Q3 earnings roundup: Large insurers' revenues rise despite exchange losses

Closeup of stock prices

While the Affordable Care Act marketplaces have proved nothing short of a tumultuous balancing act for the health insurance industry, diverse business segments continue to bode well in boosting revenues for the largest health insurers.

In Q2, UnitedHealth recalibrated its forecasts to estimate $200 million of losses on the ACA exchanges and signaled it would pull back from most marketplaces, paving the way for other insurers, such as Humana, Aetna and the venture capital-backed startup Oscar Insurance, to do the same.

During their own most recent earnings calls, Cigna and Anthem announced they are also retooling their marketplace strategies, with further reductions contingent on future financial performance of their exchange products.

Despite the regulatory and market turmoil surrounding some of the health insurers' products, revenues are on the rise for seven major insurers--but challenges remain.

Cigna

  • Revenue grew 5 percent.
  • Earnings came out to be $416 million.
  • It reported 9 percent revenue growth in its global supplemental benefits business.
  • Cigna reported some losses in its government book of business due to an expensive government audit, as well as losses on Medicaid plans in Texas and Illinois.
  • The company revised its full-year earnings expectations upward for its group disability and life business segments, a part of the company’s operations that factored into why its Q2 earnings lagged behind expectations.

Molina:

  • Molina saw revenue increase 26 percent over the same quarter of 2015, generating $4.5 billion in Q3.
  • Its membership base increased 22 percent over Q3 2015.
  • Overall profitability increased in Q3, but was partially offset by lower profitability among its marketplace products. The company expects its marketplace products to break even for the full year.
  • On a call with investors, CEO Joseph Molina maintained that the ACA programs are “valuable” and “much-needed," though also called for some tweaks. “Although these results highlight the need for programmatic adjustments to the Affordable Care Act’s health insurance marketplaces, Molina Healthcare’s combination of product and geographic diversification, quality focused medical care, and efficient operations continues to deliver value to our members, our government partners and our investors,” he said.

Anthem:

  • The insurer’s membership ticked up approximately 3.1 percent, adding 1.2 million members to its plans since the end of Q3, 2015, according to the earnings announcement.   
  • It reported net income of $617.8 million for the third quarter.
  • It experienced $21.1 billion in revenues for the quarter, a 6.8 percent increase from the same quarter of last year.
  • On a call with investors, CEO Joseph Swedish said the company continues to experience higher-than-expected claims costs for ACA enrollees. Despite marginal improvement last quarter for ACA-compliant individual products, the "disappointing" results prompted Swedish to say that the company might reduce its exchange participation next year. 

UnitedHealth:

  • The health benefits and services company announced a cool $46.3 billion of revenues for the third quarter, constituting 12 percent year-over-year growth, according to the firm’s announcement (.pdf), recording more than $7 billion in cash flows from operations for the quarter.
  • Its net earnings were $1.9 billion for Q3 2016, up from $1.5 billion Q3 2015.
  • The company improved membership by adding 485,000 individuals in the Medicaid Managed Care space.
  • United's Optum subsidiary saw operating margins improve to 6.9 percent, an increase from the 6.1 percent operating margin it reported for the second quarter, according to the report.

Aetna:

  • The company said membership totaled 23.1 million as of the end of the third quarter.
  • Its earnings came out to be $603.9 million.
  • The firm announced $15.8 billion in revenue for the quarter, almost $1 billion more than the same quarter last year, when it produced $14.9 billion in revenue, according to the earnings report.

Humana:

  • The company said its healthcare services and Medicare Advantage lines drove its promising results, but that revenues increased to $13.6 billion for Q3 2016, just barely outperforming its 2015 third quarter revenue of $13.3 billion, according to an unaudited SEC filing.
  • Nevertheless, the company reported $450 million in earnings for the quarter, up from $314 million in net income in the third quarter of 2015, according to the company’s income statements.
  • Approximately 1.7 million, or 63 percent, of the company’s Medicare Advantage members were affiliated with a value-based payment relationships.

Centene:

  • Centene posted revenues of $10.8 billion, riding the momentum of large gains in membership. Its current managed care membership, 11.4 million, increased 137 percent compared to the third quarter of 2015. 
  • "We remain focused on successfully integrating Health Net and positioning Centene to continue its track record of achieving profitable growth," CEO Michael Neidorff said in the earnings announcement, referencing the acquisition finalized in March.
  • The company said that cash flow from operations reflect its net earnings, and on this front Centene reported $480 million for Q3. 

Suggested Articles

Telehealth company Amwell saw its stock spike 42% in its first day of trading Thursday after raising an outsized initial public offering.

A new study puts a number to just how much more private health plans are paying for hospital services compared to Medicare.

Many providers are concerned about rising thresholds in Medicare ACOs, a new survey shows.