Strategy - Margin Over Volume
“We are explicitly choosing profitability over volume in 2026. We’re accepting approximately 1 million member reduction in Medicare Advantage - 600,000 from targeted plan exits and another 400,000 from group and individual MA competitive pressure. Our focus is moving margin toward the upper half of our 2-4% target range.”
“We are not providing 2026 membership guidance. This is about prioritizing lifetime value over acquisition volume. We’ve made the strategic decision that we need benefit stability after two years of cuts, contract deconsolidation to reduce H5216 concentration from 43-45%, and channel optimization toward owned distribution.”
Theme 4
Stars Recovery - Multi-Year Journey
“We’re investing $150 million incrementally in Stars, clinical excellence, and transformation. We’re confident in achieving top quartile performance by bonus year 2028 - that means 10% better than peer median. We closed 600,000 more gaps year-over-year, showing operational progress. The Stars recovery from 25% in 4+ stars today will drive $1 to $1.4 billion in revenue uplift.”
Theme 5
Marketplace EAPTC Crisis
“We saw a slight uptick in utilization in September, primarily outpatient ED. It correlated with the uptick in national dialogue around both rate increases for 2026 and the EAPTC discussion at Congressional level. We’re holding $125 million provision in Q4 and adding another $75 million given the volatility.”
“Our view of market contraction for 2026 is in the high teens to mid-thirties range. Even at that bottom end where program integrity rules remain stayed and EAPTCs are extended, there will be some degree of market contraction. Some is the roll-through of 2025 program integrity enrollment hurdles, but also breakage on members who get that letter and don’t come back.”
Theme 6
Part D / Pharmacy - The Outperformance Question
“Part D continues to outperform in 2025, but you can assume we would not guide to a similar level of outperformance as we step into 2026, making this a year-over-year headwind as we set initial guidance.”
Theme 7
Technology & AI - Efficiency Lever
“We’ve achieved more than 68% reduction in denials through our AI and automation initiatives. Our AI virtual assistant is being deployed to 10 million-plus members by year-end. We’ve also reduced prior authorization requests significantly over the last two years. Technology is providing the efficiency offset we need.”
“Our clinical excellence model is technology-enabled but operationally driven. The 87.2% MBR and inpatient ADK in the low 140s isn’t just from better software - it’s from better care coordination, better provider relationships, and better member engagement all supported by technology.”
Theme 8
Value-Based Care & Provider Relationships
“CenterWell is central to Humana’s evolution into a consumer healthcare company. It delivers integrated care and supports better MA outcomes. We’re investing heavily in upstream, proactive programs like ESRD/CKD value-based models and site-of-service optimization - for example, more ambulatory surgery centers for joint replacements.”
Theme 9
Balance Sheet & Capital Allocation
“Our debt-to-capital stands at 45.5% post-impairment, well below the 60% covenant limit. We have zero utilization of our $4 billion revolver maturing in 2030. The $6.7 billion goodwill impairment has no impact on statutory capital, cash, or adjusted EPS.”
“We have $2.9 billion in cash supporting our M&A capability. We have a $54 billion acquisition pipeline of distressed Medicaid assets. We’re pursuing acquisitions at or near book value as competitors exit markets. Our balance sheet strength is a strategic advantage right now.”
Theme 10
Investor Communication & Guidance Philosophy
“We are not providing 2026 membership guidance. This is unprecedented for us, but it reflects our philosophical shift toward lifetime value over volume metrics. The market needs to understand we’re playing a different game now - it’s about member quality and profitability per member, not raw enrollment numbers.”
“In light of our now better-than-expected full-year trajectory, we believe a prudent posture for 2026 is profitability consistent with our current full-year outlook in 2025. I will tell you that I will be disappointed if that’s all we can deliver, but we think that is a prudent assumption at this time given where we stand and what we know and also what we don’t yet know.”
Performance Scorecard
Q3 2025 revealed clear winners and those under pressure as the industry navigates medical cost acceleration and margin compression
Winners
UnitedHealth
Steady execution, margin discipline over volume
+12% YoY
Accepting -1M MA members for margin
Alignment Healthcare
EBITDA guidance +98%, clinical excellence proving superior
+98% EBITDA
100% in 4+ Stars
CVS Health
3rd consecutive beat & raise, Aetna Stars recovery
+17.6%
81% in 4+ Stars (from 49%)
Centene
Raised guidance, Medicaid HBR improved 150 bps
≥$2.00 EPS
Sequential improvement
Under Pressure
Molina
EPS miss -53%
95.6% MCR crushing results
Humana
No 2026 membership guidance (unprecedented)
BY2028 Stars recovery target
Elevance
Medicaid/ACA pressure, 2026 declared ‘low point’
Multi-year recovery ahead
Q3 2025 Financial Performance
Comprehensive comparison of revenue, earnings, and strategic positioning across major payers
| Metric | Non-SNP | D-SNP | C-SNP | I-SNP |
|---|---|---|---|---|
| Counties Covered | 3,134 | 3,030 | 2,421 | 2,121 |
| New Entries | 655 | 583 | 431 | 216 |
| County Exits | 1,054 | 603 | 139 | 9 |
| Lives Impacted (Total) | 2.8M | 269.6K | 53.9K | 1.9K |
| Payer Exit Impact | 335K | 27.9K | 9.6K | 48 |
Top Performer
+17.6% vs forecast, 3rd consecutive beat
Under Pressure
-53% EPS miss
Excellence Leader
EBITDA +98%, 100% in 4+ Stars
Medical Loss Ratio Trends
Q3 2025 reveals universal pressure with only Alignment and Centene showing favorable trends
Alignment
UnitedHealth
Elevance
Humana
Molina
Centene
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Key executive quotes flagged by theme (Stars, ACA, Medicaid, MLR, Compliance)
Market movements decoded by enrollment, benefit shifts & margin levers
Used by top MA teams to inform 2026 bid strategy & pricing
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