Anthem Beats Q2 Expectations But Worries About Medicaid Business Has Shares Sliding
The company’s medical-loss ratio, which represents the share of premiums paid out in claims, was 86.7% in the quarter, higher than the 85.8% that a consensus of analysts had anticipated, according to their research notes. In other health industry news: a social care network from CVS and Aetna, Tenet's decision to spin off as a separate company, Bayer's legal mess, and more.
Reuters:
Anthem Shares Sink As Cost Concerns Overshadow Earnings Beat
Anthem Inc shares fell as much as 4% on Wednesday after the U.S. health insurer missed Wall Street expectations for a key medical cost gauge as a result of higher costs of selling Medicaid health plans for low-income customers. Anthem reported a 10.2% fall in operating profit from its unit which sells government health plans, in the quarter, saying the decline was driven by continued elevated medical cost trends in Medicaid in some states. (7/24)
The Associated Press:
Anthem Tops 2Q Expectations, Shares Slide On Expense Worries
The Blue Cross-Blue Shield insurer said it has added nearly 700,000 Medicaid customers over the past year, but expenses were coming in higher than expected in a handful of states. Chief Financial Officer John Gallina told analysts the issue was "very manageable," and he expected the business's profitability to improve in the second half of the year. He said the populations covered in these states, which he declined to name, had changed slightly since rates were set, and they were seeking rate adjustments. (Murphy, 7/24)
The Wall Street Journal:
Anthem Shares Fall Following Earnings Results
Anthem said the launch process for its new pharmacy-benefits manager, IngenioRx, was moving ahead of expectations, and the company now expects IngenioRx’s results to hit the higher end of its previous projections. The insurer also said it had enrolled a new IngenioRx client, Blue Cross of Idaho, for next year. Anthem has said that it sees fellow Blue Cross Blue Shield insurers as a potentially fertile source of business across various areas. Anthem raised its outlook for multiple 2019 earnings metrics, but tightened its projected medical-loss ratio range to the higher end of its prior suggestion. The company expects an MLR of 86.2% to 86.5%. It had been expecting that ratio to be 86.2% plus or minus 30 basis points. (Wilde Mathews and Prang, 7/24)
Modern Healthcare:
CVS, Aetna To Launch Social Care Network
CVS Health is rolling out a network to provide its most vulnerable patients with access to local support for their social care needs. The retail healthcare giant announced on Wednesday it will collaborate with social care coordinator platform provider Unite Us to launch a platform that will allow Medicaid and dual-eligible beneficiaries covered through its insurance arm Aetna to more easily find and access help from social care providers within their communities. (Johnson, 7/24)
Modern Healthcare:
Tenet Plans To Spin Off Revenue-Cycle Subsidiary Conifer
After nearly two years of fielding underwhelming offers for its revenue-cycle subsidiary, Tenet Healthcare Corp. has settled on a decidedly different maneuver: It will spin it off as a separate, publicly-traded company. Leaders with Dallas-based Tenet have spent the past 18 months finalizing a deal on Conifer Health Solutions. While CEO Ron Rittenmeyer conceded on an investor call Wednesday that an outright sale would have been the company's first choice, there are several benefits to a tax-free spin off. (Bannow, 7/24)
Bloomberg:
Bayer's Other Legal Mess: An Old Liability Many Have Forgotten
The widening legal nightmare over Roundup weedkillers isn’t the only potential multi-billion-dollar liability Bayer AG inherited last year when it acquired Monsanto Co. While thousands of damage claims over Roundup have grabbed headlines and hogged the attention of investors, the German conglomerate also has become a target of lawsuits by American states and cities trying to clean up toxic PCBs, a widely used fire-resistant chemical compound that the U.S. banned four decades ago. (Feeley and Loh, 7/23)
Modern Healthcare:
Trinity Health Sues Anesthesiology Group Amid Insurer Rate Disputes
Trinity Health sued a Michigan anesthesiology group for allegedly compromising operations at a handful of its hospitals amid rate disputes with several insurers. The lawsuit filed in a Michigan federal court Tuesday alleged that Anesthesia Associates of Ann Arbor, which employs more than 100 doctors and is the exclusive provider for six Trinity hospitals, and its parent company, Siromed Physician Services, are terminating contracts with Blue Cross and Blue Shield, Aetna and Priority Health and have sued or are pursuing litigation against those insurers. (Kacik, 7/24)
Modern Healthcare:
Advocate Aurora Health Drops Co-CEO Model, Names Jim Skogsbergh CEO
Advocate Aurora Health has pared back its CEO office from two to one, with Jim Skogsbergh emerging as the not-for-profit health system's sole CEO. Newly merged Advocate Aurora's short-lived foray into the co-CEO model lasted just over a year. The Illinois and Wisconsin systems' union became official in April 2018. The health system's announcement Wednesday follows other co-CEO structures, which typically last less than three years. (Bannow and Kacik, 7/24)
