Stock Performance

Elevance Health, Inc. reported positive second-quarter 2023 results, powered by solid commercial performance and promising returns from its Carelon health services division, which was launched last year.

The firm, which is the parent company of the Anthem and Wellpoint insurance brands, took in $43.4 billion of operating revenue in the quarter, up $4.9 billion or 12.7% year-over-year. Adjusted earnings per share (EPS) in the quarter were $9.04, beating the Wall Street consensus of $8.78 and representing a year-over-year increase of $1.07, or slightly more than 13%. The firm’s medical loss ratio (MLR) was 86.4%, down 70 basis points from the prior-year quarter — but it increased from the 85.8% figure.

An Elevance press release said the strong top-line revenue result was “primarily driven by premium rate increases in our Health Benefits business and higher premium revenue due to membership growth in Medicaid and Medicare. The increase in operating revenue was further attributable to growth in pharmacy product revenue within CarelonRx driven by growth in external pharmacy members served and the acquisition of BioPlus” — a specialty pharmacy firm — “in the first quarter of 2023.”

Here’s how major health insurers’ stock performed in June 2023. UnitedHealth Group had the highest closing stock price among major commercial insurers as of June 30, 2023, at $480.64. Humana Inc. had the highest closing stock price among major Medicare insurers at $447.13.

Friday Health Plans Management Services Company, Inc. is in the death throes of its life as an Affordable Care Act exchange insurer — regulators are stepping in to take over its operations, and it’s laying off all employees in its home state of Colorado. Meanwhile, Bright Health Group, Inc., which has already exited every ACA exchange in which it operated, reached a deal to sell its California Medicare Advantage plans to Molina Healthcare, Inc. in order to satisfy Bright’s creditors.

Experts tell AIS Health, a division of MMIT, that both insurers largely followed the same playbook: raising massive amounts of funding from venture capital (VC) investors and promising to delight customers with tech-driven, differentiated products. But those big plans fell apart when faced with the realities of an industry that is especially challenging to disrupt, and then capital infusions dried up when interest rates rose.

Not long after UnitedHealth Group sparked an insurer-stock selloff by revealing that it is seeing higher-than-usual outpatient care utilization, Humana Inc. disclosed that it, too, is seeing elevated medical costs due to an increased use of services.

“At this point it appears that there may be a new trend brewing with a rise in utilization and claims, particularly in the Medicare Advantage segment,” A.M. Best Senior Director Sally Rosen remarked in a new video released by the insurance-focused credit rating firm.

And that’s significant for the managed care industry writ large, Rosen tells AIS Health, a division of MMIT. “Medicare Advantage comprised more than one-third of the industry’s underwriting income in 2022, and while the dollar amount has fluctuated, the percentage of underwriting income coming from Medicare Advantage has made up about one third for each of the past three years,” she says.

UnitedHealth Group’s stock took a nosedive on June 13 after Chief Financial Officer John Rex said elevated outpatient care utilization might push the insurer’s 2023 medical loss ratio (MLR) higher than it originally expected. Since UnitedHealth is the bellwether of the managed care sector, other insurers’ stock traded down in the wake of Rex’s comments. However, equities analysts suggested that the highly diversified UnitedHealth isn’t in any danger of taking a major earnings hit.

During the Goldman Sachs Global Healthcare Conference, Rex said UnitedHealth has seen higher levels of outpatient care activity since the first quarter of 2023, and looking at data from the second quarter, the trend doesn’t appear to be going away. He cited hip and knee replacements as well as cardiovascular care — all “very localized in [the] Medicare business” — as the areas where UnitedHealth is seeing higher utilization.

Venture-backed Friday Health Plans will cease operating after several state regulators placed it into receivership due to its rocky finances. The Colorado-based insurer operated in seven states — Colorado, Georgia, Nevada, New Mexico, North Carolina, Oklahoma and Texas — and as of December 2022 covered almost 400,000 enrollees, according to AIS’s Directory of Health Plans.

The insurtech, founded in 2015 with a focus on the Affordable Care Act exchanges, raised over $306 million in venture capital and debt funding. Yet in late 2022, it announced it would scale back from operating in seven states to five states, pulling out of Texas and New Mexico. In March 2023, it was placed into receivership in Texas and soon other states took similar actions.

Here’s how major health insurers’ stock performed in May 2023. UnitedHealth Group had the highest closing stock price among major commercial insurers as of May 31, 2023, at $487.24. Humana Inc. had the highest closing stock price among major Medicare insurers at $501.87.

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.

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.”

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.