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Analysis

Winners and Losers from Healthcare's Q1 Earnings Season

By Jack O'Brien  
   May 10, 2019

Healthcare companies have reported their earnings from the first quarter of 2019, as they aimed to bounce back from a rough end to 2018.

After a rocky end to 2018 and an equally unsteady beginning to 2019, the first quarter earnings reports are in for publicly-traded healthcare companies. 

This marked the first quarter of activity since a federal judge ruled the Affordable Care Act was unconstitutional, Democrats regained their majority in the House of Representatives after running on a message largely centered around healthcare, and proposals for both Medicare X and Medicare for All permeated the national conversation.

Several companies rebounded from difficult Q4 reports, while others continued to report challenging business conditions and revised financial outlooks for the rest of the year. 

Below is a list of healthcare's winners and losers from the 2019 Q1 earnings season:

Winners:

UnitedHealth Group

  • Against earnings per share (EPS) estimates of $3.60, UnitedHealth posted an EPS of $3.73.
     
  • Overall, the Minnetonka-based insurer posted revenues north of $60 billion.
     
  • Earnings from operations for the quarter were $4.8 billion, a 19% increase year-over-year, thanks to continued growth in the company's UnitedHealthcare and Optum subsidiaries.
     

Related: UnitedHealth CEO David Wichmann is Loading up on the Stock

 

CVS-Aetna

  • CVS health notched a net income of $1.4 billion, an improvement of its $421 million loss in Q4 2018.

  • The company updated its EPS guidance to a range between $4.90 to $5.05.

  • CEO Larry Merlo said Q1 was a "success in many ways" for CVS after integrating operations with Aetna.
     

Cigna

  • Cigna reported $33.4 billion in adjusted revenues for Q1, this after posting adjusted revenues of $48 billion for the full year in 2018.

  • The insurer also posted quartely adjusted EPS of $3.90, well exceeding Zacks Consensus Estimate of $3.74.

  • CEO David Cordani cited the Express Scripts megamerger as "fueling additional innovative programs" for customers serviced by Cigna.

 

Centene Corp. / WellCare Health Plans

  • The St. Louis-based insurer continued its hot streak, with higher revenues and EPS.
     
  • Centene attributed part of its success to last year's purchase of Fidelis Care in New York state.
     
  • One quarter after seeing its net income decline $55.9 million, WellCare ended Q1 with a net income of $151.4 million.
     
  • As in previous quarters, WellCare benefited from strong performance in its Medicaid segment, with revenues of $4.4 billion.
     

Middle:

HCA Healthcare

  • The company's revenues were bolstered in part by the sale of Oklahoma facilities totalling $405 million.
     
  • HCA's Q1 was marked by two major acquisitions: closing its purchase of Mission Health for $1.5 billion and securing a majority stake in the Galen College of Nursing.
     
  • The company raised its financial guidance slightly, projecting diluted EPS in a range between $9.80 and $10.40.
     

Related: You Can Find Plenty of Solid Stock Bargains in Healthcare, This Year's Worst-Performing Sector
 

Teladoc

  • As has been Teladoc's lingering challenge, the company's net loss grew in Q1, ballooning from $23.9 million in Q1 2018 to $30.2 million.
     
  • The company's EBITDA worsened from a loss of $10.8 million in Q1 2018 to $13.3 million in Q1.
     
  • Yet CEO Jason Gorevic said the Q1 earnings report "set a very positive tone for the year."
     

Quorum Health Corporation

  • Metrics that improved: cash flows from operations and adjusted EBITDA.
     
  • Metrics that declined: net operating revenues and same-facility surgeries.
     
  • Still, CEO Robert Fish said Quorum "made meaningful progress" on its cost management efforts.


Losers:

Magellan Health

  • After net income dropped by $86 million in 2018, Magellan Health continued its slide into 2019.
     
  • EPS dropped by 95.6% while adjusted EPS fell by 50.6%.
     
  • CEO Barry Smith said he's still "pleased with the actions" Magellan completed in Q1.
     

Community Health Systems

  • The company's net loss worsened by nearly $100 million year-over-year.
     
  • Net operating revenues also totalled $3.37 billion, down 8.5% compared to this time last year.
     
  • CEO Wayne Smith said CHS continues to see "incremental improvements."
     

Universal Health Services, Inc.

  • Net revenues and EPS both barely missed industry estimates.
     
  • UHS reported a net income of $234.2 million, up more than $10 million, though the company experienced a pre-tax unrealized loss of $4.3 million.
     
  • Alan B. Miller, who founded UHS in 1979, received $23.58 million in total compensation, including a base salary of $1.6 million and a $1 million bonus.
     
  • The median UHS employee salary in 2018 totalled $40,826, resulting in a CEO-to-median employee pay ratio of 578:1.

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.


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