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May 15, 2010
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MHMR May 15, 2010; Volume 18, Number 9
1Q10 MCO profits soar 34%...Ryan to retire from CVS…WellPoint rate reviews urged…Chart: 1Q10 MCO financials…Cigna 1Q09 profits soar…Cowen upgrades Health Net…Health Net raises ’10 forecast…Coventry beats Street…WellCare posts solid 1Q10…Accelerating reform deadlines…Lake on WellPoint rate fallout…MCRs rules to hit plan profits…WellPoint responds to Obama…NC HMO profits fall 34%...Chart: NC HMOs…FL HMO net falls 24%...Chart: FL HMO financials…and more…
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RYAN TO RETIRE FROM CVS
CVS Caremark announced that chairman, president and chief executive Tom Ryan, 58, will retire in May 2011. The company named Larry Merlo president and chief operating officer; he will take over as CEO after Ryan’s departure.
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SEBELIUS URGES WELLPOINT RATE REVIEWS
HHS Secretary Sebelius issued a letter to state governors and insurance commissioners urging them to re-examine WellPoint rate increases — this after the company admitted to “inadvertent miscalculations” in the criteria it used in California to unsuccessfully attempt to push through a 25% individual rate hike.
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COWEN UPGRADES HEALTH NET TO ‘OUTPERFORM’
After reporting strong first-quarter profits, Health Net (Woodland Hills, CA) received an upgrade to “outperform” from “underperform” from Wall Street analyst Christine Arnold of Cowen, who stated that the company is “uniquely positioned to take advantage of an improving underwriting cycle.”
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COVENTRY BEATS STREET, RAISES ’10 PROFIT OUTLOOK
Coventry Health Care Inc. (Bethesda, MD) reported better-than-expected first-quarter 2010 profits and raised its full-year earnings forecast to between $2.18 and $2.23 per share (excluding any impact from its exit from the Medicare Private Fee for Service Market.
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SEBELIUS IS ACCELERATING REFORM DEADLINES, OLSEN SAYS
The Obama Administration is pushing to accelerate health insurance industry adoption of certain provisions of healthcare reform in advance of the deadlines required by the new law, according to George Olsen, health policy expert and president of the law firm Williams & Jensen.
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LAKE SEES OTHER POSSIBLE RATE SETTING ‘MATH’ ERRORS
With the Obama Administration urging states to review WellPoint rate hikes for potential mathematical errors, Wall Street analyst Justin Lake of UBS sees a clear potential for other mistakes “given the thousands of rate filings that are likely to be removed, although we believe in the case of WellPoint there is minimal risk of ‘systemic’ mistakes similar to that made in California.”
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MINIMUM MCRs TO EAT INTO HEALTH PLAN PROFITS
The consensus among industry observers is that minimum medical cost ratios required by healthcare reform will eat into the profits of health plans immediately after taking effect in 2011.
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WELLPOINT RESPONDS TO OBAMA ON BREAST CARE
Angela Braly, chief executive of WellPoint Inc., expressed disappointment in a letter to President Obama for alluding in his weekly radio address to what she called “false information” that the company was systematically dropping insurance coverage of women with breast cancer.
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NC HMO PROFITS DECREASED 33.9% IN 2008
HMOs in North Carolina reported net income of $188.6 million in 2008, down 33.9%, on revenues of $5.908 billion, up 4.2%, according to an MHMR tally of state insurance department data.
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FL HMO NET INCOME DECREASED 24% IN 2008
HMOs in Florida reported total net income of $495 million in 2008, down 24%, on revenues of $16.913 billion, up 2.4%, according to an MHMR tally of state insurance department data.
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