Most major U.S. managed care insurers set for sequential earnings declines in Q3

An analysis of consensus analyst estimates for Q3 suggests that most U.S. health insurers are set for sequential bottom-line declines.

Of the nine largest U.S. managed care insurers, five are expected to see their earnings fall compared to the prior quarter.

The increasing costs associated with Medicare Advantage (MA) plans have continued to put pressure on insurers’ balance sheets. Humana (HUM), whose shares have plunged 45% year-to-date, appears to be the worst hit.

Early this year, Louisville, Kentucky-based firm lowered its outlook twice owing to higher-than-expected costs in its MA business. The managed care player also recently announced a sharp decline in members enrolled in its top-rated MA plans, its latest headwind related to government-backed insurance.

Meanwhile, industry bellwether UnitedHealth Group (UNH), which is scheduled to report Q3 earnings tomorrow, also indicated a rise in medical costs in its previous report. Nonetheless, the Minnetonka, Minnesota-based managed care giant has surpassed its last twelve quarterly earnings targets, raising optimism ahead of its Q3 release.

Here is a look at the consensus estimates of major publicly traded U.S. insurers versus their Q2 EPS:

• UnitedHealth Group (UNH) Q3 estimate $7.03 (vs EPS actual $6.80 in Q2)
• Cigna (CI) Q3 estimate $7.32 (vs EPS actual $6.72 in Q2)
• Elevance Health (ELV) Q3 estimate $9.65 (vs EPS actual $10.12 in Q2)
• Centene (CNC) Q3 estimate $1.41 (vs EPS actual $2.42 in Q2)
• Humana (HUM) Q3 estimate $3.42 (vs EPS actual $6.96 in Q2)
• Molina Healthcare (MOH) Q3 estimate $5.94 (vs EPS actual $5.86 in Q2)
• Oscar Health (OSCR) Q3 estimate -$0.18 (vs EPS actual $0.20 in Q2)
• Clover Health Investments (CLOV) Q3 estimate -$0.04 (vs EPS actual $0.00 in Q2)
• Alignment Healthcare (ALHC) Q3 estimate -$0.08 (vs EPS actual -$0.13 in Q2)