MCO stock performance in October 2021
The three largest PBMs — Cigna Corp.’s Express Scripts, UnitedHealth Group’s OptumRx, and CVS Health Corp.’s Caremark — each posted strong results in the third quarter of 2021. Indeed, those PBMs were essential — in the eyes of Wall Street — to making up for the impact of COVID-19 on the profitability of their parent companies’ health insurance subsidiaries.
Cigna Corp.’s Evernorth, the parent company of Express Scripts, took in $31.9 billion in pharmacy revenue for the first three quarters of 2021, up from $28.7 billion in the same period during 2020. Wall Street analysts were bullish on Evernorth and Express Scripts despite skepticism of Cigna’s overall performance.
The third quarter of 2021, to put it mildly, was a tough one for three out of the four startup health insurers that have gone public in the past year.
In particular, individual market-focused Oscar Health, Inc. and Bright Health Group, Inc. struggled with controlling medical costs despite their rising revenues. Oscar recorded a $212 million net loss — eclipsing its net loss of $79 million in the third quarter of 2020 — and a medical loss ratio (MLR) of 99.7%, while its revenues rose 336% year over year. Bright Health reported a $296 million loss (compared with a $59 million loss in the year-ago quarter) and a 103% MLR, and its revenues jumped 206%. Health insurers typically try to keep their MLRs in the mid-80% range to comply with federal regulations while also tightly managing medical costs.