Financial Results

Bright Health Reveals Deal to Repay Risk Adjustment Funds

Bright Health Group, Inc. — the struggling “insurtech” firm that is in the process of pulling out of the health insurance business entirely — disclosed recently that it has failed to deliver $380 million to other health plans that it’s required to pay under the Affordable Care Act’s risk adjustment program. The firm therefore has entered into a repayment agreement with the federal government.

In a press release, Bright touted the agreement as a sign the company is making “significant progress” toward the wind down of its ACA exchange business. Bright stopped offering ACA plans in all 15 states in which it operated starting in 2023 amid ongoing financial troubles.


MCO Stock Performance, August 2023

Here’s how major health insurers’ stock performed in August 2023. UnitedHealth Group had the highest closing stock price among major commercial insurers as of August 31, 2023, at $476.58. Humana Inc. had the highest closing stock price among major Medicare insurers at $461.63.


Centene, Humana Execs Downplay COVID, Redetermination Headwinds

Executives from health insurance firms Centene Corp. and Humana Inc. on Sept. 6 pitched investors on rosy projections for the rest of the year at the 2023 Wells Fargo Healthcare Conference — despite ongoing Medicaid eligibility redeterminations and elevated utilization in Medicare Advantage, particularly around COVID-19 hospitalizations.

In remarks during the conference, Centene CEO Sarah London highlighted the spinoffs and balance sheet restructuring that she has orchestrated since taking over the firm in spring 2022. London said that Centene bought back $200 million of shares in August, and “expect[s] to exceed our original $1.5 billion share repurchase target in 2023.”


MAOs Reporting 2Q Financials Factored Rising Utilization Into 2024 Bids

After a handful of publicly traded insurers last month reported second-quarter 2023 earnings that reflected the impact of increasing utilization, additional insurers reporting results in August said they witnessed a similar phenomenon, particularly among the Medicare Advantage population. But the insurers indicated that they were able to factor those trends into their bids for the coming plan year, while analysts were reassured that the issue was largely confined to MA and not the commercial sector.

UnitedHealth Group first disclosed the uptick in outpatient care utilization in June, sparking an insurer-stock selloff. Shortly after, Humana Inc. revealed in an 8-K filing with the U.S. Securities and Exchange Commission that it was also seeing elevated medical costs due to an increased use of services. Humana in that filing projected its insurance medical loss ratio (MLR) for the full year would settle in the higher (worse) end of its previously stated 86.3% to 87.3% range. “This expectation is primarily driven by the emergence of higher than anticipated non-inpatient utilization trends, predominantly in the categories of emergency room, outpatient surgeries, and dental services, as well as inpatient trends that have been stronger than anticipated in recent weeks, diverging from historical seasonality patterns,” the MA-focused insurer stated. The company also explained that it was seeing strong growth in its MA membership, including a “higher-than-expected proportion of age-ins” during the three-month Open Enrollment Period that ran from January to March, and such members tend to have an above-average MLR when compared to more established customers.


Bright Health Founders as Other Insurtechs Work Toward Profitability

Three of the four startup “insurtech” health plans made progress toward profitability in the second quarter of 2023, according to Wall Street analysts and one health care industry insider. But Bright Health Group, Inc., the highly leveraged firm that is winding down its health plan operations, has significant liquidity problems, massive outstanding risk adjustment debt and may lose the lifeline of its deal to sell its remaining health plan assets to Molina Healthcare, Inc.

Bright Health is in the process of winding down all of its health insurance operations. The firm posted a net loss of $251 million in the second quarter.

On Aug. 7, two days before Bright’s quarterly earnings call, it secured a $60 million credit facility from one of its largest creditors, venture capital firm New Enterprise Associates (NEA). In a press release announcing the loan agreement, Bright added that it “has entered into a permanent waiver of default on its existing credit facility, which expires in February 2024.” That agreement, made with a consortium of banks led by JPMorgan Chase Co., extended Bright a $350 million line of credit earlier this year.


MCO Stock Performance, July 2023

Here’s how major health insurers’ stock performed in July 2023. UnitedHealth Group had the highest closing stock price among major commercial insurers as of July 31, 2023, at $506.37. Humana Inc. had the highest closing stock price among major Medicare insurers at $456.83.


No Headwinds Here: Managed Care Giants Tout Strong 2Q for PBM Segments

Amid ongoing concerns about heightened health care utilization, Medicaid redeterminations and even risk adjustment, major managed care companies in their second-quarter 2023 earnings reports made sure to emphasize the strong performance of their health care services segments — which happen to house the country’s three largest PBMs.

The Cigna Group, which owns the PBM Express Scripts under its Evernorth division, kicked off its quarterly earnings call on Aug. 3 with CEO David Cordani singing Evernorth’s praises.

“In Evernorth Health Services, we saw another strong quarter of our market-leading pharmacy, care and benefits portfolio,” Cordani said. “Express Scripts, our pharmacy benefits business, harnesses our deep relationships, extensive clinical expertise, and is delivering innovations and innovative solutions for those we serve.”


CVS, Humana Report Continued High Utilization, MLR Increases

CVS Health Corp. beat Wall Street’s consensus second-quarter earnings projections, but it raised concerns among analysts by lowering its earnings guidance for 2024. Humana Inc., meanwhile, also beat the Street’s second-quarter earnings estimate. Both firms reported that this year’s high utilization levels in Medicare Advantage — a source of consternation for investors — persisted.

Overall, CVS took in $88.9 billion in the second quarter, up $8.2 billion year over year. However, its quarterly, year-over-year operating income decreased by $521 million to $4.48 billion; adjusted earnings per share (EPS) amounted to $2.21, down from the second quarter of 2022’s $2.53. CVS confirmed its full-year EPS guidance of $8.50 to $8.70.


ACA Marketplace Business Is Bright Spot in 2Q for Centene, Molina

Although the topic of Medicaid eligibility redeterminations loomed large over the second-quarter earnings calls held by Centene Corp. and Molina Healthcare, Inc., the companies’ Affordable Care Act marketplace business lines offered a positive — albeit partial — counterweight to concerns about member attrition.

Centene “delivered another strong quarter of marketplace growth,” with membership growing 62% year over year and “running ahead of our and management’s expectations,” Truist Securities analyst David MacDonald advised investors.


Cigna Reports Solid Second Quarter Despite Risk-Adjustment Setback

At first blush, The Cigna Group’s second-quarter financial results largely impressed equities analysts, with a higher-than-expected risk adjustment payable representing one of the few headwinds reported by the company.

“Overall, 2Q results look solid and generally in line with expectations versus a backdrop of elevated concern around trend,” Leerink Partners’ Whit Mayo advised investors in an Aug. 3 research note. The latest round of managed care earnings reports has been closely watched by investors amid disclosures from industry bellwether UnitedHealth Group that the firm is seeing elevated medical utilization.

Cigna reported adjusted earnings per share (EPS) of $6.13 for the quarter, beating the Wall Street consensus estimate of $6.04. The diversified health care company — which owns insurer Cigna Healthcare and PBM Express Scripts, among other assets — raised its full-year 2023 revenue projection by $2 billion to $190 billion, and it reaffirmed its adjusted EPS guidance of at least $24.70.