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Analysis

Winners and Losers from Healthcare's Q2 Earnings Season

By Jack O'Brien  
   August 07, 2018

As earnings season wraps up, the lines between the winners, losers, and those in the middle have become more apparent.

Healthcare earnings season comes to a close this week, after what has been a generally strong showing from providers, insurers, and health tech firms. In a strong economy, most healthcare companies have continued to post growth numbers, bolster revenues, and rebound from past difficulties.

Related: Healthcare Bulls Get a Second Dose of Earnings-Driven Profits

Below is a list of some of the winners and losers from the Q2 earnings season:

Winners:
 

Cigna Corp. and Express Scripts Holding Co.

  • Both insurers posted strong financials as they proceed with their plans to merge, which will be voted on by shareholders later this month.
  • Cigna generated $11.5 billion in Q2, a 10% increase year-over-year, while netting an adjusted income from operations of $955 million.
  • Express Scripts hauled in $877.3 million in Q2 net income and now anticipates 8% growth in its adjusted EBITDA guidance for the end of the year.

Molina Healthcare

  • Molina continued its rebound from last year's leadership changes and over half a billion dollars worth of losses.
  • The insurer had a $432 million turnaround in its net income year-over-year, while also posting premium revenue increases of $141 million. 

Centene Corp.

  • The insurer's Q2 filing was its first since finalizing its purchase of Fidelis Care in New York and offering on-exchange plans in Philadelphia.
  • Negative cash flows were due to Medicaid expansion rate overpayments, specifically in California.
  • Centene ultimately achieved total revenues of $14.2 billion, an increase of 19% year-over-year.

Anthem Inc.

  • The Indianapolis-based health plan saw its net income, benefit expense ratio, and operating revenue rise in Q2 after a flat Q1.
  • Anthem reported a net income of $1.1 billion for Q2, a 23% increase year-over-year, and an operating revenue of $22.7 billion
  • The company also posted an operating cash flow of $542 million, an increase of $149 million compared to Q1, but down from $2.8 billion this time last year.

Middle:
 

Teladoc Inc

  • The telemedicine provider continued to show signs of financial and membership growth, albeit while dealing with nagging losses.
  • Teladoc garnered $94.6 million in total revenues for Q2, a 112% increase year-over-year.
  • However, the company's net loss was $25.1 million for Q2, nearly $10 million higher than during Q2 2017.

Magellan Health

  • The for-profit managed healthcare company had net revenues totalling $1.8 billion during Q2, an increase of 27.6% year-over-year, while net income reached $13.6 million, an increase of 146.4% during Q2 2017. 
  • Despite posting year-over-year revenue increases, Magellan Health CFO Jonathan Rubin announced that the company had lowered its guidance for the second half of 2018.
  • This was due to slower membership growth, lower anticipated capitation rates, the impact of lost contracts, and cost pressures in Virginia and New York.

Athenahealth

  • Nearly two months after the abrupt exit of former CEO Jonathan Bush, the health technology servicer flexed its financial strength.
  • Athenahealth posted $323.3 million in total revenues, an operating income of $61.4 million, and a net income of $44.6 million.
  • Still, Athenahealth is in the midst of a potential takeover from Elliott Management Corp., which will likely linger for the rest of 2018.

CVS Health

  • Although the company beat expectations, it ultimately posted a $2.56 billion net loss for the quarter.
  • Adjusted earnings were $1.72 billion, or $1.69 per share, up 27% from $1.33 last year.

Losers:
 

Community Health Systems

  • The struggles continued for CHS in Q2, with a $110 million net loss attributable to stockholders and $12 million lost in net cash provided by operating activities.
  • Admissions also dropped by 2.1% compared to Q2 2017, and operating cash flows fell by $5 million compared to this time last year. 
  • For 2018, CHS also posted new operating revenues of $7.5 billion, down 16% year-over-year.

Aetna Inc.

  • The insurer's cash flows from operating activities grew from $803 million in Q2 2017 to $2.4 billion in Q2 2018.
  • Meanwhile, Aetna's adjusted revenues dropped by $35 million and adjusted earnings fell by $13 million.

Tenet Healthcare Corp.

  • The company posted $24 million gains for its net income, much better than its $56 million loss in Q2 2017.
  • However, Tenet had net operating revenues that were down 8.6% compared to this time last year. 

Quorum Health

  • Net operating revenues for the Tennessee-based, for-profit hospital chain dropped $57.5 million in an eventful second quarter that saw the departure of CEO Thomas D. Miller.
  • The hospital chain has letters of intent to sell six hospitals, and a definitive agreement to sell another.
  • With adjustments, Quorum reported that operating revenues increased $7.7 million in the second quarter compared with the second quarter of 2017. The increase is mostly due to an improved payer mix and an increase in rate and acuity.

Editor's note: This story was updated Thursday, August 9, to include earnings information about CVS Health and Quorum Health.

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


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