Our Take: HCA, insurers report billions in profits for 2020, though some saw decline in Q4
It’s that time of year when businesses whose fiscal years are the same as calendar years begin to release their annual earnings reports. We already reported on UnitedHealth Group’s 2020 financial results at the end of January. This week, we’re covering earnings reports by HCA Healthcare and several of the top insurers.
HCA Healthcare posted a profit of $3.75 billion and revenue of $51.53 billion for 2020, compared with a profit of $3.51 billion and revenue of $51.34 billion the previous year. The company had a strong fourth quarter, with a profit of $1.4 billion and revenue of $14.3 billion (compared with a profit of $1.1 billion and revenue of $13.5 billion in Q4 of 2019).
CEO Sam Hazen attributed the strong financial results in the final quarter of 2020 to “highly acute inpatient volumes coupled with solid cost management,” even though HCA’s same-facility admissions dropped 3.4%, same-facility emergency department visits fell 21%, same-facility inpatient surgeries decreased 6.7%, and same-facility outpatient surgeries decreased 5.1% relative to the previous year’s fourth quarter.
Anthem, meanwhile, reported a profit of $4.57 billion and revenue of $121.87 billion for 2020, compared with a profit of $4.81 billion and revenue of $104.21 billion for 2019. The company had a strong fourth quarter in terms of revenue, thanks to gains in membership, pulling in $31.82 billion (compared with $27.41 billion in the final quarter of 2019), but its profit for the quarter dropped substantially compared with Q4 of 2019 ($551 million vs. $934 million, respectively) as a result of pandemic-related costs.
Anthem’s in-house pharmacy benefit manager (PBM), IngenioRx, had significant gains in both annual and fourth-quarter operating revenue relative to the previous year, according to a filing with the Securities and Exchange Commission. Of note, the PBM did not start operating until the second quarter of 2019 and only completed the transition of membership by Jan. 1. 2020. For the year, IngenioRx’s operating revenue increased 305.6%, from $5.4 billion in 2019 to $21.91 billion in 2020. For Q4, the PBM’s operating revenue increased 81.4%, from $3.23 billion in 2019 to $5.86 billion in 2020.
Humana recorded a loss for Q4 because of a sharp increase in COVID-19 admissions, although a decrease in non-COVID-19 care helped offset those expenses to some extent. For the full year, Humana had revenue of $77.16 billion (compared with $64.89 billion in 2019) and a profit of $3.4 billion, a 24.4% increase compared with the previous year. For the fourth quarter, the company had revenue of $19.1 billion, up 17% from the final quarter of 2019, but its operating expenses for the quarter were 21.8% higher than in 2019, resulting in a loss of $274 million relative to Q4 2019.
Humana plans to increase its Medicare Advantage (MA) plan membership through its new Author model, which the company launched last month in South Carolina. The model is managing five MA plans in the state with approximately 13,500 members. Through the program, members and providers have access to a team of navigators to help them get the assistance they need, whether that’s help with benefits, claims, or prior authorizations.
CEO Bruce Broussard said on an earnings call last week, “Author is designed to meet the emerging expectations of digital-savvy seniors aging into Medicare, leveraging health coaches, digital and artificial intelligence to create a simplified and integrated experience for consumers.”
While Cigna also saw the savings it had accumulated earlier in the year from deferred care eroded by higher COVID-19 costs in the fourth quarter, the company still reported a profit, both for the quarter and for the full year. The insurer’s profit for Q4 2020 was $4.14 billion on revenue of $41.71 billion (compared with a profit of $977 million on revenue of $38.25 billion in the last quarter of 2019), and the company’s profit for the year was $8.46 billion on revenue of $160.4 billion (vs. a profit of $5.1 billion on revenue of $153.57 billion in 2019).
Cigna’s health services subsidiary Evernorth, which includes Express Scripts, had a 19% increase in fourth-quarter revenue compared with the previous year ($30.53 billion vs. $25.57 billion), with annual revenue reaching $116.13 billion in 2020. Evernorth fulfilled 388 million pharmacy scripts in Q4, representing a 19% increase relative to the previous year’s final quarter.
Johnson & Johnson (J&J) filed for emergency use authorization for its COVID-19 vaccine candidate Thursday, the company said in a press statement. The FDA’s Vaccines and Related Biological Products Advisory Committee is scheduled to meet on Feb. 26 to consider the request. As we reported last week, J&J’s vaccine candidate demonstrated 66% overall efficacy, requires only one dose, and can be stored for three months in standard refrigerators. J&J estimates that the vaccine can stay stable for up to two years at colder temperatures.
Top drugmakers, including GSK, Bayer, and Novartis, are pitching in to help manufacture COVID-19 vaccines. Initially, GSK worked with Sanofi to develop a vaccine but delayed that effort based on early-stage clinical results. GSK also collaborated with Clover Biopharmaceuticals on developing a vaccine — GSK was to supply the adjuvant — but a week ago Clover said it would proceed to late-stage testing with an adjuvant from Dynvax instead. Wednesday, GSK announced that it would support the manufacture of up to 100 million doses of CureVac’s mRNA vaccine, which is in late-stage testing, and will work with the German biopharmaceutical company to develop next-generation, and potentially multi-valent, COVID-19 vaccines.
Separately, despite never having produced vaccines, Bayer agreed to help manufacture 160 million doses of CureVac’s first-generation vaccine and is providing other support. And, starting next quarter, Novartis said it will use its manufacturing plant in Stein, Switzerland to support production of Pfizer and BioNTech’s mRNA vaccine.
AstraZeneca released new clinical trial data for its vaccine, which was authorized for use in the European Union late last month. A primary analysis of data from Phase III trials in the U.K., Brazil, and South Africa found that while the vaccine demonstrated 76% efficacy in preventing COVID-19 after the first dose and maintained protection to the second dose, efficacy increased to 82% when the second dose was administered after a period of 12 weeks or more. Further, the data showed that the vaccine might reduce asymptomatic transmission of the disease; researchers at the University of Oxford found a 67% reduction in positive swabs among study participants who received the first dose. These results were published on Feb. 1 as a preprint by The Lancet and have not yet been peer reviewed.
Phase one of the Federal Retail Pharmacy Program for COVID-19 Vaccination will launch this week, according to a White House press statement. The federal government is shipping 1 million vaccine doses to approximately 6,500 pharmacy partners in the program, and eligible individuals in vaccine priority groups will be able to get vaccinated at select pharmacies starting on Feb. 11. As vaccine supply increases, the program, which was announced in November, could expand to include up to 40,000 pharmacies nationwide. Doses distributed through this program are in addition to the minimum of 10.5 million doses per week the Biden administration committed to shipping to states, tribes, and territories, starting last week.
The Federal Emergency Management Agency (FEMA) is assisting with vaccine distribution by providing nearly $2 billion (as of Friday) to states and other localities, the agency said in a press release. The funds are being used to set up community vaccination centers and to cover the cost of storage equipment and other supplies necessary for administering the vaccines. FEMA has asked for the Pentagon’s assistance in speeding up distribution, and CNBC reported on Friday that Secretary of Defense Lloyd Austin approved the deployment of 1,100 active-duty troops to help deliver and administer the vaccines.
The White House said FEMA will also reimburse states for eligible COVID-19-related costs they have borne since the start of the pandemic, such as money spent on personal protective equipment and deployment of the National Guard. And, during a briefing on Friday, the COVID-19 Response Team’s supply coordinator said President Biden is invoking the Defense Production Act to ramp up the supply of at-home coronavirus tests, surgical gloves, and materials that Pfizer needs to meet its vaccine manufacturing targets.
UnitedHealth Group CEO David Wichmann is retiring, the company announced on Thursday. Wichmann has been with the company since 1998 and has been CEO since 2017. Effective immediately, Sir Andrew Witty, who served as CEO of Optum since March 2018 and as president of UnitedHealth Group since November 2019, succeeds Wichmann, who will stay on in a transitional role through March. Dirk McMahon, who has held numerous leadership positions within the UnitedHealth group of companies, most recently as CEO of UnitedHealthcare, will take on the roles of president and chief operating officer of UnitedHealth Group.
Ken Frazier is stepping down as CEO of Merck after 10 years. Effective July 1, Robert Davis, who currently serves as executive vice president, global services and chief financial officer, will assume the role of CEO and become a board member. Davis also will become president of Merck, effective April 1. Frazier, who has been CEO since 2011, will stay on as the company’s executive chairman for a transition period, according to a news release.
Premier will also soon have a new CEO. After nearly 18 years with the company, Susan DeVore will step down as CEO, effective May 1, and Michael Alkire, who is currently the president of Premier, will take on the additional role of CEO. The company said DeVore will stay on until the end of June and will continue to serve as an adviser for two years. She has been CEO for 12 years.
