Here's how major payers fared in a Q1 dragged by a cyberattack, MA challenges

It's been a bit of a weird start to the year for the insurance industry, as ongoing headwinds in Medicare Advantage (MA) and a massive cyberattack drove results that buck the typical earnings trends.

UnitedHealth Group's Change Healthcare division was hit by a cyberattack in late February, and the ongoing fallout incurred $872 million in financial impact for the first quarter. UnitedHealth posted a $1.4 billion loss in the first quarter, driven in part by the cyberattack as well as the sale of Amil, its Brazil-based business.

The company is bracing for a total financial hit from the cyberattack to fall between $1.35 billion and $1.6 billion, combining costs associated with the response and business disruption.

UHG falls to the bottom of the list in terms of profitability based on a Fierce Healthcare analysis of financial data on the six largest national insurers. However, it did grow its revenues year over year from $91.3 billion to $99.8 billion.

Executives also said that despite the hit the company took in the first quarter along with further costs it's set to incur from the cyberattack, UnitedHealth is still on pace to meet its guidance for the full year of between $27.50 and $28 in earnings per share.

Elevance Health was the most profitable company in the quarter, bringing in $2.2 billion in profit. That's a slight increase from the prior-year quarter, in which the company posted $1.98 billion in earnings.

The company's leadership said it was less impacted than some of its peers by the Change Healthcare cyberattack, and it has less exposure to MA, where elevated utilization continued to be a headache for other payers.

Elevance did fall short of Wall Street's expectations on revenue, growing by just 1% to $42.6 billion in the quarter. The company had the fourth-highest revenue in the quarter, despite leading the way on profit, according to its earnings report.

It was also down about 1.9 million members year over year, which Elevance Health said was driven largely by the ongoing Medicaid unwinding.

Centene Corporation reported the next-highest profit for the quarter with $1.2 billion, just edging out CVS Health's $1.1 billion. Centene does land near the bottom on revenue, however, posting $40.7 billion.

Centene's leadership put a focus on Medicaid in the quarter, with CEO Sarah London saying that 2024 "represents an important year for blocking and tackling through acuity shifts and corresponding rate discussions with our state partners." The insurer scored some key wins in Medicaid too, most notably in Florida.

CVS' shares, meanwhile, are continuing to trend at some of the lowest levels in recent memory as the company warned that MA costs posed a major challenge in the quarter. It took a $900 million hit on Medicare in the first quarter and posted a medical loss ratio above 90% thanks to rising utilization.

The company missed on both profit and revenue in the quarter, bringing in $88.4 billion in revenue. 

CVS Chief Financial Officer Tom Cowhey said the MA segment is likely to drive "significant losses" over the course of the year.

The final profitable insurer of the six in the first quarter was Humana, which earned $741 million. While it surpassed Wall Street's expectations, it too faced significant headwinds in MA.

The company pulled back its guidance for 2025 as rocky seas lie ahead in MA, which accounts for the bulk of its insurance business. Utilization remains elevated, executives said, and they're expecting to feel the squeeze caused by a recently finalized pay cut from the Centers for Medicare & Medicaid Services.

Humana did slightly grow its revenue in the quarter, reaching $29.6 billion compared to $26.7 billion in the prior-year quarter.

UnitedHealthcare is the industry leader in MA, and, while much of the conversation around its earnings centered on the cyberattack, executives did say that seasonal trends that drove up vaccination rates eased in the first quarter compared to the fourth quarter of 2023, where a spike in outpatient care and high demand for respiratory syncytial virus vaccinations drove up its medical loss ratio.

Cigna joins UHG in posting a loss in the first quarter, totaling $277 million in the red. The largest driver of this, Cigna said, is its decision to write off $1.8 billion of its investment in VillageMD as the Walgreens-owned provider produced disappointing results and has closed a number of clinics.

Execs don't expect that write-off to have a lasting tail over the course of the year, however, as it boosted its guidance for 2024 despite the loss.

Cigna also grew its revenue year over year, with the figure rising from $46.5 billion in the first quarter of 2023 to $57.3 billion in the first quarter of 2024.