As the Q1 earnings season wraps, let’s dig into this quarter’s best and worst performers in the health insurance providers industry, including Cigna (NYSE:CI) and its peers.
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.
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 print exceeded analysts’ expectations by 8.4%. Overall, it was a satisfactory quarter for the company with a decent beat of analysts’ EPS estimates.
"We are building a more sustainable health care model by successfully delivering on our series of commitments and actions to improve transparency and support for our customers and patients," said David M. Cordani, chairman and CEO of The Cigna Group.
Cigna scored the biggest analyst estimates beat of the whole group. The company lost 1.14 million customers and ended up with a total of 16.36 million. Even though it had a relatively good quarter, the market seems discontent with the results. The stock is down 1% since reporting and currently trades at $317.40.
Is now the time to buy Cigna? Access our full analysis of the earnings results here, it’s free.
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 an impressive beat of analysts’ same-store sales estimates and a solid 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.
Humana (NYSE:HUM)
With over 80% of its revenue derived from federal government contracts, Humana (NYSE:HUM) provides health insurance plans and healthcare services to approximately 17 million members, with a strong focus on Medicare Advantage plans for seniors.
Humana reported revenues of $32.11 billion, up 8.4% year on year. This result was in line with analysts’ expectations. Taking a step back, it was a mixed quarter as it also produced a solid beat of analysts’ EPS estimates but a significant miss of analysts’ customer base estimates.
The company lost 1.51 million customers and ended up with a total of 14.84 million. The stock is down 9.4% since reporting and currently trades at $235.
Read our full, actionable report on Humana here, it’s free.
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 print beat analysts’ expectations by 2.6%. Zooming out, it was a satisfactory quarter as it also recorded a decent beat of analysts’ EPS estimates but customer base in line with analysts’ 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.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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