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Q1 EARNINGS RUNDOWN
A big week of Q1 earnings highlights steady operational performance across the board
This week brought a solid slate of Q1 earnings reports in which the vast majority of companies reported a strong Q1 and saw stock price increases north of 10%. And the only company meaningfully down, Privia, still reported a solid quarter for the business. After a few years of turmoil in the public markets, it seems like companies across the board felt good about Q1 results.
A few of the more interesting earnings sessions:
agilon stock was up almost 100% on the week after a huge beat in Q1. An analyst asked when it is “going back on the offensive,” which provides a good overall sense of the tone of the call. agilon seems to have put the needed data infrastructure and clinical model in place, which is helping it execute. Interesting to note the analyst question on the impact of AI in the org, and that agilon is seeing it more on the revenue growth / medical management side than on the opex side of its P&L. It gave an example of its heart failure management program as example of that — whereas generally 40% - 50% of new heart failure diagnoses are after a hospital admit, agilon has that number down to 5% because of its risk strat capabilities.
Evolent was up 14% as it announced a handful of contract wins and solid performance in the quarter. It described its business as a “tale of two cities” — strong growth in oncology driving the overall narrative, while the other specialties are seeing opportunity in AI automation. Evolent noted that it is only 10% of the oncology market today, while 50% is still insourced by payors, and that it expects an increasing number of payors to look for external partners given the complexity in the oncology market.
Privia was down almost 7% this week despite having a very Privia-like quarter with strong performance in the business that had analysts seemingly wondering why it wasn’t raising guidance yet. VBC continues to play a bigger role in the narrative, as Privia talked about the opportunity in MA, although still very much centered around its philosophy of shared risk. Interestingly, Privia noted the business development pipeline is strong, and it essentially feels like it can wait out the market for valuations to come down as sellers realize there are not many options out there.
Oscar was up 15% after a strong Q1 and reaffirming FY 2026 outlook. If Oscar’s early results are any indicator, the doomsday view of ACA in 2026 has not played out, as morbidity and membership contraction are both turning into tailwinds for Oscar. Lucie is its new strategic growth initiative — +Oscar continues to fade to the background — as it attempts to ease large employers’ concerns about network size by bringing competitor plans on to Lucie, with the general idea being that a lot of narrow network plans for employees to choose from ends up being a broader network than the widest single carrier PPO network. As strong as their ACA business is performing, the ICHRA narrative here still feels underdeveloped to me.
CVS was up 10% after highlighting strong momentum across the business. It increased its 2026 EPS guidance, driven by improvements in Aetna and the Pharmacy and Consumer Wellness segment. CVS again highlighted its AI-native consumer front door marketplace, Health 100, which is launching later this year. Very curious to see what that is like when it launches, given the emphasis on CVS becoming a consumer health technology company.
Other earnings reports from the week: Clover (up 16% on the week), Astrana (up 14%), Hinge (up 22%), Omada (down 2%), Surgery Partners (~flat), Ardent Health (~flat), Lifestance (up 2%), Amwell (up 30%). Note Molina also hosted its investor day on Friday, which Martin dug into on Slack and we’ll spend more time with next week.
MUSING
What is access to primary care worth in Massachusetts?
Regular readers here will know Massachusetts is facing a number of challenges when it comes to primary care access. KFF highlighted earlier this year that patients in the area face a one-and-a-half- to two-year wait for a new-patient visit with PCPs, NPs, or PAs.
With that context, it was interesting to see Med City News highlight last weekend how the Massachusetts Health Policy Commission doesn’t appear overly thrilled with a potential partnership between CVS MinuteClinic and Mass General Brigham. Under the partnership, MinuteClinic locations would join MGB’s ACO and MinuteClinic would begin billing for primary care services in addition to existing convenience care services, all under MGB’s rates (read: much higher rates). This partnership, according to the MHPC analysis, would conservatively increase healthcare costs by ~$40 million per year. Here are the key drivers behind that increase:
Source: HTN analysis; MHPC data
Now, if you look at the analysis above, there are essentially two cost drivers. First, 34,000 people who didn’t have a PCP before would gain access to one, and per the MHPC, commercial patients with a PCP at MGB cost, on average, $815 per year more than patients without a PCP, between claims and quality payments. That accounts for almost $28 million of the cost increase.
The rest is pretty evenly split between the price increase for convenience care, both at CVS locations that would bill more under MGB rates, and the care that will need to be done at other locations, given CVS would be moving some of its capacity to primary care.
It strikes me as a bit of a double-counting issue to hold it against MinuteClinic that it is the lowest-priced convenience care option in Massachusetts when noting that costs will go up because people will need to go to other providers, which all cost more. The chart below, from the MPHC report, highlights the difference between MinuteClinic prices and MGB prices for top MinuteClinic services. Not surprisingly, MinuteClinic is generally at the bottom, while MGB is generally at the top.
The full report is well worth perusing if you are looking for a 301-level case study in the business of healthcare and the iron triangle-y tradeoffs at hand. If you step back and put yourself in the shoes of the person running MinuteClinic, what are you supposed to do here? I’d imagine that operating the lowest-priced convenience care clinics in a market isn’t necessarily the most profitable care delivery model. I can imagine why MinuteClinic might want to partner with an organization, and why MGB is appealing as a partner. I can also imagine why the state isn’t entirely pleased, particularly given MGB is the partner.
QUOTE OF THE WEEK
After a merger between WakeMed / Atrium in North Carolina unexpectedly came to light late last Friday, WakeMed’s CEO showed up at a press conference on Tuesday to explain the situation. Per reporting by The Assembly, when pressed by reporters on affordability concerns and whether this transaction would actually reduce costs for patients, his reply was:
“Expensive is how you define it.”
WakeMed and Atrium apparently negotiated this deal behind closed doors for two years, and the press release notes that the partnership will enable a $2 billion investment in the county where WakeMed operates and the creation of 3,300 jobs. Nonetheless, the approach here appears to have caused significant consternation in the market, as the North Carolina treasurer and others have expressed concern about the transaction's implications for healthcare costs. I can’t imagine quotes like the one above do anything to help that.
While the AHA attempts this week to maintain that the “hospital blame” narrative for rising healthcare costs is wrong — see below for more on that — processes and quotes like this don’t exactly seem to support the AHA's case.
Other Top Headlines
South Dakota-based Sanford Health took a step this week towards achieving its Manifest Destiny of entering the Minneapolis market by announcing its intent to merge with North Memorial. This move comes three years after Sanford’s failed attempt to enter the state by acquiring Fairview. North Memorial and HCMC in Minneapolis are both facing serious financial issues, and it appears Sanford sees an opportunity to enter a market that has otherwise resisted its attempts to enter. The local Sioux Falls coverage indicates that North Memorial had reached out to 22 organizations as potential merger partners, and Sanford Health wasn’t even on that initial list, which suggests how unlikely this outcome was.
WHOOP is adding on-demand video visits via its WHOOP app. It seems quite clear at this point that WHOOP sees a significant opportunity in the clinical setting. Between WHOOP’s participation in the ACCESS model and its recent investment round, highlighting the opportunity “to expand meaningfully into healthcare and even Medicare markets, bridging consumer and clinical worlds.” I will be quite interested to keep an eye on how this journey goes. It’s particularly interesting to consider the model here, juxtaposed with Myoung Cha’s recent blog post reflecting on Apple Health's journey and the business-model challenges it faced. The opportunity is certainly there.
Also on the D2C wearable front, Google announced the Fitbit Air, a wearable that looks an awful lot like a WHOOP. It is retailing for $99, although the Stephen Curry special edition is available for $129.
Roche announced it will acquire AI pathology startup PathAI for up to $1.05 billion, including $750 million in an upfront payment and $300 million in earnouts. The two originally partnered back in 2021
Cross Country Healthcare, a staffing company, is going private as PE firm Knox Lane is paying $437 million to acquire it.
Funding Announcements
Nitra announced $20 billion of committed financing through 2028 to fund the development of 8,000 private practices across the US. Nitra is launching the “Future of Care Initiative,” designed to support independent medicine nationwide as the backbone of US healthcare. Nitra’s customer list includes derm, urology, ophthalmology, medspas, and aesthetics practices, which aren’t necessarily the list of practices I think of when I think about the need to support independent medicine in this country, but the financial opportunity seems pretty straightforward here.
Enzo Health, an AI platform for home health agencies, raised $20 million. N47 led the round. The press release notes that Enzo has grown revenue 40x since it launched 24 months ago, and works with agencies that see 500k patients a year.
Village, a pediatric speech, OT & PT therapy model, raised $9.5 million. Upfront Ventures led the round. The Village has a network of 400 providers and payor contracts with several payers.
XCaliber Health, an AI operating platform reducing admin waste, raised $6.5 million. ManchesterStory led the round.
Rosarium Health, an aging-in-place model focused on home improvements, raised $6 million. Kalos Ventures led the round. Rosarium works with MA and Managed Medicaid plans in California and the Northeast. It is currently in-network for 1.2 million Medicare and Medicaid lives, and expects to grow to 4 million by year end.
What I’m Reading
OpenAI shared a white paper offering its perspective on how to ensure that AI can be used to its fullest potential to support patients. Interesting to see the section on regulatory suggestions in particular, given the broader conversation there at the moment, suggesting that states should oversee how AI integrates into care delivery and that the federal government should oversee AI as medical devices.
A physician, Dr. Danielle Ofri, shared her opinion in the NYTimes on what AI cannot do compared to a clinician — essentially interpreting the human context around a patient.
The WSJ Editorial Board slammed the 340B program. The WSJ Editorial Board continues its streak of strong opinions recently, in this case referring to the 340B program as “government grift at its worst.”
Zack Cooper shared his opinion in the NY Times this week that hospitals are the biggest cost driver of high prices in the US, and that we should be discussing this issue more. The AHA took exception to this and responded, suggesting the “hospital-blame” narrative is wrong.
A JAMA article explored the use of consultants at hospitals. It looked at 306 nonprofit hospitals that used a consulting firm for the first time between 2010 - 2022, and compared performance with 513 hospitals that didn’t use consultants based on form 990 data. Nonprofit hospitals paid on average $15.7 million for consultants, spending $7.8 billion in total.
A survey from the Business Group on Health on the costs of GLP-1s for employers finds that 67% of employers are currently offering GLP-1s for weight loss, and 10% of those employers likely will not continue coverage in 2027 given the costs.
An interesting exploration of PE-backed orthopedic MSOs by Brendan Schwartz. It does a really nice job walking through the economics of PE investment cases, why that has become more challenging recently, and potential opportunity paths moving forward.
Olivia Webb Kosloff and Lawson Mansell, did a quick interview on physician supply issues in the US. A lot of discussion in AI circles these days centers around the premise that healthcare has a human capital issue, i.e. the lack of supply of physicians. Mansell does a nice job walking through a handful of other alternatives.
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HTN Content of the Week
Weekly Health Tech Reads: A rundown of Q1 earnings calls, Devoted asks CMS to pay it less, Apollo's take on radiologists, Mark Cuban's contradictory week, and more. Read here.
Community Brain Trust: Does hospital consulting deliver? Why AI isn't moving the productivity needle, Q1 earnings season continues, May HTN meetups are live, and more. Read here.
The Grand Roundup: Devoted's long-term bet, Anthropic's AI services firm, Q1 earnings, healthcare financial infrastructure, gene therapy exit, public trust in healthcare, NC state health plan turnaround, and more
Addressing revenue cycle's root problem, data fragmentation | Eliana Berger (Joyful Health)
What Kelonia's journey to exit could mean for cell & gene therapies | Bryan Roberts (Venrock)
Healthcare affordability, declining trust, and the realities of reform | Natalie Davis (United States of Care)
The NC State Health Plan: a case study in managed care, benefit design, and healthcare affordability | Brian Miller (NC State Health Plan)
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