Here is what you’ll find in this week’s newsletter!

1. Important links 🔗 - the best articles we found this week about the Medicare Market along with links to Jared’s recent LinkedIn posts.

2. Deep Dive 📚 - Q3 2025 Medicare Carrier Financials Side-By-Side 🏥

3. Sponsor Snapshot 🚀 - brought to you by Modivcare

It’s only a 6 minute read, but it will make you 10x smarter.

DEEP DIVE 📚

Q3 2025 Medicare Carrier Financials Side-By-Side 🏥

In this week’s deep dive, we take a side-by-side look at the Q3 2025 financials of publicly traded Medicare carriers.

We’ve made one key update this quarter: Cigna (CI) has been removed and Alignment Healthcare (ALHC) added. The change reflects the March 2025 HCSC acquisition of Cigna’s Medicare business. Alignment continues to expand within Medicare and is a fitting addition to this comparison.

Each of these companies is competing for share in the growing Medicare market—while trying to do so profitably.

Carriers included:

• UnitedHealth Group ( $UNH ( ▼ 0.93% ) )

• Alignment Health ( $ALHC ( ▼ 0.18% ) )

• Elevance Health ( $ELV ( ▲ 0.46% ) )

• Centene Corp. ( $CNC ( ▲ 2.02% ) )

• Humana ( $HUM ( ▼ 6.01% ) )

• Molina ( $MOH ( ▼ 1.28% ) )

• CVS ( $CVS ( ▲ 0.6% ) )

Aside from Centene, Alignment and Molina, these carriers operate both health insurance and healthcare service businesses (providers, PBMs, pharmacies, etc.).

Below we break out Insurance Operations and Healthcare Service Operations to better understand where profits are being made—or lost.

—

Income Statement & Membership Side-By-Side

Total revenues climbed nearly 12% year-over-year, but operating profits collapsed—from $12.8B in Q3 2024 to a $4.0B loss this quarter.

While UnitedHealth and Elevance managed modest gains, Centene and CVS recorded large goodwill writedowns, erasing billions in reported earnings and signaling how valuation assumptions across the sector have reset.

Note: “Healthcare Service Operations” definitions vary by carrier but generally include providers, PBMs, pharmacies, and technology businesses.

—

YoY % Change

Here is the percentage change in key metrics from Q3 2024 → Q3 2025.

—

Current Valuation Metrics

Despite revenue growth, valuation multiples remain under pressure - reflecting investor concern over sustained high MLRs, shrinking margins and regulatory pressure.

Here are current valuation metrics for these carriers:

—

Notable Observations

Profitability Collapsed Across the Sector

• Combined operating margin fell from +3.9% in Q3 2024 to –1.1% in Q3 2025.

• Centene (-$6.9B) and CVS (-$3.2B) drove nearly the entire industry loss, primarily due to large goodwill impairments booked this quarter.

• Excluding those non-cash charges, both companies would still have posted thin or slightly negative underlying margins given elevated medical costs.

• UnitedHealth (+$4.3B) and Elevance (+$1.3B) remained solidly profitable, while others hovered near break-even.

Medical Costs Remain Elevated

• Combined MLR jumped to 91.8%, up nearly 300 bps from last year’s 89.0%.

• The sharpest increases were at United and Centene, reflecting ongoing Medicare Advantage utilization pressure and Medicaid normalization.

Expense Ratios Diverged

• The combined expense ratio rose to 14.7%.

• Centene’s 31.7% reflects not just operating cost growth but also Goodwill impairment-related charges flowing through SG&A.

• Others held steady around 8–11%.

Healthcare Services Profitability Down

• UNH’s Optum and Elevance’s Carelon stayed profitable (3.6–4.2% margins).

• CVS Health Services swung from +$2.8B to –$2.5B, partly from primary-care asset impairments and cost overruns in pharmacy operations.

• Sectorwide services operating profit fell from $8.5B to $1.1B.

Membership Trends: Stable Totals, Shifting Mix

• Overall enrollment across these carriers held roughly steady at 204M, masking meaningful shifts beneath the surface.

• Medicare Advantage grew slightly to 22.3M (+1%), led by UnitedHealth and Elevance.

• Medicaid declined to 37.5M (–0.9M) as redeterminations continued, while Commercial membership inched up to 87.7M, helping offset public-program losses.

• Medicare Supplement continued its slow erosion, while PDP enrollment remained flat — evidence that the broader Medicare market is growing in volume, not in profitability.

—

Final Thoughts

The Q3 results underscore how fragile Medicare profitability remains heading into 2026.
Even with double-digit revenue growth, margin recovery is proving elusive. Carriers are absorbing higher care utilization, managing regulatory shifts, and contending with one-time accounting resets that reveal just how much valuations had stretched during the boom years.

UnitedHealth and Elevance are navigating the turbulence with steady (if slim) margins, while Centene and CVS are resetting expectations after years of acquisition-driven expansion.

Stay tuned. Over the next few months we will learn a lot more, and will be keeping you up-to-date!

If you’re ready, here are some ways we can help you:

• Newsletter Sponsorship opportunities: Promote your product or services to leaders in the Medicare space. Let’s discuss. (link)

• Market Research: Reports that help you wrap your arms around the Senior focused insurance markets. (link)

• Consulting: We can help you develop new insurance products for the Medicare market, appraise your books of business, and keep you compliant. Let’s discuss. (link)