After major insurers reported second-quarter financial results that reflected continued medical cost pressure in the government business, analysts revisited their takes on expectations for CVS Health Corp.’s Aetna, Centene Corp. and industry peers. Two notable factors driving some of the headwinds in the back half of the year are the 2025 Medicare Annual Election Period (AEP), which kicks off on Oct. 15, and the impact of Medicaid redeterminations. The latter was of particular concern to analysts after Sept. 4, when Centene provided an update at the Wells Fargo Healthcare Conference signaling lower-than-expected Medicaid enrollment.

For managed care organizations with a large Medicaid footprint, the consistent takeaway for Barclays after second-quarter earnings reports was “incremental trend pressure relative to current expectations,” stemming from redeterminations picking up in the first half of the year “that put increased acuity pressure on state rates,” wrote equity research analysts on Aug. 22. “From here, membership should start to stabilize, which is the first step toward recovery.”

So far, 2024 has proven to be an eventful year for publicly traded health insurers — and not always in a good way.

Indeed, during the most recent quarter CVS Health Corp. made waves by adjusting its earnings outlook downward for the third time this year and dismissing the short-tenured president of its Aetna health benefits division due to ongoing Medicare cost pressures.

Other publicly traded firms, including Humana Inc. and Elevance Health, Inc., offered better second-quarter performances, but still saw their share prices fall amid investors’ concerns about how medical costs will shake out in the second half.

When CVS Health Corp. announced on Aug. 7 that Aetna President Brian Kane was leaving after less than a year on the job, it highlighted how severe the company’s struggles in its health benefits segment have become. The decision also drew mixed reactions from Wall Street analysts.

Barclays’ Andrew Mok wrote in an Aug. 7 note that Kane’s departure was “a big surprise” and added that Kane “was widely viewed as the fixer for the Medicare Advantage business,” which has been a drag on earnings.

“The accountability here is questionable and the change casts significant uncertainty on whether the company was able to capture developing cost trend pressure in 2025 Medicare bids,” Mok wrote.

Here’s how major health insurers’ stock performed in July 2024. UnitedHealth Group had the highest closing stock price among major commercial insurers as of July 31, 2024, at $576.16. Humana Inc. had the highest closing stock price among major Medicare insurers at $361.61.

While most of the largest managed care organizations have recently reported higher-than-expected utilization that negatively impacted their second-quarter results, the three publicly traded “insurtechs” did not have the same issues.

Ari Gottlieb, principal of health care consulting firm A2 Strategies who has often criticized the financial performance and management of Alignment Healthcare, Inc., Clover Health Investments Corp. and Oscar Health, Inc., tells AIS Health the insurtechs “all posted pretty good quarters” and are headed in the right direction.

Amid a summertime resurgence of ire directed at major PBMs, CVS Health Corp., The Cigna Group and UnitedHealth Group during their recent earnings calls each took the opportunity to defend their pharmacy benefits businesses and tout their new, more transparent offerings.

When reporting CVS’s second-quarter financial results on Aug. 7, CEO Karen Lynch opened her prepared remarks with the bad news first, revealing that the continued struggles of the firm’s health benefits division led her to cut its 2024 earnings forecast and fire Aetna President Brian Kane. But she then sang the praises of CVS Caremark — as well as hit back at major PBMs’ critics.

Despite Humana Inc. beating second-quarter earnings and revenue expectations, Wall Street did not react kindly to the insurer’s latest financial results. Humana shares closed at $361.61 on July 31, the day the results were released, a 10.6% decline from the previous day. Wells Fargo analyst Stephen Baxter primarily attributed the negative sentiment to higher-than-expected inpatient admissions and the company not raising its full-year guidance as many had expected it would do.

Humana had adjusted earnings per share (EPS) of $6.96 in the second quarter, well above the Wall Street consensus estimate of $5.92. Still, Humana reaffirmed its full-year EPS of about $16, which CEO James Rechtin said “prudently assumes that the higher inpatient costs will continue even as we work to mitigate that pressure.” Humana in January surprised investors by lowering its EPS guidance to about $16 for the year, down from its previous estimate of about $25, which it attributed to elevated care utilization.

Although The Cigna Group reported second-quarter results on Aug. 1 that were strong on paper, the company’s decision to reaffirm — not raise — its full-year 2024 earnings guidance and executives’ remarks regarding health care utilization trends appear to have led to a mild stock selloff.

For the quarter ending June 30, Cigna reported adjusted earnings per share (EPS) of $6.72 and total revenues of $60.5 billion, beating Wall Street’s consensus estimates of $6.43 and $58.5 billion and representing 25% and 10% year-over-year growth, respectively. Cigna said its revenue increase was “primarily driven by significant growth in Evernorth Health Services, reflecting large client wins.”

Of all privately insured markets, Medicare Advantage had the highest gross margins per member in 2023, reaching $1,982, according to a new analysis from KFF on insurers’ financial performance. Margins have been consistently higher in MA than other sectors over the past decade. KFF pointed out that while gross margins are generally one good indicator of financial performance, they do not necessarily mean higher profitability, as gross margins do not account for any administrative costs or tax liabilities. Researchers analyzed data compiled by Mark Farrah Associates based on information provided by insurers to the National Association of Insurance Commissioners.

During recent conference calls to discuss second-quarter 2024 earnings, Centene Corp., Elevance Health, Inc. and Molina Healthcare Inc. all discussed the long-term Medicaid growth opportunity despite declining membership resulting from redeterminations and increasing medical costs — scenarios that they expect to stabilize next year. And while Centene may be scaling back its Medicare Advantage footprint and Elevance pursued a “disciplined approach” to 2025 bids, all three emphasized their continued focus on serving dual eligible Medicare-Medicaid beneficiaries.

For the quarter ending June 30, Centene on July 26 posted adjusted earnings per share of $2.42 and said it is on track to deliver adjusted EPS of at least $6.80 for the full year. The company ended the quarter with more than 13.1 million Medicaid members, down from just over 16 million a year ago. However, its total membership increased slightly to nearly 28.5 million members, with growth in the Affordable Care Act exchanges and Medicare Prescription Drug Plan (PDP) businesses offsetting Medicaid losses. Its overall medical loss ratio for the quarter was a higher-than-expected 87.6%, as cost pressures in Medicaid led to a segment MLR of 92.8% (compared with 88.9% in the prior year quarter).