On February 17th, Humana announced that it intends to reduce its positions by 2,500, balancing them with 1,100 additional jobs in medical cost containment and other areas. This is in line with an analysis performed by Sherlock Company using our administrative cost benchmarks.
On February 19th, CMS released a preliminary estimate of the National Per Capita Growth Percentage for calendar year (CY) 2011, which is a key factor employed by CMS when it determines the capitation rates for Medicare Advantage for next year. Managed care stocks had a positive reaction to the announcement.
On average, health plan stock prices decreased 0.6% in February with valuation indicators following suit. Medicaid plans had the largest declines, followed by commercial plans. Medicare plans had increases in their stock prices.
Eleven of the fourteen publicly-traded health plans announced earnings last month. Aetna’s net income decreased 17.2% year-over-year, due to a higher health benefit ratio. AMERIGROUP Corporation reported a 13.2% increase in total membership, as operating income grew 22.5%. Centene Corporation reported a 21.7% increase in risk membership and a 6.5% increase in operating income. CIGNA’s membership fell, but net income increased due to improvements in its non-health lines of business. Coventry Health Care’s operating earnings grew on Medicare growth and margin improvement. Health Net reported a 14.7% increase in both operating income and non-operating income. Margins improved and revenues declined. Health Spring’s net income increased 37.0% on increased total membership. Humana experienced growth to operating earnings of 57.2% as its Medicare Advantage membership increased. Molina Healthcare’s net earnings fell 130.2% with higher medical expenses. Universal American Corporation experienced Earnings per Share growth of 49.5% despite large non-operating losses. WellCare Health Plans reported a 40.9% decline in operating income, partly due to a higher health benefit ratio.
Aetna, Inc. appointed Anne Rote as Chief Executive Officer of Aetna Better Health in Texas, the company’s Texas Medicaid business. Blue Cross Blue Shield of Montana appointed Mark Burzynski as its Chief Financial Officer. CIGNA Corporation named Stephanie Gorman Hurlbut as President and General Manager of its health care operations in Arizona. Harvard Pilgrim Health Care named Eric H. Schultz as its President and Chief Executive Officer, effective March 1st. Humana Inc. announced Roy Goldman as Vice President and Chief Actuary.
Coventry Health Care, Inc. announced it closed its acquisition of Preferred Health Systems, a wholly-owned subsidiary of Via Christi Health System, Inc.
Health Spring, Inc. announced it entered into a $350 million senior secured credit facility. UnitedHealth Group announced it will buy back approximately $800 million of its short and intermediate term debt. The company also announced that it will pay an annual dividend of $0.03 per share and renewed and increased its share repurchase program.
This analysis reviews the capital market activities of health plans over the past year and long term. Similar to last year, health plan use of the capital markets was low, while repayments of debt exceeded new offerings.
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