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January 15, 2004
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MANAGED CARE SERVICES STOCKS UP 1%
Managed care services stocks rose 1% in the two weeks ended Jan. 9, according to an MHMR tally of 18 issues. Market cap fell 4% to $36 billion.
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MANAGED CARE STOCKS FALL 1%
Managed care stocks fell 1% in the two weeks ended Jan. 9, according to an MHMR tally of 19 issues. Market cap rose less than 1% to $106.8 billion.
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MCO STOCKS UP 61% IN 2003; OFF TO SLOW START IN ‘04
After a spectacular 2003, managed care stocks fell in early 2004 after an ignominious downgrade by a key Wall Street analyst (see story, this issue). Still, investors can hardly complain given that in 2003 managed care stocks delivered a total return of 61%, topping all major market indexes for the fourth straight year, according to an MHMR tally of 20 issues.
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VEIEL TOPS 12 ANALYSTS IN ’03 HMO STOCK PICKS
Eric Veiel of Deutsche Banc Alex. Brown, who chose Coventry and UnitedHealth as his top stock picks for 2003, beat out 12 other analysts with an average 80.5% return for the year.
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MCO PROFIT MARGINS HIT 3-4% IN 2003
Managed care industry profit margins continued to rise in 2003, with publicly traded companies posting a net margin of 4% in the first nine months of the year.
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MCOs STILL PRICING AHEAD OF COST TRENDS, ANAYLST SAYS
Managed care commercial premium pricing is expected to continue to rise at a faster pace than costs in 2004, boding well for another year of solid earnings growth, according to a report from Christine Arnold of Morgan Stanley.
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CONSENSUS REPORT: EXECUTIVES HANDICAP KEY TRENDS
In interviewing Wall Street analysts and executives from leading managed care companies for this issue, MHMR asked for predictions on several key legal, legislative, competitive and market trends. The following is our second annual “Consensus Report,” a tally of anecdotes, opinions and crystal ball gazing about what 2004 will likely bring—including our own two cents worth.
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SPECIAL REPORT: OUTLOOK FOR 2004
The managed care industry is coming off two consecutive years of double-digit profit growth and extraordinary stock market performance, and now the question is whether the ride can last.
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HMO INSOLVENCIES FALL TO JUST 3 IN 2003
The HMO industry suffered only three insolvencies in 2003, according to Weiss Ratings (Jupiter, FL), as the sector’s financial strength was buoyed by premium increases, cost-cutting and economic growth. In 2002, 10 HMOs failed, Weiss said.
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AETNA LAUNCHES PICK-A-PLAN SUITE IN CALIFORNIA
Aetna (Hartford, CT) is offering small groups in California a package of health plan products called Pick-A-Plan, which enables employers to choose from up to 14 HMO, PPO, and EPO plan options for their employees.
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CONNECTICARE TO EXPAND INTO NY
ConnectiCare (Farmington, CT) will expand into New York, having acquired a health plan licensed to operate in the state from AmeriHealth Inc., a unit of Independence Blue Cross (Philadelphia, PA).
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CORRECTION: 3Q03 NET INCOME
The Nov. 15, 2003 issue of MHMR contained incorrect net income figures for Cigna, UnitedHealth and the total industry. Corrected figures appear in the chart below.
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WELLPOINT RAISES EARNINGS OUTLOOK FOR ’03, ‘04
Citing better than expected results in October and November, WellPoint Health Networks (Thousand Oaks, CA) said it was increasing its earnings projections to $6.15 per diluted share for the full-year 2003 from $6 previously.
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PACIFICARE SAYS STRIKE MAY IMPACT EARNINGS
PacifiCare Health Systems (Cypress, CA) said it may fall short of 2004 earnings and membership projections because of a strike at three southern California grocery chains.
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PBM, DENTAL, VISION, BEHAVIORAL HAVE MOSTLY GOOD ‘03
Specialty health plans—including pharmacy benefit management, behavioral, dental and vision—posted generally good results in 2003 despite increasing competition, according to the soon-to-be-released Outlook for Managed Care 2004.
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AETNA ACQUIRES CHICKERING GROUP
Aetna Inc. (Hartford, CT) has acquired The Chickering Group (Boston), a broker and administrator of school-sponsored health plans serving 283,000 students at more than 100 colleges and universities.
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CVS DRAWS LINE ON MANDATED MAIL ORDER
CVS Corp. (Woonsocket, RI) announced that it will not participate in the networks of any additional pharmacy benefit management companies that mandate mail order for maintenance drugs.
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CVS DRAWS LINE ON MANDATED MAIL ORDER
CVS Corp. (Woonsocket, RI) announced that it will not participate in the networks of any additional pharmacy benefit management companies that mandate mail order for maintenance drugs.
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EXPRESS SCRIPTS TO BUY CURASCRIPT
Express Scripts (St. Louis) has agreed to acquire CuraScript (Orlando, FL), including the company’s specialty pharmacy and PBM operations, for $335 million in cash.
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PRIME WINS HCSC PBM ACCOUNT, WITH 4 MILLION LIVES
Prime Therapeutics (St. Paul, MN), a pharmacy benefit management company owned by several Blue Cross Blue Shield plans, will nearly double its membership having won the account to provide PBM services to 4 million Health Care Service Corp. (Chicago) lives.
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MEDCO RENEWS UNITEDHEALTH, ITS LARGEST CLIENT
Medco Health Solutions (Franklin Lakes, NJ) will hold onto its largest client for at least another five years, renewing an agreement to provide administrative support services for the pharmacy benefit management operations of UnitedHealth Group (Minnetonka, MN) through 2008.
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HUMANA TO BUY OCHSNER, PUSH INTO LA
Humana Inc. (Louisville, KY) will make a major push into the Louisiana market with the acquisition of provider-owner Ochsner Health Plan, which has a total of 188,000 lives largely in New Orleans. Purchase price wasn’t disclosed.
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MHMR Jan. 15, 2004: Volume 12, Number 1
SPECIAL REPORT: Outlook for Managed Care, 2004...17 top execs on 2004 outlook...Consensus Report: Key Trends...MCO pricing ahead of costs...
’04 profits to grow 16%...MCOs margins hit 3-4%...Wall Street bullish on ‘04...Veiel tops in ’03 stock picks...MCO stocks beat Street in ‘03...and more...
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