Major payers faced another mixed quarter financially amid ongoing cost pressures in Medicare Advantage (MA) and new challenges emerging on the Affordable Care Act's (ACA's) exchanges.
While Wall Street may be souring on industry bellwether UnitedHealth Group, the company still led the pack on profits in the second quarter with $3.4 billion. The next-highest earner was Elevance Health, at $1.7 billion in profit, followed by the Cigna Group with $1.5 billion.
UnitedHealth also reported the highest revenue in the quarter, with $111.6 billion, edging out CVS Health, which brought in $98.9 billion in revenue.
The company did beat the Street on revenue but fell short of analysts' estimates on profits. Top executives took investors through the major factors hindering its financial performance, with UnitedHealthcare CEO Tim Noel saying expenses significantly outpaced projections.
Noel said the company's updated outlook accounts for $6.5 billion in additional medical costs than were previously expected, with more than half coming from its MA plans.
As such, Noel said the insurer is repricing its products for 2026 in response to the expectation that elevated costs will extend into much of that year. It also plans to exit certain MA plans that are underperforming, which could impact about 600,000 enrollees.
Humana, meanwhile, said utilization in the MA market was in line with its expectations. The insurer, which is the second-largest player in this space, took a hit from rising medical costs beginning in mid- to late 2024 that allowed it to pivot sooner.
In fact, Humana execs said they project lower membership losses than previously expected, anticipating about 500,000 people to depart its plans.
The company brought in $545 million in second-quarter profit along with $32.4 billion in revenue, per its earnings report.
CVS Health's Aetna, also a major player in the MA space, was a bright spot for the company in the second quarter for the first time since mid-2024, after it too was crippled by rising costs and a poor showing in the 2025 star ratings for MA.
CVS executives told investors the continued turnaround at Aetna is a major focus. The improved performance at the insurance segment was also positive news for Wall Street as others, like UHG, continue to battle substantial headwinds.
The healthcare giant posted $1.02 billion in profit for the second quarter. CVS was also dinged last quarter for legal settlements related its Omnicare unit that constituted a one-time drag on its earnings.
While there seems to be light at the end of the tunnel for the big MA payers, as UnitedHealth pushed forward on performance improvements, a new financial threat is building: higher costs and morbidity on the ACA exchanges.
Centene Corporation, a key figure in this market, pulled its guidance in early July after an actuarial report suggested the company's growth in the ACA marketplaces would fall far short of expectations. CEO Sarah London told investors during the company's earnings call three weeks later that the payer is seeing more aggressive provider coding and increased utilization that are driving up costs.
In addition, London said member mix is shifting on the marketplaces as integrity measures put in place by the feds led to fewer sign-ups from healthy, younger individuals. Medicaid redeterminations also led to more sign-ups from sicker enrollees, London said.
The company posted a $253 million loss in the second quarter and brought in $48.7 billion in revenue.
The commentary from Centene was echoed by leaders at Molina Healthcare, which also lowered its guidance for the year. CEO Joseph Zubretsky said the cost spike was "a temporary dislocation between premium rates and medical cost trend which has recently accelerated."
Molina, meanwhile, posted $294 million in profit and $11.4 billion in revenue for the second quarter, the lowest tally among the seven companies analyzed.
Elevance Health also lowered its outlook for 2025 amid headwinds in the ACA exchanges and in Medicaid. CEO Gail Boudreaux said the team is already taking steps to reprice its 2026 ACA plans to account for the new cost pressures, seeking to avoid a mismatch between plan designs and utilization.
A recent analysis from KFF suggests that many insurers are taking similar steps and found that the median proposed increase based on early rate filings is 15%.
Boudreaux told investors that while needing to reduce its guidance for the second straight year is certain to be "disappointing," the company is focusing on things within its control that can bolster it against these headwinds, such as key long-term investments.
Elevance Health reported $49.8 billion in revenue for the second quarter.
For Cigna, given that the bulk of its insurance business is in the commercial market, it's more insulated against the medical cost trend than some of its competitors. It also recently exited the MA market with the sale of its plans to Health Care Service Corporation.
The company reaffirmed its outlook for the year as it was less exposed to the trends battering other payers and as its Evernorth division continues to grow.
The Cigna Group's second-quarter revenue was $67.2 billion, the third-highest among the seven insurers included in this story.