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As has been in the case in past earnings reports from the major U.S. health insurers, the second quarter of 2016 brought more news of ongoing financial losses on the Affordable Care Act exchange markets despite generally favorable results in other business lines.
It was also a chance for investors to gauge Aetna, Humana, Anthem and Cigna executives' thinking about how they will proceed with their planned transactions after the Justice Department’s decision to file suit.
Here’s a glance at how the health insurance industry’s “big five” fared in Q2, and other interesting developments:
UnitedHealth: United’s total second-quarter revenues of $46.5 billion grew 28 percent year over year, driven in part by 52 percent revenue growth in its healthcare services arm, Optum. The company indicated its plan to exit many state insurance marketplaces is on track, adding that it posted $200 million of full-year losses from ACA-compliant individual products above its previous projections.
Humana: The insurer reported adjusted consolidated revenues of $14 billion in Q2, a 2 percent increase from Q2 2015 that was driven in part by higher average individual Medicare membership, but offset by by lower services revenues due to the sale of Concentra last June. Humana also noted “continuing challenges” in its individual commercial medical business, which has led the company to pull back from many on- and off-exchange markets starting in 2017. Though the company did not host an earnings call, Humana said in its report that it and Aetna plan to “vigorously defend” their transaction.
Aetna: The company reported that it grew its total revenue by 5 percent year over year to reach $16 billion in Q2--primarily due to higher premium yields and membership growth in Aetna's government business, but partially offset by membership declines in Aetna's commercial insurance products. The company also sent shock was throughout the industry by announcing it will scrap its plans to expand on the ACA exchanges and pull back from certain markets where it already sells plans. On an earnings call, CEO Mark Bertolini made his case for the merits of the acquisition of Humana while also indicating the insurer does have a “Plan B” for if the transaction falls through.
Anthem: The insurer reported an operating revenue of nearly $21.3 billion in Q2, a 7.7 percent year-over-year increase driven by premium increases to cover overall cost trends, and higher enrollment in the company’s Medicaid and commercial self-funded business segments, among other factors. Anthem noted that its insured membership increased by 170,000 lives, primarily due to growth in Medicaid membership. In his remarks to investors, CEO Joseph Swedish also defended Anthem’s deal with Cigna, saying it will boost competition and stabilize prices on the ACA exchanges.
Cigna: The company’s total revenues increased 5 percent in the second quarter to $10 billion, it said in its earnings report, noting solid performance from its global healthcare segment but unexpectedly disappointing results in its group disability and life segment. CEO David Cordani also discussed the insurer’s plans for if its deal with Anthem falls through, highlighting its willingness to pursue other growth opportunities.