Health Plan Weekly

Cigna Corp. on Nov. 3 reported third-quarter adjusted earnings per share (EPS) of $6.04, beating the Wall Street consensus expectation of $5.72 and getting a nod from one equities analyst for delivering “well-controlled medical costs.” During the company’s conference call to discuss quarterly results, executives touted Cigna’s big PBM contract win that will allow it to provide pharmacy benefits for Centene Corp. Yet they also fielded a critical analyst question about whether Cigna’s mergers and acquisitions (M&A) strategy is keeping up with the competition. 

On the subject of the Centene PBM contract, which will begin in 2024 and cover 20 million members, Cigna CEO David Cordani said it “builds on Express Scripts’ track record as the partner of choice and will present growth opportunities to provide additional Evernorth health services over time.” Added Chief Financial Officer Brian Evanko: “This mutually beneficial partnership will bring significant revenue and be financially accretive over the course of the multi-year contract term.” In 2023, though, the new contract will create a “one-year headwind” financially as Cigna’s Express Scripts division invests funds to get the new partnership started, executives acknowledged. 

CVS Health Corp., the parent company of insurance firm Aetna, reported solid results in the third quarter, beating Wall Street earnings projections. However, the company also acknowledged headwinds including declining Medicare Advantage Star Ratings, the loss of Centene Corp.'s PBM business, a major legal settlement over opioid overprescribing, and losses posted by newly acquired divisions.  

The insurer reported $2.09 in adjusted earnings per share (EPS), beating the Wall Street consensus projection of $2.00. Executives project an end-of-year adjusted EPS of $8.55 to $8.65, slightly up from a previous projection of $8.40 to $8.60. Total revenues across the firm increased by 10% year over year to $81.2 billion.  

Humana Inc. posted strong third-quarter results, beating the Wall Street consensus earnings projection. The firm credited its lower-than-expected medical loss ratio (MLR), financial tailwinds from merger and acquisitions (M&A) and its yearlong value-creation plan as the main drivers of the results. 

The insurer reported $6.88 in adjusted earnings per share (EPS), beating the  consensus projection of $6.27. Executives maintained their estimated end-of-year adjusted EPS of approximately $25.00. Centene’s MLR was 85.6%, and its total revenues reached $22.79 billion in the quarter, up from $20.6 billion in the third quarter last year. Executives said they project membership growth in 2023 of 325,000 to 400,000 members, or 7.1% to 8.7%. 

When the 2023 open enrollment period for Affordable Care Act exchange plans officially begins on Nov. 1, health insurers will be offering plans in a market full of contrasts: where, for example, rising premiums are masked by enhanced subsidies, and where health plan competition is at its highest level but there’s fewer new-to-the market insurers than there were in 2022.  

New regulatory changes are also taking effect in the 2023 plan year. Most notably, insurers will have to offer standardized plans alongside their other products for the first time since the Obama administration, and CMS will be evaluating plans for quantitative network adequacy standards.