Health plans report gains but remain financially cautious

Companies continue to look for opportunities beyond insurance as a hedge against how health system reform might affect earnings.

By Bob Cook — Posted Nov. 19, 2012

Print  |   Email  |   Respond  |   Reprints  |   Like Facebook  |   Share Twitter  |   Tweet Linkedin

In the third quarter of 2012, five of the seven largest publicly traded insurers reported increased profits — the reverse of the second quarter, when five of seven recorded declines.

However, health plans weren’t looking at the turnaround as a sign they were on a path to great financial health. Instead, they cautioned investors that gains would be modest, if they occurred at all, because of regulations to come from the Affordable Care Act, and because of the time and money being spent to figure out the most profitable way to operate in the new environment the law creates.

Humana reported a per-share earnings decline of 4% in the third quarter compared with 2011. On Nov. 5, the day of its financial release, Humana emphasized the new deals it was undertaking to find new profit opportunities to replace money lost because of rules requiring that a minimum amount be spent on care, and rules limiting what Medicare Advantage plans can make.

The company announced an $850 million deal to buy Metropolitan Health Networks, a Boca Raton, Fla.-based company providing and coordinating care for 87,500 Medicare Advantage, Medicaid and other beneficiaries. The deal includes 35 primary care centers, which are integral to the coordination of that care. The companies said the deal would allow Metropolitan to expand its operations and allow Humana to “simplify and improve the overall health care experience for our members,” said Humana President Bruce Broussard.

Humana announced two other deals upon its earnings release. It paid an undisclosed sum to buy Virginia-based Certify Data Systems, which provides technology for health information networks. And Humana paid an undisclosed amount to acquire a noncontrolling interest in MCCI Holdings, which coordinates care for Medicare Advantage and Medicaid beneficiaries, primarily in Florida and Texas.

Humana wasn’t the only company announcing deals on its earning release day. UnitedHealth Group, which saw its revenue climb to more than $27 billion, said upon its earnings release that it had received regulatory approval in Brazil for its plan to acquire 90% of the country’s largest private health insurer, the 5 million-member Amil Participacoes. Terms of the deal were not disclosed. Aetna is among the other plans using international acquisitions as a way to expand profits in light of the ACA’s medical-loss-ratio requirement.

United’s boost was well ahead of the second-largest plan in revenue, WellPoint, which had revenues of about $16 billion.

Health Net, whose profits fell 69%, which mostly reflected a one-time gain in the third quarter of 2011, also announced a deal at earnings time, though it wasn’t a merger or acquisition. The company said it had settled issues with California over Medicaid pay, signed new contracts with the state and inked a deal creating a dual-eligible, Medicare-Medicaid pilot program.

Back to top


Health plan earnings head back up

In the third quarter of 2012, five of the seven largest publicly traded health insurers saw their revenue and earnings go up — a reversal from the second quarter, when five of seven posted declines.

Revenue Net income Earnings per share
Plan 3Q11 3Q12 (change) 3Q11 3Q12 (change) 3Q11 3Q12 (change)
Aetna $8,475 $8,917 (5%) $490 $499 (2%) $1.30 $1.47 (13%)
Cigna $5,610 $7,358 (31%) $183 $466 (155%) $0.67 $1.61 (140%)
Coventry $2,976 $3,458 (16%) $123 $105 (-14%) $0.83 $0.78 (-6%)
Health Net $2,692 $2,780 (3%) $62 $18 (-71%) $0.71 $0.22 (-69%)
Humana $9,301 $9,651 (4%) $445 $426 (-4%) $2.67 $2.62 (-2%)
UnitedHealth Group $25,280 $27,302 (8%) $1,271 $1,557 (23%) $1.17 $1.50 (28%)
WellPoint $15,398 $15,353 (< 1%) $683 $691 (1%) $1.90 $2.15 (13%)

Source: Company filings with the Securities and Exchange Commission

Back to top



Read story

Confronting bias against obese patients

Medical educators are starting to raise awareness about how weight-related stigma can impair patient-physician communication and the treatment of obesity. Read story

Read story


American Medical News is ceasing publication after 55 years of serving physicians by keeping them informed of their rapidly changing profession. Read story

Read story

Policing medical practice employees after work

Doctors can try to regulate staff actions outside the office, but they must watch what they try to stamp out and how they do it. Read story

Read story

Diabetes prevention: Set on a course for lifestyle change

The YMCA's evidence-based program is helping prediabetic patients eat right, get active and lose weight. Read story

Read story

Medicaid's muddled preventive care picture

The health system reform law promises no-cost coverage of a lengthy list of screenings and other prevention services, but some beneficiaries still might miss out. Read story

Read story

How to get tax breaks for your medical practice

Federal, state and local governments offer doctors incentives because practices are recognized as economic engines. But physicians must know how and where to find them. Read story

Read story

Advance pay ACOs: A down payment on Medicare's future

Accountable care organizations that pay doctors up-front bring practice improvements, but it's unclear yet if program actuaries will see a return on investment. Read story

Read story

Physician liability: Your team, your legal risk

When health care team members drop the ball, it's often doctors who end up in court. How can physicians improve such care and avoid risks? Read story

  • Stay informed
  • Twitter
  • Facebook
  • RSS
  • LinkedIn