As the Q3 earnings season comes to a close, it’s time to take stock of 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 12 health insurance providers stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 2.4% while next quarter’s revenue guidance was 1.4% below.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 6.9% 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 $69.75 billion, up 9.5% year on year. This print exceeded analysts’ expectations by 3.6%. Overall, it was a strong quarter for the company with a solid beat of analysts’ revenue and EPS estimates.
"Our strong quarterly results reflect the breadth of our businesses and focused execution on our growth strategy, even in a dynamic environment," said David M. Cordani, chairman and CEO of The Cigna Group.
The stock is down 9.6% since reporting and currently trades at $270.29.
Best Q3: 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 $102.9 billion, up 7.8% year on year, outperforming analysts’ expectations by 4.1%. The business had an exceptional quarter with a solid beat of analysts’ same-store sales estimates and an impressive beat of analysts’ revenue estimates.
Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 5.2% since reporting. It currently trades at $77.90.
Is now the time to buy CVS Health? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: 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 $11.48 billion, up 11% year on year, exceeding analysts’ expectations by 4.7%. Still, it was a slower quarter as it posted a miss of analysts’ full-year EPS guidance estimates and a significant miss of analysts’ EPS guidance for next quarter estimates.
As expected, the stock is down 28.9% since the results and currently trades at $138.46.
Read our full analysis of Molina Healthcare’s results here.
Cencora (NYSE: COR)
Formerly known as AmerisourceBergen until its 2023 rebranding, Cencora (NYSE: COR) is a global pharmaceutical distribution company that connects manufacturers with healthcare providers while offering logistics, data analytics, and consulting services.
Cencora reported revenues of $83.73 billion, up 5.9% year on year. This print beat analysts’ expectations by 0.5%. Overall, it was a satisfactory quarter as it also put up a narrow beat of analysts’ full-year EPS guidance estimates.
Cencora had the slowest revenue growth among its peers. The stock is up 5.1% since reporting and currently trades at $361.93.
Read our full, actionable report on Cencora here, it’s free for active Edge members.
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 $113.2 billion, up 12.2% year on year. This number met analysts’ expectations. Aside from that, it was a mixed quarter as it also produced a narrow beat of analysts’ customer base estimates but revenue in line with analysts’ estimates.
The company kept the number of customers flat at a total of 54.08 million. The stock is down 12.2% since reporting and currently trades at $320.62.
Read our full, actionable report on UnitedHealth here, it’s free for active Edge members.
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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