Stock Performance

Analyst: Humana’s Low Share Price Could Draw Cigna Takeover Attempt

With Humana Inc.’s share price slumping in recent months, one Wall Street analyst points out that conditions may be better than ever for a possible takeover of the Medicare Advantage insurer by The Cigna Group.

“The math now works for a [Cigna] + [Humana] fusion even with [Humana’s] lower EPS [earnings per share],” wrote Jefferies analyst David Windley in an April 22 note to investors. The two managed care giants were rumored to be in talks to combine at the end of 2023, but the Wall Street Journal reported on Dec. 10 that the firms were walking away from the deal. But that was before Humana cut its full-year EPS outlook when reporting its fourth-quarter 2024 results earlier this year, citing a trend of higher-than-expected utilization that has bogged down the MA-focused carrier’s results since the beginning of 2023.

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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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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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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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© 2024 MMIT

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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Checking on the Blues: Analysts Predict Margin Uptick in ’23 Will Be Short-Lived

Although Blue Cross Blue Shield plans’ margins started rising again in 2023 after a two-year slump, industry analysts say that a diverse array of factors could prevent continued margin expansion among the Blues this year.

“We don’t question that Blues overall will probably remain profitable…but the improvement in the margins in ’23 probably is not going to reoccur [this year],” says Bridget Maehr, director at the insurance-focused credit rating firm AM Best. “We’re probably going to see a little bit more of a normalization of margins.”

According to a new analysis from Mark Farrah Associates, Blues’ aggregate profit margin — net income divided by total revenues — swelled to 6.1% in the third quarter of 2020. During that time, the uptick in COVID-19-related care was far outpaced by declines in routine care, causing coffers to fatten across the insurance industry. Blues’ aggregate margin then declined to 3.9% by the third quarter of 2021, and it fell further to 3.0% in the third quarter of 2022.

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© 2024 MMIT

Health Insurer Executive Compensation Database, 2019-2022

CEOs of health insurance companies have received increasing pay packages over the past few years, AIS Health’s Executive Compensation Database shows. The database includes major health insurers’ executive compensation from 2019 to 2022 — collected from individual companies, state insurance documents and U.S. Securities and Exchange Commission filings — and their national membership information as of the third quarter of 2023, per AIS’s Directory of Health Plans. The database will be updated annually.

Several states do not disclose compensation data for specific executives at health insurance companies or do not collect compensation data. Some insurance companies made leadership changes over the years.

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Some Insurtech, Blues CEOs Log High Pay as Executive Comp Changes Loom

In the latest round of health insurer executive compensation data collected by AIS Health, there were once again intriguing stories to tell — such as why an insurtech CEO appeared to outearn the heads of the industry’s largest insurers, or what led a Blue Cross Blue Shield affiliate to nearly double its CEO’s compensation year over year.

However, finance experts who spoke to AIS Health, a division of MMIT, say that the biggest story might just be a recent court decision involving none other than Tesla, Inc. CEO Elon Musk, as the ruling could influence how all types of companies — including health insurers — determine their chief executives’ compensation going forward.

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MCO Stock Performance, January 2024

Here’s how major health insurers’ stock performed in January 2024. UnitedHealth Group had the highest closing stock price among major commercial insurers as of Jan. 31, 2024, at $511.74. Humana Inc. had the highest closing stock price among major Medicare insurers at $378.06.

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© 2024 MMIT