ZACKSยท2025-06-26 14:16Industry Overview - The U.S. health insurance industry, known as Health Maintenance Organization (HMO), benefits from a stable membership base due to affordable plans and consistent contracts with federal and state agencies [1] - The industry primarily involves entities that manage subscribers' health services, assuming risks and providing administrative services through a network of approved care providers [2] Key Trends - A diversified set of cost-effective health insurance plans is essential for maintaining a steady membership base, which ensures reliable premium income [3] - The aging U.S. population is driving demand for Medicare plans, allowing insurers to attract more seniors and secure premium revenues [4] - Significant investments in telehealth and digital solutions are enhancing service delivery and operational efficiency, despite initial cost increases [5] - Active mergers and acquisitions (M&A) strategies are being pursued to expand capabilities and market reach, supported by potentially lower borrowing costs [6] Performance Metrics - The Zacks Medical-HMO industry is ranked 67, placing it in the top 27% of 244 Zacks industries, indicating positive near-term prospects [8] - Over the past year, the industry has outperformed the Medical sector and the S&P 500, growing by 26.9% compared to the Medical sector's decline of 15.1% and the S&P 500's increase of 10.7% [10] - The industry currently trades at a forward 12-month price-to-earnings (P/E) ratio of 22.7X, higher than the S&P 500's 22.13X and the sector's 18.91X [13] Company Highlights - Centene Corporation (CNC) is expected to generate premium and service revenues between $164 billion and $166 billion for 2025, benefiting from its Medicare and Medicaid businesses [15] - Molina Healthcare (MOH) targets long-term adjusted EPS growth of 13-15% and has recently acquired ConnectiCare to enhance its market presence [18] - Cigna (CI) continues to grow through its Evernorth and Cigna Healthcare platforms, with a 2025 earnings estimate of $29.68 per share, reflecting an 8.6% increase [23] - Humana (HUM) is experiencing steady growth in premium revenues and membership, with a 2025 earnings estimate of $16.37 per share, indicating a 1% rise [26]