Health Plan Weekly

Humana Inc.’s earnings for the third quarter beat Wall Street projections, but the firm lowered its end-of-year guidance, citing COVID-19 costs. The Medicare Advantage-focused payer’s executives also said it would sell off much of its hospice operations, touted the firm’s acquisitions in home care and said they are actively looking for more home health and primary care providers to purchase.

Humana reported adjusted earnings per share (EPS) of $4.83 for the quarter, which beat the Wall Street consensus projection of $4.66. However, the firm lowered its end-of-year guidance by about $1.00 to $23.67, citing the persistence of the COVID-19 pandemic. The firm brought in more than $20.8 billion in adjusted revenue during the third quarter, up from over $18.8 billion in the third quarter of 2020. Adjusted pretax income amounted to $802 million, up from $550 million in the third quarter last year.

CVS Health Corp. beat earnings projections for the third quarter, with PBM subsidiary Caremark a main driver of profitability. Aetna, the firm’s health insurance subsidiary, was also profitable, but its results disappointed Wall Street analysts. CVS executives also doubled down on the firm’s growing primary care strategy and indicated they may seek transactions in that space.

The retail and health benefits giant generated $1.97 in earnings per share (EPS) for the quarter, outstripping a Wall Street consensus projection of $1.79. The firm raised its end-of-year projected earnings to $7.90 to $8.00 per share. Total revenues were more than $73.7 billion, with more than $4 billion in adjusted operating income, an increase of 10% over the same period last year.

✦ Politan Capital Management LP, a new hedge fund led by longtime activist investor Quentin Koffey, plans to use its $900 million stake in Centene Corp. to replace several of the carrier’s board members, the Wall Street Journal reported on Nov. 3. Politan hopes to increase margins at the insurer, which have been lower than those at other large carriers. According to the Journal, Politan wants to put former WellCare CEO Kenneth Burdick and former Anthem, Inc. Chief Financial Officer Wayne DeVeydt on Centene’s board. In a Nov. 3 statement responding to the story, Centene pointed out it launched a margin-boosting plan at its June investor conference. “While the activist activity is noteworthy, it comes at a time when [Centene] has announced to the markets that it is looking to reposition itself for margin expansion instead of its historical practice of focusing on greater topline growth,” Citi analyst Ralph Giacobbe wrote in a Nov. 3 note to investors. “That said, [Centene’s] shares have languished/underperformed peers over the last several years, and we would imagine some level of investor support around a Board refresh is not out of the question, particularly if the new Board slate includes trusted industry veterans.”

✦ Thomas Jefferson University Hospitals Inc., a Philadelphia non-profit health system branded as Jefferson Health, will fully acquire managed care organization HealthPartners Plans from Temple University Health System for $305 million. The providers previously held 50% stakes in the 290,000-member health plan, per a Nov. 1 press release. In a statement, Jefferson Health President Bruce A. Meyer, M.D., said the move will help HealthPartners Plans “care for more marginalized patient populations and provide access to critical, lifesaving and value-based care.”

When the annual open enrollment period for Affordable Care Act exchange plans kicks off on Nov. 1, consumers will be shopping in a market that is experiencing a surge of insurer competition and consequently, a dizzying array of plan choices.

“The number of plans that people are seeing is increasing dramatically,” David Anderson tells AIS Health, a division of MMIT. Anderson is a research associate at the Duke-Margolis Center for Health Policy who studies the ACA marketplaces.