News Article

For anyone tracking Medicare reimbursement rates in the U.S., Monday’s announcement from the Trump Administration of a minimal 0.09% (~$700 million) increase in Medicare Advantage funding – well below analysts’ expectations of around 5% growth – will have caught your attention.

Candesic Engagement Manager Blake Edwards and Senior Associate Denis Tomanov have been watching the market’s reaction, noting the decision marks a sharp break from prior years following 2025’s rate update which boosted Medicare Advantage funding by roughly $25 billion.

Blake explains: “The markets reacted swiftly. Shares of major US insurance providers, including UnitedHealth, Humana, CVS, and Elevance were sold off sharply reflecting investor concerns over margin pressure in an environment of slowing government reimbursement growth.”

“The announcement compounds existing financial strain across the sector. For instance, UnitedHealth has flagged weaker profitability driven by elevated restructuring costs following its 2024 cyberattack. Against this backdrop, insurers are expected to push premiums onto healthier patient populations as part of their strategy to restore profitability in the coming years.”

For private equity investors, the implication are meaningful:

– Platforms exposed to Medicare Advantage or provider networks will likely face heightened earnings and valuation volatility

– Assets linked to care management, population health, and Electronic Health Record (EHR) infrastructure are in a position to experience turbulence due policy uncertainty as well as a potential patient attrition due to rising premiums

– For sellers, exit multiples are expected to compress as macroeconomic uncertainty and constrained federal funding pressure Medicare Advantage growth and long-term revenue visibility.

If you’d like to dive deeper into the implications of this decision, reach out to Blake Edwards on LinkedIn.