Q3 2025 earnings recap: higher revenue, elevated costs, and payors prepping to pivot

The Q3 2025 earnings cycle confirmed what’s been building all year: managed care’s core economics are shifting, and not in the direction payors prefer.

Elevance, Cigna, Humana, CVS Health, and UnitedHealthcare all posted solid top-line growth. Premiums are up, membership is holding steady, and diversified revenue streams continue to expand.

But the more important story? MLRs are still elevated — and they’re not moving. While most landed within 30 to 70 basis points of expectations, they stayed above target. That’s not a crisis. But it is a ceiling on margin growth, and that ceiling isn’t coming down anytime soon.

Here’s the reality: utilization isn’t reverting. That means payors have two levers left: raise premiums or suppress costs. And based on Q3 commentary, many are choosing the latter.

Four signals that stood out

1. Medical cost trend is sticking.

Cigna and United both pointed to stubbornly high utilization, particularly in outpatient and behavioral health. Humana’s MLR hit 88.4%, up 70 basis points year-over-year. But the real story is that costs aren’t reverting to pre-pandemic trendlines. We’re in a new normal, and pricing assumptions haven’t fully caught up.

2. MA exposure is sharpening margin pressure.

Humana and CVS leaned heavily into Medicare Advantage over the last three years. Now they’re managing the downside. Disability and under-65 populations are driving outsized spend, and the 2026 bid process is already being shaped by that reality. Expect more restrictive benefit designs and more aggressive steerage.

3. Diversification isn’t cushioning the core.

For CVS, their risk-business margin is under pressure and the diversification play isn’t fully doing the heavy lifting. The insurance arm and pharmacy/PBM side are growing, but the care-delivery bet tied to Oak Street Health has been a drag — in both senses of the word. CVS took a multibillion-dollar impairment related to that unit this quarter. Meanwhile, Optum continues to provide scale for UnitedHealthcare, but even that growth isn’t enough to offset elevated medical cost trends in the risk business. For Humana, CenterWell added 56,600 patients or nearly 15% growth since December and showed strength in pharmacy and home health, early signals that those businesses may be helping support the core.

Bottom line: diversification still matters, but growth in the non-risk segments cannot substitute for margin pressure in the core risk business.

4. Payors are sharpening their tools.

Elevance made it plain: unit cost trend is in the crosshairs. That means targeting provider reimbursement directly, especially in markets where leverage is weak or performance is hard to prove. Providers should expect a more aggressive posture in 2026 renewals, particularly on commercial and MA lines.

Here’s how providers should respond

Prepare a cost story that isn’t just “we deserve it.”

You need quantifiable value: lower total cost, higher access, improved outcomes. And you need to tell that story in ways that resonate with actuaries and finance teams, not just network managers.

Refine your MA strategy — before plans rewrite the rules.

Plan behavior in MA is changing fast. If you’re delivering care to higher-need populations without a clear handle on risk-adjusted economics, it’s time to reassess.

Be louder about your efficiency.

If you’re managing throughput, hitting quality targets, and maintaining access, say it. Say it clearly. Say it often. 

Watch the bid cycle, not just your claims data.

MA product design for 2026 is happening now. Q3 performance is part of that calculus. If you’re waiting until summer to respond, you’re already late.

Our prediction? Q4 will follow the same script.

Revenues up. Margins pressured. Medical costs persistently high. Payors won’t wait for utilization to settle. They’ll adjust pricing. Or more likely, they’ll double down on cost controls. Elevance already tipped their hand. Others will follow.

Providers who plan for this now — operationally, financially, and strategically — will be the ones leading the conversation in 2026.

One last thing before we close the book on our analysis of Q3. It’s concerning for us that in the quest to reduce MLR patients aren’t going to get the care they need…all in the name of quarterly earnings.