Diverging Payor Performance during Q1 2024 Earnings Season

I broke down HCA and Tenet’s Q1 performance last week here, so I wanted to quickly touch on payors as well now that the major ones have released their earnings reports.

Long story short, payors with exposure to MA in Q1 struggled, unless you’re named Centene or Alignment, and payors with stable commercial books of business have barely outperformed the broader market (~9% or so).

Jeff DelVerne and Jared Strock separately do great jobs of diving into the details and analysis behind payor results. Click on those links for recent summaries and visuals from them.

Side note. I absolutely love the newsletter Chartr, so I took a little bit of inspiration from them for this chart:

Diverging Payor Performance during Q1 Earnings Season

I also enjoyed this note from HTN as well on CVS investor expectations: It’s worth remembering that during their Q4 2023 earnings call in February, CVS leadership suggested that its Medicare Advantage book of business would be “marginally profitable” in 2024. So within a three-month period, CVS leadership saw the Medicare Advantage book of business go from a 0% profit margin expectation to a -3% to -4% profit margin expectation for the year. On top of that, given the headwinds the business faces in 2025, CVS doesn’t expect to be able to get to profitability until 2026. Even with a meaningful pricing action in 2025, they expect to improve profitability by up to 2%, meaning they’ll be around -1% in 2025. By my math, that means CVS is looking to at least 2027 before it is back to its profitability target of 4% to 5%. All of that just goes to highlight how big of a miss this was here. HTN weekly reads 5/5/24, my emphasis added

Oh…and Oscar Health is…profitable. Here’s my breakdown of their comeback. Very cool to see!

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Blake Madden
Blake Madden
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