As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the health insurance providers industry, including Alignment Healthcare (NASDAQ: ALHC) 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 12 health insurance providers stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 3.5% while next quarter’s revenue guidance was in line.
Luckily, health insurance providers stocks have performed well with share prices up 10.2% on average since the latest earnings results.
Alignment Healthcare (NASDAQ: ALHC)
Founded in 2013 with a mission to transform healthcare for seniors, Alignment Healthcare (NASDAQ: ALHC) provides Medicare Advantage health plans for seniors with features like concierge services, transportation benefits, and technology-driven care coordination.
Alignment Healthcare reported revenues of $1.02 billion, up 49% year on year. This print exceeded analysts’ expectations by 5.7%. Overall, it was a very strong quarter for the company with a beat of analysts’ EPS estimates and full-year EBITDA guidance exceeding analysts’ expectations.
“In today's Medicare Advantage environment, Alignment Healthcare's second quarter performance proves that strong financial results and high-quality care can go hand in hand – with the right model,” said John Kao, founder and CEO.
Alignment Healthcare scored the fastest revenue growth and highest full-year guidance raise of the whole group. The company added 6,200 customers to reach a total of 223,700. Unsurprisingly, the stock is up 22.9% since reporting and currently trades at $16.04.
Best Q2: 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 $98.92 billion, up 8.4% year on year, outperforming analysts’ expectations by 5.1%. The business had a stunning quarter with a solid beat of analysts’ same-store sales and EPS estimates.
The market seems happy with the results as the stock is up 18.7% since reporting. It currently trades at $73.95.
Is now the time to buy CVS Health? Access our full analysis of the earnings results here, it’s free.
Slowest Q2: Oscar Health (NYSE: OSCR)
Founded in 2012 to simplify the notoriously complex American healthcare system, Oscar Health (NYSE: OSCR) is a technology-focused health insurance company that offers individual and small group health plans through its cloud-native platform.
Oscar Health reported revenues of $2.86 billion, up 29% year on year, falling short of analysts’ expectations by 3.5%. It was a disappointing quarter as it posted a significant miss of analysts’ EPS estimates.
Oscar Health delivered the weakest performance against analyst estimates in the group. Interestingly, the stock is up 38.2% since the results and currently trades at $19.10.
Read our full analysis of Oscar Health’s results here.
Centene (NYSE: CNC)
Serving nearly 1 in 15 Americans through its government healthcare programs, Centene (NYSE: CNC) is a healthcare company that manages government-sponsored health insurance programs like Medicaid and Medicare for low-income and complex-needs populations.
Centene reported revenues of $48.74 billion, up 22.4% year on year. This result surpassed analysts’ expectations by 11.6%. It was a strong quarter as it also put up an impressive beat of analysts’ customer base estimates.
Centene pulled off the biggest analyst estimates beat among its peers. The company added 60,900 customers to reach a total of 28 million. The stock is up 20.8% since reporting and currently trades at $32.34.
Read our full, actionable report on Centene 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 $11.43 billion, up 15.7% year on year. This print topped analysts’ expectations by 4.4%. However, it was a slower quarter as it produced a significant miss of analysts’ full-year EPS guidance estimates and a slight miss of analysts’ customer base estimates.
Molina Healthcare had the weakest full-year guidance update among its peers. The company lost 6,000 customers and ended up with a total of 5.75 million. The stock is down 5.1% since reporting and currently trades at $180.99.
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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