Weekly Health Tech Reads | 4/28/24

Earnings calls (Humana, Centene, Molina, Teladoc, Accolade) and more!

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Public Company Earnings Updates

Rundown of key takeaways from earnings calls

Humana pulls 2025 guidance on MA uncertainty; plans to exit markets


  • Humana’s 2024 is on track, but the big news was that Humana pulled 2025 EPS guidance given the level of uncertainty in the MA market. Humana did share they expect membership losses for 2025 as they expect to exit some markets based on profitability levels.

Going Deeper:
Humana expects that the industry will be able to normalize back to a 3%+ margin over time. But whereas Humana was previously expecting some of that recovery in 2025, it now is pushing that out into 2026 and beyond. Humana is waiting to see what competitors do in bid filings before providing earnings guidance for 2025, and will provide an update to investors later in the year.

Despite the 2025 concerns, Humana still expressed optimism about the fundamentals of the MA market longer-term, and its ability to consistently get back to 3%+ margins.

  • One of the more interesting questions to watch is whether this period of dislocation prompts any of the larger insurers to revisit M&A conversations. Humana’s stock is down 40% over the last six months. Given this now appears to be at least a two year period before we see meaningful margin recovery in 2026, it seems like a window could open up.

Read More:

Centene continues to execute well on core Medicaid and exchange strategies, increasing guidance for the year


  • Centene’s quarter was solid as it continues to execute on its plans around Medicaid, Medicare Advantage, and the Individual Exchanges. It beat expectations in Q1 and raised EPS guidance for 2024.

Going Deeper:
It is interesting to see the tone of Centene’s commentary around Medicare Advantage. Centene noted that they view it as a nice long-term business for Centene to be in, but they are not worried about losing top-line revenue in MA in the short term. They appeared to indicate that we should expect a flat-to-down year in 2025. An analyst even asked if the infrastructure required to be in MA isn’t worth it and Centene might consider exiting the business.

The answer was no, because the strategic alignment of MA to Medicaid is important to Centene. This is particularly true as it relates to Duals. This comment from CEO Sarah London in opening remarks, echoed by Molina in their call as well (see below) is something folks in this space should be keeping an eye on:

Longer term, Medicare Advantage remains an important business for Centene. The strategic link between Medicare and Medicaid has only become more explicit since our last earnings call. Recent CMS rule-making included final requirements to better coordinate dual special needs plans, or D-SNP, participation with important milestones beginning in 2027. By the end of the decade, a Medicaid footprint will be a prerequisite to D-SNP growth. Centene is perfectly positioned to gain positive momentum from this growing bond between Medicare and Medicaid.

- Centene CEO Sarah London

Read More:

Molina’s core business performs well; has mixed RFP results


  • Similar to Centene, Molina’s core business is performing well as it moves through Medicaid redeterminations. Molina had mixed results on Medicaid RFPs in the quarter, winning in Texas and Michigan but losing contracts in Virginia and Florida.

Going Deeper:

Despite the RFP hiccups in Virginia and Florida, Molina expressed confidence in its ability to continue driving Medicaid growth via RFP wins with $60 billion of premiums up for bids in the next three years. As is the case with these RFPs, Molina noted it expects there might be a more favorable outcome in Florida over time.

Molina also positioned its Medicare Advantage presence as a strategic asset for the business, noting its strategy is to leverage its Medicaid footprint to serve high-acuity and low-income Medicare populations. As a result, Molina played down the headwinds that many other plans are facing, noting that only 2/3rds of its Medicare revenue is subject to the 2025 rate challenges other plans are facing, representing 10% of Molina’s overall revenue.

Similar to Centene above, Molina leadership seems pleased with the opportunity it has in D-SNP populations moving forward given CMS’s move toward integrating the plans:

As Joe mentioned earlier, we believe that the recent CMS 2025 final role, strategically advantaged us to grow. Currently, many dual eligible members received their medicated Medicare benefits from 2 different MCOs. CMS announced rules that will move these unaligned dual members to the D-SNP plan run by their Medicaid MCO. As such, incumbent Medicaid players will see increased growth opportunities in D-SNP. While the new rule will phase in over time, it's clear that our substantial Medicaid footprint positions us well to grow our D-SNP product to serve due eligible members. This shift, along with demand from state partners to service these complex populations gives us confidence, our Medicare portfolio will meet our long-term growth and margin targets.

- Mark Keim, Molina CFO

This quarter was also the first full quarter Molina was operating Bright’s MA insurance business. Molina noted that it inherited a business running at 95% MCR and 13% SG&A and has already improved MCR to 87% and SG&A to 8%. They expressed confidence that the business would be accretive to Molina in the next few years.


Accolade attempts to chart a path towards profitable growth across a diversified revenue base


  • Accolade spent a lot of time on its Fiscal Q4 and FY2024 earnings call describing how they’ve diversified their business substantially since they went public four years ago and have a line of sight to strong profitable growth and being a Rule of 40 company.

Going Deeper:

In some ways, this earnings call felt a bit like Accolade was attempting to reintroduce its business model to analysts. Accolade has diversified its business model substantially since it went public, noting on this call that it’s grown to 1,200 customers, up from 54 at the IPO.

Accolade has also added several revenue streams, highlighting this slide below as what a model client relationship looks like. Whereas five years ago this client was only using Accolade’s navigation product, today it is also using virtual primary care (PlushCare), expert opinions (2nd.MD), and the third-party ecosystem. The navigation product appears to be essentially flat over the five year period, with growth coming from the new product extensions.

Analysts still had a lot of questions for Accolade trying to understand the various business drivers, which made for an interesting earnings call if you’re selling to employers. Given Accolade’s stock is down 13% on the week it appears investors still have more questions about Accolade’s ability to achieve the profitable growth it is expecting.


Teladoc continues to wade through the mud as BetterHelp struggles


  • Teladoc's Q1 was dragged down by BetterHelp performance, which saw a 4% revenue decline year over year. This was driven by an 11% decrease in paying users. Other parts of the business performed better, with the Chronic Care segment seeing 9% enrollment growth. year over year. But on the whole, Teladoc still needs to figure out how to grow the business moving forward. Even with all these challenges, Teladoc expects to generate $210 to $240 million of free cash flow in 2024.



Compelling visuals that help convey data, trends, or topics

A look at healthcare-related AI legislative activity across the country

The Manatt Health team’s AI Health Policy Tracker highlights just how quickly the regulatory landscape is changing, with ~28 states either introducing or approving bills related to the use of AI in healthcare settings.

Other News

A round-up of other newsworthy items

The FTC issued a much-discussed new final rule banning non-competes. As the final rule document indicates, it appears the FTC received numerous comments from the healthcare industry on both sides of the argument. The rule noted that hundreds of physicians and other commentators argued that non-competes make it harder for patients to access quality care. On the other hand, the AHA’s general counsel penned a response calling the move “bad law, bad policy, and a clear sign of an agency run amok.” That said, it seems like this ruling will face substantial pushback, with the AHA concluding its letter: “the only saving grace is that this rule will likely be short-lived, with courts almost certain to stop it before it can do damage to hospitals’ ability to care for their patients and communities. Link

Tufts and Navvis announced a new partnership to advance value-based care. Per the press release, the partnership will focus on “changes to care models, workflows, and staffing approaches, state-of-the-art IT solutions and payer strategies.” It didn’t include much in the way of specifics beyond that. But regardless of the specifics, it seems like yet another indicator that health systems are feeling the urge to find VBC partners as they evaluate their relationships with health plans and how to capture more of the healthcare dollar). Link

Advocate Aurora is selling its remote patient monitoring business, MobileHelp. Advocate Aurora acquired it two years ago for $290 million and is taking a $150 million write-down on the sale. Link

Kaiser is notifying 13.4 million patients that it shared patient data with advertisers. Link

Optum Virtual Care shut down this week after launching back in 2021. Link

Cohere Health and Humana continue expanding their prior auth relationship, adding diagnostic imaging and sleep services. Link

SSM Health and Inbound Health partnered to launch a new hospital-at-home model starting in Madison. Link

Turquoise Health, a price transparency platform, acquired Bramble Health, which will be integrated into Turquoise’s solutions for employers. Link


Notable startup financing rounds across the industry

Lumeris, a value-based care enablement platform, raised $100 million. The release cites that the funding is going to support the growing demand from health system and provider groups to implement value-based care. Seems like a clear theme between this news and the Navvis / Tufts partnership this week. Link

Midi Health, a virtual clinic for menopause, raised $60 million. Midi plans to use the funding in part to hire an additional 150 clinicians by year-end. Link

AccessHope, a platform that expands the reach of oncology COEs to local providers and employers across the country, raised $33 million. The funding came from City of Hope, which launched AccessHope as a wholly-owned subsidiary back in 2020. Link

Amae Health, an outpatient clinic model for serious mental illness, raised $15 million. Link

Summer Health, a virtual pediatrics practice, raised $11.65 million. Link

Alaffia Health, a AI-based claims platform to payors, raised $10 million. Link

Clarity Pediatrics, a company that offers support for parents of children with ADHD, raised $10 million. Link

Commons Clinic, a value-based care enabler for MSK providers, announced a $9.75 million investment in Marina Orthopedic & Spine Institute (MOSI), an independent ASC in Los Angeles. Link

Auxa Health, an AI-powered benefit navigation platform, raised $5.2 million. Link

Handl Health, a platform for benefits consultants to choose plan designs, raised $2.5 million. Link

Writers Guild

Thought-provoking posts from the broader healthcare community

Hospitals declare War on Corporate Insurance: Handicapping the Players by Paul Keckley
Keckley’s latest blog post highlights how the AHA has declared war against corporate insurance, with some helpful thoughts on which party has the upper hand across some key issues - public support, regulatory positioning, capital markets support, physician relationships and more.

Inferred Risk: Reforming Medicare Risk Scores To Create A Fairer System by Abe Sutton and Gabriel Drapos
This Health Affairs piece proposes that CMS pilot an inference-based approach to calculating risk scores, using the billing data it has to assign every patient a risk score.

Expert Q&A: Value-Based Kidney Care by Tim Fitzpatrick and others
This is a good deep dive into the current state of value-based kidney care in the form of a written Q&A with seven folks in the industry.

Reflections on the CMS Final Rule by James Jiang
A good perspective from Spark Advisors on changes for Medicare Advantage brokers in the recent 2025 Final Rule and strategic implications for Field Marketing Organizations moving forward.

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