The third quarter of 2023 was another mixed bag for major insurers as they continue to grapple with significant headwinds.
Profits in the third quarter shrunk year over year for all but two of the payers included in Fierce Healthcare's review of quarterly earnings reports. Industry juggernaut UnitedHealth Group came out on top yet again with nearly $6.1 billion in profit, up from $5.8 billion.
Centene also increased its profits from the prior-year quarter, posting $713 million compared to $469 million in the third quarter of 2023.
UnitedHealth also leads the way on profit through the first three quarters of this year, earning $8.9 billion. That is down significantly, though, from its haul through the first nine months of 2023, which was $16.9 billion.
The insurer with the next highest profit through the first three quarters was Elevance Health with $5.6 billion, up slightly from $5.1 billion a year ago.
UnitedHealth Group also led the way on revenue for the quarter at $100.8 billion, with CVS Health the second highest at $95.4 billion. All six insurers included in the analysis grew their revenue year over year in the third quarter, with the largest increase for the Cigna Group.
Cigna's revenue grew from $49 billion to nearly $63.7 billion, according to its earnings report.
While CVS did expand its revenue, it had a significant drop off in profitability, Fierce's review found. CVS reported nearly $2.3 billion in profit for the third quarter of 2023, which plummeted to $87 million in the third quarter of 2024.
One of the major storylines for insurers over the course of this year has been a spike in utilization in Medicare Advantage (MA) alongside other challenges in that space like updates to the methodology used to calculate the program's star ratings, lowered payment rates and pushback from providers.
CVS in particular is feeling those struggles at its Aetna unit.
The company elected not to release guidance for 2024 or a preliminary outlook for 2025 on its call last week as it seeks to right the ship at its health insurance segment. CEO David Joyner told investors that CVS priced its 2024 MA plans based on poor performance in the star ratings but did not account for potentially elevated utilization.
MA plans overall have seen ongoing spikes in utilization, and that's expected to continue into the coming year.
UnitedHealth, for instance, failed to wow investors with its outlook and saw it stocks decline notably as a result. However, executives said that it was able to price its MA slate to account for the ongoing utilization trends. Its profits have instead been stymied by the massive cyberattack that shock its Change Healthcare subsidiary earlier this year.
It expects to eat 75 cents per share in business disruption costs related to the hack, according to its report.
Humana, given that the bulk of its insurance business is in MA, has also felt the sting of challenges in that market over the course of this year.
While the company did surpass Wall Street's expectations in the third quarter, it is still facing significant financial disruption after its star ratings performance took a massive hit. It is also exiting a number of markets and is expected to lose several hundred thousand members as it focuses on improving overall performance.
Insurers with more limited exposure to the MA market, like Cigna, have largely weathered this storm. However, the company has faced hurdles of its own, particularly losses related to its investment in embattled primary care provider VillageMD.
Cigna said it took a $1 billion hit in the third quarter alone on its investment in Village.
Centene and Elevance Health, meanwhile, have more so felt the sting in Medicaid, which is wrapping up the post-COVID unwinding process. Elevance's medical loss ratio was elevated in the quarter like many of its peers, but it attributed the increase to a mismatch between Medicaid rates and acuity.
Centene reported that it was down by about 2 million members in Medicaid thanks to the eligibility determinations, though it offset those losses in other segments.