Industry analysts expect a majority of the largest publicly traded U.S. health insurers to see fourth-quarter 2021 earnings decline sequentially, but many could see year-over-year gains.
Of the top nine managed care companies by total assets, Alignment Healthcare USA LLC is the only company expected to post a sequential EPS increase for the period, according to an S&P Global Market Intelligence examination of sell-side analyst forecasts.
Alignment Healthcare said its inpatient utilization in the fourth quarter of 2021 was about 5% lower than expected, even amid the COVID-19 pandemic. The company's health plan membership stood at 92,700 as of Jan. 1, 2022. That represented an increase of 16% compared to its
Revenues are projected to grow year over year across the board and are expected to tick up on a sequential basis for a majority of the insurers examined.
UnitedHealth Group Inc., the largest managed care insurer in the U.S. based on total assets, reported results ahead of the rest of the industry. The company logged adjusted net EPS of $4.48 in the period, compared to $2.52 in the prior-year period, and saw revenues jump tp $73.7 billion from $65.5 billion a year earlier. Its medical care ratio for full year 2021 came in at 82.6%, up from 79.1% a year earlier. UnitedHealth said the medical ratio rose due to higher COVID-19 costs and the repeal of the health insurance tax.
UnitedHealthcare CEO Brian Thompson during an earnings call said COVID-19 results were in-line with expectations in the fourth quarter of 2021, but also noted that the Omicron variant only started to take hold in the final month of the year. As was the case with prior surges, UnitedHealth has seen "double-digit declines" in physician and specialist visits.
The cost of at-home tests may become an issue for health insurers given new federal rules requiring full reimbursement for policyholders who buy them. But Thompson said UnitedHealth is, for now, more focused on the "consumer experience" and helping policyholders understand how to get tests and get their reimbursements.
Cigna Corp. and Anthem Inc., which round out the top three managed care companies in the U.S., are expected to see EPS decline sequentially to $4.71 and $5.12, respectively.
Fitch Ratings has a neutral sector outlook for the U.S. health insurance industry in 2022, reflecting expectations for continued strong full-year operating performance for the majority of established companies in the sector. The rating agency said the presence of significant continued COVID-19 infections into first half of 2022 is expected to extend the 2021 trend of discretionary care deferral, which will serve to meaningfully offset costs associated with virus-related treatment and testing.