Although the COVID-19 pandemic has had a largely positive impact on health insurers' bottom lines, two publicly traded payers' recent fourth-quarter earnings results show that they are not immune from the myriad costs associated with the case surge that occurred in the fall and winter of 2020, AIS Health reported.
Cigna Corp., which reported its fourth-quarter and full-year 2020 financial results on Feb. 4, posted an adjusted earnings per share (EPS) of $3.51, missing the consensus Wall Street estimate of $3.68 because of "higher COVID cost in the quarter," as Citi analyst Ralph Giacobbe put it.
However, analysts noted that Cigna's new Evernorth segment — encompassing its PBM and health services businesses — beat their revenue expectations. Looking ahead to 2021, Cigna tweaked its full-year earnings estimate from a range of $20-21 per share to "at least" $20 per share.
Humana Inc., which reported its earnings on Feb. 3, recorded an adjusted $2.30 per share loss in the fourth quarter of 2020 that it attributed in part to rising COVID-related costs. But unlike Cigna, Humana reported that the decline of non-COVID utilization in the fourth quarter more than offset the heightened COVID-related testing and treatment costs that it experienced.
Humana said two other major factors that affected its fourth-quarter results included "ongoing crisis relief efforts and strategic investments in the company's integrated care delivery model," and "increased marketing expenses associated with the Medicare Advantage Annual Election Period." Those marketing investments seem to have paid off so far, as Humana CEO Bruce Broussard said during the company's earnings call that the insurer is expecting 11% to 12% MA membership growth in 2021.
Humana estimated that for full-year 2021, its EPS would be in the range of $21.25 to $21.75, "which falls generally in line with consensus and consistent with prior messaging," Giacobbe advised investors in a research note.