May 19, 2024


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Fourth quarter COVID-19 costs catch up to insurers

Fourth quarter money benefits for 2020 are now in for the nation’s biggest health care insurers, and the figures mirror the impact the COVID-19 pandemic has had on payers. Insurers are mainly reporting declining gains, or even losses, at the conclude of a topsy-turvy 12 months.

Most however posted significant profits, and some done greater than expectations. But even though the early times of the pandemic observed insurers publishing robust figures due to Americans’ first avoidance of healthcare treatment, individuals are now looking for to make up shed floor when it will come to their health care journeys. That, and COVID-19 treatment, is catching up to payers in a tangible way.

Choose CVS Wellbeing, for example, which owns Aetna and was the very last to launch its This fall financials in a press connect with Tuesday morning. On the floor, CVS posted a robust fourth quarter, beating its personal expectations by bringing in $sixty nine.9 billion in revenue – a $2.7 billion boost from the fourth quarter of 2019, very good for a 4{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627} jump.

But its posted income of $975 million represented a 44{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627} decline from This fall 2019.

For the comprehensive 12 months, CVS brought in $268.7 billion in revenue and $7.2 billion in income – the former up 4.6{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627} and the latter up eight.five{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627} from the 12 months right before. For this 12 months, the business initiatives earnings per share in between $7.39 and $7.55, and hard cash movement from functions someplace north of $twelve billion.

“Our target is to make health care extra obtainable, extra affordable and less complicated,” claimed CVS Wellbeing president and CEO Karen Lynch, who not too long ago took about from former CEO and president Larry Merlo. “In order to do this, we will accelerate the pace of our development as a result of qualified investments in key parts that will drive our client-centered approach. We believe that that fixing client health needs will deliver greater health outcomes and decrease costs, even though building future financial benefit for CVS Wellbeing and its shareholders.”

Identical benefits had been identified amid the nation’s top insurers, with lots of anticipating 2021 to be an up-and-down 12 months – with some of the potential coronavirus headwinds remaining felt now.


Anthem president and CEO Gail Boudreaux was specific about the outcomes of the pandemic all through the insurer’s latest This fall money benefits. All through the first fifty percent of 2020 – when the pandemic was in its nascency – COVID-19 procedure costs had been the key narrative. In the second fifty percent of the 12 months, a return to extra regular utilization styles brought on strain as Anthem began paying out out extra promises.

“Regular with our expectations, fourth quarter utilization was above baseline, reflecting higher costs attributable to the latest surge of COVID-19 conditions, coupled with the return of non-COVID-19 treatment utilization,” Boudreaux claimed.

In accordance to John Gallina, Anthem CFO and government vice president, full running revenue jumped 16{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627} to $31.five billion, reflecting development in Medicare and Medicaid. In actuality, Medicaid membership manufactured up extra than eleven instances the decline in the firm’s commercial threat-based mostly organization.

Whole-12 months running revenue, meanwhile, grew extra than seventeen{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627}, and the healthcare loss ratio was 88.9{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627}, a lessen of 10 basis points about This fall 2019. All through the quarter, coronavirus-relevant costs accelerated extra than analysts had predicted, but this was offset by non-COVID-19 utilization coming in decrease than anticipated.

“Our running hard cash movement in the fourth quarter benefitted by a range of payments that had been initially anticipated to be obtained in 2021,” claimed Gallina. “These early receipts … benefited 2020 hard cash movement, such as payment deferrals authorized below the CARES Act. We will reverse in 2021 and negatively impact our 2021 running hard cash movement metrics.”

Boudreaux claimed that membership traits exceeded expectations. Health care enrollment concluded the 12 months at 42.9 million associates, symbolizing development of 1.9 million associates about the prior 12 months.


Cigna CFO and government vice president Brian Evanko claimed that all through the fourth quarter, the insurance provider skilled an boost in immediate COVID-19 costs for testing and procedure as incidence prices spiked across the nation.

When Cigna also observed greater degrees of treatment deferral for non-coronavirus costs all through the latter element of the quarter, the immediate COVID-19 costs outweighed the impact of decrease, non-COVID-19 costs.

For the comprehensive 12 months, Cigna posted adjusted annual revenue of $one hundred sixty billion, adjusted earnings of $6.eight billion right after tax, adjusted earnings per share of $eighteen.45 and running hard cash flows of $10.4 billion.

For comprehensive-12 months 2021, the business expects consolidated adjusted revenues of at the very least $165 billion, symbolizing development of around $10 billion right after adjusting for 2020 team revenues. Whole-12 months 2021 consolidated adjusted cash flow from functions is anticipated to be at the very least $6.ninety five billion, or at the very least $twenty per share – inclusive of an anticipated COVID-19-relevant headwind of about $1.twenty five per share.

In 2021, Cigna expects elevated healthcare costs, such as the impact of immediate COVID-19 relevant costs and extra normalized non-COVID-19 utilization. It also anticipates the gradual financial restoration of its consumer foundation.

“Specified these COVID-19 dynamics, we expect the major impact to be in our U.S. healthcare organization,” claimed Evanko. “Even further, we expect the COVID-19 headwind to be extra concentrated in the first quarter of the 12 months, and so we would expect the cadence of earnings per share in 2021 to be extra weighted to the final a few quarters of the 12 months. Specially, we expect about twenty{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627} to 22{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627} of 2021 earnings per share to arise in the first quarter of the 12 months.”

Evanko initiatives Medicare Edge consumer development in the concentrate on typical annual development range of 10{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627} to 15{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627}, as perfectly as development in the particular person ACA organization, which he claimed will be mainly offset by the exit of legacy non-ACA particular person current market choices.


In accordance to UnitedHealth Team CFO and government vice president John Rex, UnitedHealthcare’s fourth quarter running benefits reflected comparatively decrease degrees of treatment deferrals and higher COVID-19 treatment costs compared to the 3rd quarter. 

The benefits had been further more impacted by extra reserves or rebates and relevant action, as plans with this sort of preparations moved into these positions as a outcome of the cumulative treatment-deferral impacts all through 2020.

All through the fourth quarter, UnitedHealthcare observed general typical treatment actions return to seasonal baselines in comparison to the just about ninety five{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627} logged in the 3rd quarter. The pacing about the system of the quarter moved from just down below baseline as the outfit began to modestly exceed baseline in the latter fifty percent. This evaluate consists of greater immediate COVID-19-relevant treatment, which in full comprised about eleven{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627} of all treatment action all through the fourth quarter in comparison to about 6{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627} in the 3rd quarter.

Outpatient action began the quarter at baseline, but by the latter element of the quarter, some outpatient action moderated as the incidence of COVID-19 climbed. Total inpatient action greater modestly about the system of the quarter as the immediate COVID-19-relevant treatment elements rose as a proportion of the full in the latter fifty percent. For example, of the 65,000 COVID-19-relevant inpatient admissions all through the quarter, about twenty{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627} transpired in October and about fifty{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627} in December.

Whole-12 months 2020 hard cash flows from functions had been $22.2 billion, practically one particular-and-a-fifty percent instances web cash flow, also exceeding expectations. Professional membership was about a hundred,000 people today ahead of the first outlook, and early January benefits look to be continuing this development.

“Our comprehensive 12 months 2021 outlook remains regular with the early December commentary, with full revenue approaching $280 billion and adjusted earnings per share in the range of $seventeen.75 to $eighteen.twenty five, inclusive of the damaging COVID-19 relevant outcomes we described,” claimed Rex. “Specified the however extremely dynamic circumstances, we will possible keep this broader than common range of expectations as we a great deal like every person else, keep on to learn extra about the atmosphere.”


In 2020, right after adding 10 million associates, Centene observed comprehensive-12 months revenue of $111 billion, symbolizing forty nine{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627} development and adjusted diluted earnings per share of $five, up thirteen{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627} about the prior 12 months.

Centene President, Chairman and CEO Michael Neidorff attributed this development to the extension of the Medicaid redetermination suspension. The Facilities for Medicare and Medicaid Services has indicated they will possible prolong the general public health crisis as a result of the conclude of the 12 months.

“1 thirty day period into the first quarter, our check out of 2021 remains mainly regular with what we shared at our December Investor Day, and we are reiterating our adjusted EPS guidance of $five to $five.thirty,” claimed Neidorff. “We are not altering our EPS guidance at this time, but in the spirit of our ongoing commitment to transparency, we want to provide the head and tailwinds impacting our operational landscape. 

“Among the the key potential headwinds, extra point out level actions due to COVID-relevant reductions in utilization, further than the $four hundred million we’ve now integrated. We will remind you that CMS has not approved the beforehand submitted level actions. Having said that, as we have claimed, we have created them into our guidance and hard cash flows. And CMS maintains that level actions should be actuarially audio. The potential for higher than anticipated general COVID-relevant costs is the second headwind. And 3rd, a Medicare physician cost routine update.”

Centene’s fourth quarter revenues had been $28.three billion, an boost of fifty{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627} about the fourth quarter of 2019 and adjusted diluted earnings per share was $.46 in comparison to $.seventy three very last 12 months. 

Centene CFO, treasurer and government vice president Jeff Schwaneke claimed full revenues grew by $9.4 billion about the fourth quarter of 2019 due to the acquisition of WellCare and development in the Medicaid and Wellbeing Insurance Marketplace organization. This development also consists of the impact from the suspension of Medicaid eligibility redeterminations and the reinstatement of the health insurance provider cost in 2020 – partially offset by the divestiture of Centene’s Illinois health approach and retroactive point out premium-level changes and threat-sharing mechanisms.

“By way of 12 months-conclude 2020, we compensated about $three.6 billion connected with COVID promises,” claimed Schwaneke. “This compares to the $2 billion we talked over on our 3rd quarter connect with. Our comprehensive 12 months figure applies regular methodology and consists of all of the COVID-relevant promises codes regular with CDC recommendations.”

For the comprehensive 12 months, Centene expects revenue to be in between $116 and $118 billion. 

“Moreover, we keep on to expect common utilization to stay down below the historical baseline all through the first fifty percent of 2021,” claimed Schwaneke. “We’re turning to normalized degrees in the second fifty percent of the 12 months. [COVID-19] utilization is anticipated to be elevated all through the early element of the 12 months, specifically offsetting the impact of decrease classic utilization. The length and intensity of higher COVID costs will be impacted by the trajectory of the pandemic and vaccination prices.”


Humana ended 2020 on a down observe, publishing a document web loss of $274 million in the fourth quarter.

A sharp boost in COVID-19 admissions transpired across its markets all through the very last pair of months of the 12 months, although most of those people bills had been balanced out by a decline in non-coronavirus treatment, the insurance provider claimed all through its earnings connect with. 

The loss was a stark contrast to the $512 million income Humana posted in This fall 2019. Regardless of the sizable web loss, on the other hand, the group however managed a $three.1 billion income for the 12 months, a considerable twenty five{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627} boost from 2019. Its pre-tax cash flow was $4.6 billion for the 12 months, a 33{79e59ee6e2f5cf570628ed7ac4055bef3419265de010b59461d891d43fac5627} 12 months-about-12 months boost.

Twitter: @JELagasse
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