Stock Performance

News Briefs: AHIP CEO Will Step Down in the Fall

AHIP President and CEO Matt Eyles will leave his position on Oct. 2, the health insurer trade group said on May 24. Eyles has helmed AHIP for nearly five years, and the organization said his resignation is a “personal decision.” During his tenure, Eyles brought both Aetna and Humana back into the fold, as those two insurers left AHIP before he became president and CEO. He also presided over a branding overhaul, in which the group known as America’s Health Insurance Plans opted to go by its acronym alone “to recognize the industry’s role extends well beyond health insurance coverage to providing solutions that are ‘Guiding Greater Health.’” The executive committee of AHIP’s board of directors will start a national search for Eyles’ replacement.


Oscar, Clover, Bright Detail Downsizing Efforts in 1Q Earnings Calls

Not one, not two, but three insurtechs that have gone public in recent years reported their first-quarter earnings on May 9 — and each took the opportunity to detail how they’re stepping away from unprofitable parts of their businesses and focusing on ventures that can help put them in the black.

“Oscar is in a very different place than we were a year ago,” newly minted CEO Mark Bertolini said during Oscar Health Inc.’s earnings call.

“A year ago, we were focused on absorbing our increased scale and ensuring that our operations could handle a sizable increase in growth,” continued Bertolini, the former Aetna CEO who left the company after its acquisition by CVS Health Corp. “Today, we are focused on advancing the capabilities and technology to best serve our members and have been able to shift our attention to implementing a series of initiatives aimed at improving the efficiency of our operations.”


MCO Stock Performance, April 2023

Here’s how major health insurers’ stock performed in April 2023. UnitedHealth Group had the highest closing stock price among major commercial insurers as of April 28, 2023, at $492.09. Humana Inc. had the highest closing stock price among major Medicare insurers at $530.49.


PBM Probes Loom Large in Cigna, CVS, UnitedHealth 1Q Earnings Calls

During their first-quarter earnings calls in recent weeks, top executives at the companies that own the three largest PBMs in the U.S. discussed the regulatory challenges and inquiries facing the industry. They also defended the PBMs’ business practices, claiming they play a major role in negotiating drug prices on behalf of their clients. And they noted they have retained nearly all of their customers and added new ones despite the increased industry scrutiny.

Elected officials have targeted CVS Health Corp.-owned Caremark, The Cigna Group’s Express Scripts and UnitedHealth Group’s Optum Rx, accusing them of contributing to the high price of medications and for their lack of transparency. Those three PBMs have about an 80% market share, a consolidation of power that has garnered criticism from state and federal policymakers.


As the Insurtech World Turns: Bright, Clover Disclose Deals, Lawsuits, Layoffs

Recent weeks have brought both good and bad news for insurtechs, with Bright Health Group, Inc. appointing a new chief financial officer, putting its last health insurance asset up for sale, and disclosing that it’s being sued by a provider group for unpaid claims. Clover Health Investments Corp., meanwhile, revealed that it will outsource its core insurance operations to a technology vendor, cut 10% of its workforce, and settle one of a series of shareholder lawsuits filed against the company.

Industry observers tell AIS Health, a division of MMIT, that the net effect of those developments isn’t yet clear, but one thing is certain: The Bright and Clover sagas are far from over.


Humana Dodges Cost Concerns, Touts MA Growth in 1Q Earnings Report

Although the managed care earnings season kicked off with concerns about rising medical costs, equities analysts appeared optimistic about Humana Inc.’s prospects after the insurer reported its first-quarter 2023 financial results on April 26. They seemed particularly impressed by Humana’s performance during the Annual Election Period (AEP) and Open Enrollment Period (OEP) for Medicare Advantage customers.

Humana’s first-quarter results “brought forth a positive preliminary look at 2024 MA rates, strong MLR [medical loss ratio] upside aided by favorable development, and 2023 AEP/OEP details that draw a positive look into the composition of members, retention, and margins,” SVB Securities analyst Whit Mayo wrote in an April 26 note to investors.


Centene Beats First-Quarter EPS Projection, but Predicts 2024 Medicare Loss

Centene Corp. exceeded earnings projections during the first quarter of 2023 and raised its guidance, moves that were made possible by growth in Affordable Care Act exchange enrollment. But the carrier cut its guidance for 2024, mainly due to capital costs related to scaling up its Medicare Advantage business. One Wall Street analyst was sanguine on the results and praised the firm’s “conservatism” in approaching Medicaid redeterminations, which will have a disproportionate impact on the Medicaid-focused insurer compared to other commercial insurance peers.

Centene took in $35 billion in revenues during the first quarter of 2023, and delivered $1.16 billion in adjusted net earnings, which amounted to adjusted diluted earnings per share (EPS) of $2.11, a figure that beat the Wall Street consensus projection of $1.98. Total quarterly premium and operating revenues increased by 2% year over year, while adjusted quarterly net earnings increased by 8.2% year over year. Medical loss ratio (MLR) was 87%, down from 87.3% in the first quarter of 2022. Management reduced its 2024 full-year EPS projection to $6.60 or higher.


Despite Elevated Medical Costs, Elevance Posts Strong First-Quarter Results

Elevance Health, Inc. reported increased premium revenues in the first quarter of 2023 and strong results from its fast-growing PBM and services division, Carelon. While Wall Street analysts were mostly positive about the results, some expressed concerns that the firm’s medical loss ratio (MLR) and operating expenses were too high.

Elevance took in $41.9 billion during the first quarter of 2023, an increase of 10.6% year over year. Income rose 16.6% year-over-year to $2.8 billion, yielding adjusted earnings per share (EPS) of $9.46, which beat the Wall Street consensus of $9.23. Elevance’s MLR was 85.8%, which was in line with projections from the firm and the Street consensus. Days claims payable (DCP) was 46 days as of March 31, “a decrease of 1.5 days from December 31, 2022 and a decrease of 0.9 days compared to March 31, 2022,” per a press release announcing the results.


‘Days Claims Payable’ Dip Clouds UnitedHealth’s 1Q Earnings

Although UnitedHealth Group’s executives touted “strong and well-balanced” growth in the first quarter of 2023, the company’s stock dropped following its April 14 earnings report. Equities analysts suggested that a decline in the days claims payable (DCP) metric led to the sell-off, as well as concerns about Medicare Advantage-related business risks — but their views differ about how concerned investors should be.

SVB Securities analyst Whit Mayo, for example, suggested in an April 17 research note that the risks to UnitedHealth’s valuation are overblown.

The company’s first-quarter results “brought forth continued themes of consistency, strong MA and self-funded growth, along with noticeable top-line strength within Optum Health,” Mayo wrote. “Noise around trend, lower DCP, 2024 MA risk balanced against the recent run-up, and a historically high relative valuation premium presumably pushed shares lower on Friday,” he suggested, but added that “1Q results generally and historically present few new details to reshape investors’ views on the full-year earnings curve for the sector.”


Wall Street Analysts Have Little Faith That Feds Can Slow Health Care M&A

During a recent panel discussion featuring equities analysts who cover the health care sector, analysts expressed skepticism that the rapid rate of mergers and acquisitions occurring in the industry will slow down in the near future — and they suggested that may not be such a bad thing.

“Can I just say no?” George Hill, a managing director at Deutsche Bank, said when asked whether tougher antitrust enforcement is having an impact on health care consolidation. Hill was one of four equities analysts who discussed market trends shaping the health care system during the USC-Brookings Schaeffer Initiative for Health Policy’s 27th “Wall Street Comes to Washington” roundtable.