The majority of US health insurers are projected to record year-over-year revenue growth for the first quarter of 2024, despite nearly half of them expecting a drop in Earnings Per Share (EPS) during the same period. This forecast is based on an S&P Global Market Intelligence analysis of sell-side analyst predictions.
Among the nine largest publicly traded US health insurers, all but two are anticipated to report higher EPS sequentially from the fourth quarter. However, only five are expected to register higher EPS year over year. This comes at a time when the industry continues to grapple with ongoing Medicaid redeterminations and high Medicare usage.
Despite these challenges, revenues are largely up year over year, with only two insurers predicted to report a decline from Q1 2023. The majority of these major insurers are expected to see both sequential-quarter and year-over-year growth in revenue. Only Centene Corp. and Clover Health Investments Corp. are forecasted to experience declines in both quarters.
Elevance is the only insurer projected to register lower revenue from the previous quarter but grow year over year.
"We believe investors remain skeptical about the adequacy of 2024 [Medicare Advantage] bids given persistently higher than anticipated utilization in 2023," reads a research note from J.P. Morgan analysts.
Managed care insurers will likely also address news that government payments for companies running Medicare Advantage programs will be lower than expected in 2025 due to post-COVID-19 changes.
The Centers for Medicare and Medicaid Services (CMS) announced on April 1 that it established a 3.70% increase in payments in 2025 to insurers that run Medicare Advantage, which was 0.16% lower than the advance notice rate published by CMS on January 31.
"Investors were expecting something between a 50- and 125-basis-point [upward] revision to rates between the advanced notice and the final notice and they didn't get it," said Piper Sandler analyst Jess Tassan.
Alignment Healthcare Inc., Centene, Humana Inc., and Molina Healthcare Inc. are all expected to register lower EPS year over year. The Cigna Group is predicted to be the only insurer to log lower sequential EPS but higher year-over-year EPS.
Amid ongoing Medicaid redeterminations, Centene expressed disappointment with Texas over the state's scoring of its Medicaid proposal, according to comments made by Sarah M. London during a March conference.
The first-quarter earnings season will commence with UnitedHealth's presentation on April 16.