Financial Results

MCO Stock Performance, March 2024

Here’s how major health insurers’ stock performed in March 2024. Elevance Health, Inc. had the highest closing stock price among major commercial insurers as of March 28, 2024, at $518.24. Humana Inc. had the highest closing stock price among major Medicare insurers at $346.72.

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Wall Street Analyst Predicts ‘Multiyear Utilization Catchup’ Post-COVID

Since last summer, major health insurers’ reports of unusually high outpatient care utilization have proven to be a thorn in the industry’s side — inflating medical loss ratios and forcing Humana Inc. to significantly downgrade its 2024 earnings outlook. And according to some Wall Street analysts, the trend isn’t likely to go anywhere soon.

With the COVID-19 pandemic winding down, “grandma has been locked in her house for the last three years; she’s ready to go on a cruise and she wants that new hip, she needs that new knee,” Deutsche Bank Managing Director George Hill said during the annual Wall Street Goes to Washington Roundtable on April 8, hosted by the Brookings Institution. That increased demand, he said, “has resulted in a surge in outpatient orthopedic procedures that we’ve seen, particularly among seniors, particularly impacting the Medicare Advantage books of business.”

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Bright Health Gave CEO $2M Bonus Despite Owing Insurers Millions

Although NeueHealth Inc. — formerly known as Bright Health Group Inc. — still owes a substantial sum of money to health insurers and is struggling to stay afloat, its CEO received a $1.95 million cash bonus last year, according to a new regulatory filing.

“It really is just a mockery of good governance and fairness at this point,” remarks Ari Gottlieb, principal of A2 Strategies and a prominent critic of Bright and other startup "insurtech" firms.

NeueHealth did not respond to AIS Health’s questions about the basis for the bonus earned by G. Mike Mikan, who has served as the firm’s president and CEO since April 2020.

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Analyst Reports Underscore Headwinds Facing Medicare Advantage Insurers

Recent reports from Wall Street analysts are shining a spotlight on challenges faced by UnitedHealth Group and Humana Inc., which are major players in the Medicare Advantage market. In particular, the authors cited increased utilization and potential lower reimbursement as reasons for pessimism, and they said they would be closely watching what insurers say during their upcoming first-quarter earnings calls.

Analysts’ concerns echo the sentiments that UnitedHealth and Humana executives expressed during their fourth-quarter earnings calls in January. However, it remains to be seen whether these are short-term trends or will continue for a longer period of time.

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Cigna Raises Long-Term Earnings Projections, Cites Specialty as Driver

During its March 7 Investor Day, The Cigna Group raised its long-term earnings projection and highlighted the diverse offerings it believes will win client business and differentiate itself from competitors. The company placed particular emphasis on opportunities in the specialty pharmacy area, where it already has a strong foothold and plans on expanding in the coming years.

Cigna increased its long-term adjusted earnings per share (EPS) guidance range to an average growth of 10% to 14% per year, up from a range of 10% to 13%. For 2024, it kept its adjusted EPS target of at least $28.25, up from $25.09 last year.

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Change Healthcare Faces Lawsuits, Could Lose Clients After Data Breach

UnitedHealth Group could face significant financial and legal consequences amid the ongoing cyberattack on its Change Healthcare subsidiary. A federal regulator is investigating the diversified health care giant for possible HIPAA violations; patients and providers have filed lawsuits; and the firm was forced to suspend prior authorization in many cases, which may hurt the bottom line of its UnitedHealthcare insurance arm, according to Wall Street analysts.

In addition to these immediate problems, Change Healthcare may lose the leading position it holds in its areas of operation. Some providers and insurers have already begun to switch to other revenue cycle management platforms and claims clearinghouses, one expert tells AIS Health, a division of MMIT.

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Oscar, Clover, Alignment Make Progress Toward Profitability

The software-focused startup insurers known as “insurtechs” last year made tangible strides toward reaching profitability, according to their full-year earnings reports, backing up their executives’ statements that 2024 may see break-even results or better.

Financial institutions generally took a positive view toward Oscar Health Inc., Alignment Healthcare Inc. and Clover Health Investments Corp., but some analysts tempered their praise by pointing out holes in the firms’ growth and profitability strategies.

One former insurtech, the erstwhile Bright Health Group, Inc., exited the insurance business altogether, and now operates as a care delivery-focused business under the name NeueHealth.

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Feds Target Private Equity — and Payer — Investment in Providers

The Federal Trade Commission, Dept. of Justice and HHS on March 5 released a request for information (RFI) on private equity (PE) and “other corporations’” — including payers’ — ownership of health care providers, citing concerns over patient and worker safety, consolidation, and escalating costs. In a public event held that day, the agencies presented a deeply negative view of providers currently owned by PE and tipped further enforcement actions — including a heightened emphasis on legal coordination with state antitrust regulators.

The investigation is just the latest in a series of ambitious health care antitrust moves by the Biden administration. The FTC has also launched investigations into PBMs, while the DOJ tried to block notable transactions like UnitedHealth Group’s acquisition of Change Healthcare — and in October launched a broad antitrust investigation into UnitedHealth itself, which became public in recent days. The text of the new RFI said it “complements” CMS’s recent, separate RFI on Medicare Advantage.

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At Investment Conferences, Insurer Execs Discuss Cyberattack, Care Utilization

Speaking at two health care investment conferences on March 5, executives at three major health insurance companies noted that they had been affected by the ongoing cyberattack on Change Healthcare, the nation’s leading processor of medical claims. However, they noted that it is still too early to assess how the Change attack will affect their first-quarter results.

The companies — CVS Health Corp., Elevance Health, Inc. and Humana Inc. — each reaffirmed their financial guidance for the year while addressing investors. They admitted, though, that they do not have as much information on claims and utilization as usual due to the Change outage that was discovered on Feb. 21.

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MCO Stock Performance, February 2024

Here’s how major health insurers’ stock performed in February 2024. Elevance Health, Inc. had the highest closing stock price among major commercial insurers as of Feb. 29, 2024, at $501.25. Humana Inc. had the highest closing stock price among major Medicare insurers at $350.32.

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© 2024 MMIT