Health

Insurers came back down to earth in Q2 following sky-high profits a year ago

UnitedHealth Group was again the most profitable insurer in a quarter filled with companies warning that the pandemic is likely to remain a significant headwind through the end of 2021, especially as the Delta variant spreads.

UHG brought in $4.3 billion in profit in Q2 on $71.3 billion in revenue. CVS Health was the highest revenue earner in the quarter, with $72.6 billion; the healthcare giant also posted the second-highest profit at $2.8 billion.

While multiple national payers raised their guidance or surpassed Wall Street analysts’ quarterly projections, all six companies feel short of the massive earnings they brought in during the height of the pandemic in Q2 2020.

Insurer profits in the prior-year quarter were so high that Congress kicked off an investigation into their finances.

RELATED: Insurers boost 2021 guidance in Q1 even as pandemic’s impact remains murky

Payers are bracing for the pandemic’s influence to continue through the end of this year, in a more negative fashion. Humana executives, for example, said they expect COVID-19 to be a $600 million headwind this year.

(Graphic by Randy Leonard)

What care utilization trends might look like by the end of 2021 is still an open question, CEO Bruce Broussard said. Non-COVID utilization has stabilized but COVID costs are rising again with the spread of Delta.

“While we continue to navigate these pandemic-related uncertainties in 2021 … we expect 2022 to be a more normal year,” Broussard said.

Cigna and Centene executives echoed the sentiment. Cigna’s CFO Brian Evanko told investors that costs related to the pandemic were higher in Q2 than expected, even as non-COVID claims returned to near baseline levels.

The company expects that trend to continue through the end of the year. However, Cigna still posted $43.1 billion in revenue and $1.5 billion in profit on the back of notable growth, particularly at its Evernorth subsidiary, which includes Express Scripts and a number of other business arms.

RELATED: Insurers’ earnings growth is outpacing the market. Expect that to continue

Centene CEO Michael Neidorff sounded the alarm about rising cases in what public health experts have called a “pandemic of the unvaccinated.”

He said that 83% of COVID-19 cases are of the Delta variant, with hospitalizations and deaths increasingly significantly. The vast majority (97%) of those who are hospitalized and 99.5% of recent deaths are among unvaccinated people.

Anthem executives also reported higher than expected COVID costs in the quarter.

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