The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Elevance Health (NYSE: ELV) and the rest of the health insurance providers stocks fared in Q1.
Upfront premiums collected by health insurers lead to reliable revenue, but profitability ultimately depends on accurate risk assessments and the ability to control medical costs. Health insurers are also highly sensitive to regulatory changes and economic conditions such as unemployment. Going forward, the industry faces tailwinds from an aging population, increasing demand for personalized healthcare services, and advancements in data analytics to improve cost management. However, continued regulatory scrutiny on pricing practices, the potential for government-led reforms such as expanded public healthcare options, and inflation in medical costs could add volatility to margins. One big debate among investors is the long-term impact of AI and whether it will help underwriting, fraud detection, and claims processing or whether it may wade into ethical grey areas like reinforcing biases and widening disparities in medical care.
The 11 health insurance providers stocks we track reported a strong Q1. As a group, revenues beat analysts’ consensus estimates by 3% while next quarter’s revenue guidance was in line.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 10.8% since the latest earnings results.
Elevance Health (NYSE: ELV)
Formerly known as Anthem until its 2022 rebranding, Elevance Health (NYSE: ELV) is one of America's largest health insurers, serving approximately 47 million medical members through its network-based managed care plans.
Elevance Health reported revenues of $48.89 billion, up 14.8% year on year. This print exceeded analysts’ expectations by 5.3%. Overall, it was a strong quarter for the company with a narrow beat of analysts’ full-year EPS guidance estimates and a decent beat of analysts’ EPS estimates.
“At Elevance Health, our purpose—to improve the health of humanity—drives everything we do. In the first quarter, we made measurable progress reimagining the healthcare experience with personalized support, real-time digital solutions, and a whole-health model that improves outcomes and reduces cost. Through Carelon and our broader enterprise, we’re delivering on our strategy to be a lifetime trusted health partner—and elevating health beyond healthcare.”
The stock is down 5.5% since reporting and currently trades at $384.55.
Best Q1: CVS Health (NYSE: CVS)
With over 9,000 retail pharmacy locations serving as neighborhood health destinations across America, CVS Health (NYSE: CVS) operates retail pharmacies, provides pharmacy benefit management services, and offers health insurance through its Aetna subsidiary.
CVS Health reported revenues of $94.59 billion, up 7% year on year, outperforming analysts’ expectations by 1.5%. The business had an exceptional quarter with a solid beat of analysts’ same-store sales estimates and an impressive beat of analysts’ EPS estimates.
The market seems content with the results as the stock is up 1% since reporting. It currently trades at $67.40.
Is now the time to buy CVS Health? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: UnitedHealth (NYSE: UNH)
With over 100 million people served across its various businesses and a workforce of more than 400,000, UnitedHealth Group (NYSE: UNH) operates a health insurance business and Optum, a healthcare services division that provides everything from pharmacy benefits to primary care.
UnitedHealth reported revenues of $109.6 billion, up 9.8% year on year, falling short of analysts’ expectations by 1.7%. It was a softer quarter as it posted a significant miss of analysts’ full-year EPS guidance estimates.
UnitedHealth delivered the weakest performance against analyst estimates in the group. The company added 395,000 customers to reach a total of 54.12 million. As expected, the stock is down 46.5% since the results and currently trades at $312.99.
Read our full analysis of UnitedHealth’s results here.
Molina Healthcare (NYSE: MOH)
Founded in 1980 as a provider for underserved communities in Southern California, Molina Healthcare (NYSE: MOH) provides managed healthcare services primarily to low-income individuals through Medicaid, Medicare, and Marketplace insurance programs across 21 states.
Molina Healthcare reported revenues of $11.15 billion, up 12.2% year on year. This result topped analysts’ expectations by 2.6%. Taking a step back, it was a satisfactory quarter as it also recorded a decent beat of analysts’ EPS estimates.
The company added 217,000 customers to reach a total of 5.75 million. The stock is down 10.1% since reporting and currently trades at $298.14.
Read our full, actionable report on Molina Healthcare here, it’s free.
Cigna (NYSE: CI)
With roots dating back to 1792 and serving millions of customers across the globe, The Cigna Group (NYSE: CI) provides healthcare services through its Evernorth Health Services and Cigna Healthcare segments, offering pharmacy benefits, specialty care, and medical plans.
Cigna reported revenues of $65.5 billion, up 14.4% year on year. This number surpassed analysts’ expectations by 8.4%. Aside from that, it was a satisfactory quarter as it also produced a decent beat of analysts’ EPS estimates.
Cigna pulled off the biggest analyst estimates beat among its peers. The company lost 1.14 million customers and ended up with a total of 16.36 million. The stock is down 5.2% since reporting and currently trades at $317.40.
Read our full, actionable report on Cigna here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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