Insurers Highlight M&A as Critical to MA Growth

From RADAR on Medicare Advantage

TAs managed care organizations recently reported second-quarter 2018 financial results, continuing growth and improving medical cost trends in Medicare Advantage caused many to raise their full-year earnings outlook. And several insurers highlighted recent and/or pending acquisitions that they believe will contribute to further MA growth.

Humana Inc. on Aug. 1 reported adjusted earnings per share (EPS) of $3.96, ahead of expectations and above Wall Street consensus of $3.77. Revenues also came in higher than expected at $14.3 billion.

Speaking of the recently completed purchase of Kindred at Home, which builds on the company's existing Humana At Home capabilities, Humana President and CEO Bruce Broussard said Humana over the next year will leverage its predictive modeling to identify additional clinical interventions, integrate Humana Pharmacy resources to conduct comprehensive medication reviews and extend care management practices from Humana At Home into the Kindred home care environment.

Cigna Corp. President and CEO David Cordani boasted of an "exceptionally strong quarter" that included a 34% increase in adjusted EPS to $3.89 and consolidated revenue growth of 10% to $11.5 billion, which the company attributed to strong performance in MA and Part D.

The company sees growth opportunities in its existing individual MA markets and is planning to open a new market, said President and CEO David Cordani. Cigna's pending $60 billion acquisition of Express Scripts Holding Co. should further drive growth in 2020 as its "contributions to further affordability improvement" will benefit both its MA and PDP value proposition, he added.

Meanwhile, WellCare Health Plans, Inc. is working closely with regulators in Illinois and Michigan to secure approval for its planned acquisition of Meridian Health Plan.

The addition would boost WellCare's No. 1 Medicaid market standing from four to six states and grow its overall Medicaid membership by nearly 40%, while expanding its geographic footprint from 18 to 21 states and deepening its MA presence in Illinois.

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