Zacks Industry Outlook Highlights Cigna, Humana, Centene and Molina Healthcare

For Immediate ReleaseChicago, IL – June 27, 2025 – Today, Zacks Equity Research discusses The Cigna Group CI, Humana Inc. HUM, Centene Corp. CNC and Molina Healthcare, Inc. MOH.Industry: HMOLink: https://www.zacks.com/commentary/2554357/4-hmo-stocks-set-to-thrive-from-steady-premium-flows-ma-strategyThe U.S. health insurance industry, commonly referred to as the Health Maintenance Organization (HMO), benefits from a stable membership base driven by affordable plan offerings and a consistent track record of securing contracts with federal and state agencies. The rising proportion of elderly citizens fuels demand for Medicare plans, enabling insurers to tap into a growing senior population.Although investments in technologies like telehealth can initially raise costs, they ultimately enhance care delivery and operational efficiency. Additionally, an active merger and acquisition (M&A) strategy helps insurers broaden their product offerings and extend their geographic reach. Industry players such as The Cigna Group, Humana Inc., Centene Corp. and Molina Healthcare, Inc. are well-positioned to capitalize on these favorable growth dynamics.About the IndustryThe Zacks HMO industry consists of entities (either private or public) that take care of subscribers’ basic and supplemental health services. Players in this space primarily assume risks and assign health and medical insurance policy premiums. Industry participants also provide administrative and managed-care services for self-funded insurance.Services are generally offered via a network of approved care providers (called in-network), which include primary care physicians, clinical facilities, hospitals and specialists. However, out-of-network exceptions are made during emergencies or when it is medically necessary. Health insurance plans can be availed through private purchases, social insurance or social welfare programs.4 Trends Shaping the Future of the HMO IndustryDiversified Set of Plans Ensures Steady Membership Base: To remain competitive and appealing, industry players are designing cost-effective health insurance plans enriched with attractive features. By extending these offerings to diverse communities across the United States, insurers are able to steadily expand their membership, ensuring a reliable stream of premium income — the cornerstone of their revenue base.The strong value proposition of these plans often results in numerous contract awards and renewals with federal and state agencies, further boosting their customer base. Although most Medicaid disenrollments have already taken place, the ongoing impact is still playing out, indicating that the process continues to impact both Medicaid plans and their members. Nevertheless, a diverse set of plans distributed by industry participants is likely to partially offset the Medicaid membership losses suffered by the industry participants.An Aging U.S. Population: Medicare plans are specifically tailored to meet the needs of individuals aged 65 and older. The aging of the baby boomer generation, combined with increasing life expectancy, is expected to sustain strong demand for these plans in the years ahead. Health insurers can capitalize on this demographic shift by using Medicare offerings to attract a growing number of seniors, thereby expanding their customer base and securing a steady stream of premium revenues.To ensure comprehensive care for this medically vulnerable group, insurers partner with extensive networks of healthcare providers — including physician groups, hospitals, ancillary service providers and pharmacies. Additionally, some insurers operate specialized, senior-focused care centers that deliver targeted, high-quality services to meet the unique health needs of older adults.Technological Upgradation: The HMO industry is making substantial investments in virtual healthcare solutions—commonly referred to as telehealth services—as part of a broader shift toward digital transformation across the healthcare sector. Innovations such as AI-powered chatbots, voice assistants, mobile health applications, robotics, cloud-based platforms and advanced analytics are enabling patients to access care conveniently from their homes.These digital tools significantly enhance overall service delivery and help lower administrative and clinical costs for healthcare providers. While the initial outlay for technology integration may temporarily elevate costs for health insurers, the long-term benefits include more resilient and uninterrupted revenue streams.Strategic Expansion Via Mergers and Acquisitions: Alongside technological investments, HMOs are actively pursuing M&A moves to expand capabilities, enter new markets, solidify their presence in existing regions, grow their customer base and enhance national reach. These strategic moves also offer diversification advantages that help sustain competitiveness. With the Federal Reserve signaling possible rate cuts in the days ahead, borrowing costs are likely to decrease further. This will encourage companies to seek financing for M&A transactions, enabling growth while preserving liquidity.Zacks Industry Rank Instills OptimismThe group’s Zacks Industry Rank, which is the average of the Zacks Rank of all-member stocks, indicates bright near-term prospects. The Zacks Medical-HMOs industry, which is housed within the broader Zacks Medical sector, currently carries a Zacks Industry Rank #67, which places it in the top 27% of 244 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate.Before we present a few stocks that you may want to buy or retain in your portfolio, let’s look at the industry’s recent stock-market performance and valuation picture.Industry Outperforms Sector, S&P 500The Zacks Medical-HMO industry has outperformed the Medical sector and the Zacks S&P 500 composite in the past year.In the said time frame, the industry has grown 26.9% against the Medical sector’s decline of 15.1%. The Zacks S&P 500 composite has risen 10.7% in the same time frame.Industry's Current ValuationBased on the forward 12-month price-to-earnings (P/E) ratio, which is commonly used for valuing medical stocks, the industry trades at 22.7X compared with the S&P 500’s 22.13X and the sector’s 18.91X.Over the past five years, the industry has traded as high as 36.3X and as low as 18.5X, with the median being at 23.26X.4 Stocks to Keep a Close Eye OnWe present four stocks from the space, either carrying a Zacks Rank #2 (Buy) or #3 (Hold). Considering the current industry scenario, it might be prudent for investors to buy or retain these stocks in their portfolio, as these are well-placed to generate growth in the long haul.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Centene: Based in Missouri, Centene's revenues are bolstered by robust performance in its Medicare and Medicaid businesses, resulting in multiple contract wins. The aging U.S. population continues to favor demand for its Medicare Advantage plans. This Zacks Rank #2 health insurer leverages an inorganic growth strategy through acquisitions and provider collaborations. Management estimates premium and service revenues within $164-$166 billion for 2025.The Zacks Consensus Estimate for Centene’s 2025 earnings is pegged at $7.28 per share, which indicates a 1.5% rise from the year-ago figure. CNC’s earnings outpaced estimates in three of the last four quarters and missed the mark once, the average being 25.47%.Molina Healthcare: This California-based health insurer develops affordable Medicare and Medicaid plans, which have consistently led to contract wins. These contracts have contributed to a growing customer base for the Zacks Rank #2 company. Management targets to achieve long-term adjusted EPS growth in the range of 13-15%. This February, Molina Healthcare acquired ConnectiCare, which is expected to bolster its presence in Connecticut.The Zacks Consensus Estimate for Molina Healthcare’s 2025 earnings is pegged at $24.44 per share, indicating a 7.9% rise from the year-ago figure. The consensus mark for MOH’s 2025 earnings has moved 0.1% north over the past 30 days.Cigna: The Connecticut-based company continues to benefit from the robust performance of its two growth platforms, Evernorth and Cigna Healthcare. The Evernorth platform is bolstered by a comprehensive suite of specialty pharmacy services, while Cigna Healthcare benefits from a broad customer base in its U.S. Healthcare business. This Zacks Rank #3 health insurer continually expands its product offerings and enhances its growth through acquisitions and partnerships with prominent healthcare systems.The Zacks Consensus Estimate for Cigna’s 2025 earnings is pegged at $29.68 per share, indicating 8.6% growth from the prior-year figure. The consensus mark for CI’s 2025 earnings has moved 0.2% north over the past 60 days.Humana: Headquartered in Kentucky, Humana continues to achieve steady growth, driven by rising premium revenues and a growing membership base within its Medicaid and Medicare segments. The strong performance of these plans has resulted in multiple contract acquisitions and renewals with both federal and state agencies.Through its CenterWell brand, Humana remains committed to addressing the evolving healthcare needs of the nation's senior population. This Zacks Rank #3 company has also strategically expanded through acquisitions such as those of Family Physicians Group, iCare and Inclusa.The Zacks Consensus Estimate for Humana’s 2025 earnings is pegged at $16.37 per share, which indicates a 1% rise from the prior-year figure. HUM’s earnings surpassed estimates in each of the last four quarters, the average surprise being 14.33%.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Media ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.comhttps://www.zacks.comPast performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. 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(HUM): Free Stock Analysis Report Molina Healthcare, Inc (MOH): Free Stock Analysis Report Cigna Group (CI): Free Stock Analysis Report Centene Corporation (CNC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks