The health insurance industry weathered a rough 2025, and the turnaround for some companies through the midpoint has surprised even Wall Street analysts.
UnitedHealth Group was the most profitable company in the second quarter of 2026, posting $5.5 billion in profit. The next-highest firm was CVS Health, which reported just shy of $3 billion in profit for the quarter.
The performance of both companies came as a surprise to investors. Michael Cherny, senior research analyst at Leerink Partners, said CVS, for example, "beat our number on all three segments fairly handily."
"It was kind of as clean a quarter as you would hope to see, even when you adjust for one-timers," Cherny said in an interview with Fierce Healthcare.
For comparison, CVS reported $1 billion in profit in the prior-year quarter. At the midpoint of 2026, CVS' profits were $5.9 billion, up from $2.8 billion in the first half of 2025.
Cherney said that the cost pressures impacting the broader insurance industry hit CVS too, but the company was a bit ahead of the curve in making operational improvements in Medicare Advantage and more broadly, at Aetna.
And the quarter wasn't entirely rosy for the company, he added, as headwinds on CVS' pharmacy benefit manager, Caremark, did spook some investors and drag down its share price upon the earnings release.
Whit Mayo, senior research partner at Leerink, told Fierce Healthcare that he was similarly surprised by the "profound amount of improvement" from UnitedHealth Group in Q2.
While the company frequently leads the way in profits compared to its peers, it did also post a significant year-over-year jump in the second quarter. Its $5.5 billion Q2 tally rose from a $3.4 billion profit haul in the second quarter of 2025.
Through the first six months of the year, UnitedHealth reported $11.8 billion in profit, rising from $9.7 billion in the first half of 2026.
UHG and CVS also led the industry in revenue for Q2, with United reporting $112 billion and CVS bringing in $106.1 billion.
While there were positive signs around costs overall, insurers did name several key pain points that could post a significant headwind into the future. For one, while the cost pressures largely began in Medicare Advantage, payers are now forecasting negative margins in Medicaid.
And for those that have a presence in the Affordable Care Act's marketplaces, turbulence in that market continues to pose a substantial challenge.
Mayo said that for Medicaid, investors are "not really seeing any tangible evidence yet that that's improving."
"The insurers are calling it the trough, but I think we're going to face some turbulence early next year with work requirements and some of the Medicaid changes," he said.
Centene, for example, with much of its business clustered in Medicaid and the ACA, did see positive signs after a disastrous 2025. The company posted a $1.2 billion profit in the second quarter, reversing a $458 million loss a year ago.
Profits at the midpoint were $3.05 billion, compared to $1.1 billion in H1 2025.
However, the insurer has also seen a decline in enrollment in its Medicaid plans, and while the company's overall medical loss ratio in Q2 was 89.6%, MLR in Medicaid was 93.9%.
CEO Sarah London said the company was seeing "tangible results" in managing Medicaid costs in the quarter, and that work would carry into the back half of the year. All eyes will be on Medicaid as states take the next six months to roll out work requirements, which must be in place beginning on Jan. 1 nationally.
And while signs are growing more positive in Medicare Advantage, as payers reprice their plans and adjust geographic footprints for better performance, the analysts said there are still trends to be concerned about, too.
Mayo said that Humana, for example, has cited multiple positive signals in its MA business over the past two quarters, but is continuing to maintain its guidance rather than boost its outlook. The company also noted in its Q2 call that it is planning further market exits for 2027.
He said that investors are looking more closely at the company's multi-year margin improvements rather than their expectations for just 2026.
"Their previous comments were that trend's running a little favorable back in like April, and then now as they have more information, they're now describing it as an inline year, so I think there was a hope that they were going to up their guidance slightly," Mayo said.
Humana reported $694 million in profit for Q2, up somewhat from its $545 million haul in the prior year quarter. Profits at the midpoint of the year were $1.8 billion, on par with its profitability in the first half of 2025.
Mayo also noted that turmoil around MA's star ratings has changed how payers in that market present results to investors, with many lacking commentary about what's going to happen in the future given the volume of litigation.
"I think the level of activity in lawsuits around star ratings is really important," Mayo said.