👋 Welcome to my Sunday recap of healthcare news. While leading health system CEOs visited Washington DC this week, we were busy keeping an eye on the news. Lots of earnings calls this week, featuring some interesting momentum for Teladoc and the payors generally doing well in Q1. Apollo’s Chief Economist caused a stir among Health Tech Nerds by sharing a chart on AI and the radiology market, while Devoted’s CEO pleaded to CMS to pay the industry less. Between that contradiction and Mark Cuban partnering with what is apparently his favorite vertically integrated insurer, Humana, my head was spinning. Insert something here about it being classic Sun Tzu-endorsed enemy-of-my-enemy-is-my-friend moves, maybe. The very next day, Cuban implored political leaders not to be wimps and break up vertically integrated insurers, which I believe is indicative of another strategy Sun Tzu described when he said: “Do not repeat the tactics which have gained you one victory, but let your methods be regulated by the infinite variety of circumstances.” That’s called range, my friends.
Ah, the joys of covering healthcare news!
- Kevin
Q1 EARNINGS
A busy week of earnings highlights confidence in 2026 performance and momentum ahead
Earnings calls generally went well this week. This early in the year, many of the earnings calls followed a similar theme — confidence in how Q1 is progressing and feeling good about the business's trajectory, but still early in the year. Snowstorms and flu-related impacts in Q1 still show up in most calls. Something to keep an eye on as we wait for Q2 earnings is whether we’re finally seeing the market get its arms around cost trend increases after a few years of struggling to catch up.
Two calls stood out to me the most in terms of interesting strategic implications: Teladoc and Alignment. Teladoc, because it feels like the business is turning a corner, and momentum in BetterHelp insurance is picking up. Alignment, because despite continued solid performance, its stock was down 12% on earnings, as I imagine investors are questioning how quickly Alignment can get to the scale its valuation demands.
Here’s a quick rundown of the key calls from this week, with more details in HTN Slack at the link below:
Teladoc, which was up 12% on the week, feels like it is turning a corner in Q1. There is light at the end of the tunnel for the Integrated Care segment as it continues to adjust to fee-for-service style contracts, and the BetterHelp insurance momentum is palpable. It reported $13 million of insurance revenue for BetterHelp in Q1, currently on a $75 million ARR, and expects to be at $125 million ARR by the end of 2026.
Alignment briefly dropped 20% on Friday before settling in down ~12%, despite raising guidance for revenue and membership and raising the low end of gross profit and EBITDA guidance. There was some particularly interesting strategic conversation in the second half of the conversation about Alignment’s approach to PPO vs HMO products, its negotiations with health systems, and CMS’s attempts to shift the trajectory of MA. The stock drop doesn’t appear to be indicative of concerns about Q1 results, but rather of questions about the pace at which Alignment can scale.
Humana stock was up 7% on the week after reporting medical costs in Q1 were on track to be slightly ahead of expectations, with Humana kicking off the call by noting it is right where it expected to be. Humana reported that its performance is trending slightly ahead across the business, even when accounting for the impact of flu and storms. Humana more clearly indicated it will need to pull back on benefits as it prioritizes margin improvement in 2027 to get back to 3% margin in 2028. Q2 results will be the big tell here.
Cigna was down slightly this week despite beating Q1 expectations and raising 2026 guidance, as it continues to focus its model on the specialty pharma and employer markets. Its decision to exit the ACA market in 2027 and review strategic alternatives for its eviCore business made headlines, but seemed entirely logical in the context of the overall business. Cigna called out its Clearity copay-only plan design, noting strong market interest in the employer segment.
Centene stock was up 26% as it beat for Q1 and raised guidance for the year. The Medicaid business and the Medicare business are both performing well for Centene relative to expectations. It noted that its pretax margin estimate for the ACA business in 2026 is now 3% versus 4%, as its ACA silver population incurred higher-than-expected medical costs, but it also expects a larger risk adjustment receivable as a result. There was some interesting dialogue in the Q&A about whether fraud, waste and abuse efforts by states are creating “go gets” for plans and the dynamics there. Centene doesn’t appear to be seeing that, but also wouldn’t seem to mind if it did.
Tenet was up slightly after a strong Q1 earnings season which sets the stage for it to raise guidance after Q2. Tenet is ahead of pace deploying capital into ASCs — it acquired 7 ASCs for a combined $125 million in the quarter, along with opening three de novo locations. Tenet noted it saw an unfavorable payor mix shift as a result of the exchanges, although on the whole its managed care segment doesn’t appear to have changed all that much in terms of % of revenue. Tenet’s CEO noted on the call after a spate of analyst questions that there is clearly a desire from the investor community for more clarity on what’s going on with the underlying payor and acuity mix shifts across segments.
MUSING
Why is a Medicare Advantage plan CEO telling CMS to pay MA plans less?
Devoted Health’s CEO Ed Park was on stage at Medicarians for a rare public appearance, and he certainly caught my attention with the curious statement below:
I wish the government would just start paying MA plans less.
It comes from an interview with Med City News’ Arundhati Parmar, which is well worth watching in its entirety here. Lest you worry that this is taken out of context, Park followed up that sentiment by noting, “Please put the headline out there. We’re in for it.”
Ok, I’ll oblige.
Needless to say, I imagine the MA industry trade associations are scratching their head at this one. I find it particularly curious, given that I think a reasonable case could be made that Devoted should be the most worried of any MA plan about its profitability at the moment. Check out the fact pattern below:
Devoted Health grew its membership by 120%+ in 2026, to 466k lives in January. I believe this is the single highest growth rate for any MA plan in the industry this year?
Devoted’s Board Member Bob Kocher publicly predicted Humana would crash because of its excessive membership growth in 2026 (Humana grew ~20%). Many in the industry agreed with this prediction, given the losses associated with new members.
Endpoints noted this week that Devoted shrank in 2025 as it had to strategically adjust pricing and benefits. This comes after growing rapidly in 2024, presumably indicating it has struggled with this dynamic in the not-too-distant past.
By my math, Devoted’s current enterprise value being placed on each MA life is… high… compared to public comps:
Now, certainly Devoted’s leadership is well aware of all of those dynamics, too. Given all of that, what is going on here? Is Ed Park sharing his response to Zeke Emanuel by suggesting he is willing to sacrifice his company’s profits for better healthcare? I don’t think that is quite what is happening here.
After listening to the interview and connecting the dots with a recent newsletter musing about Devoted Medical Group’s hiring, I think the answer is this: Devoted views itself as a medical group that manages total cost of care better than anyone else because of its technology platform. It does not view itself as a Medicare Advantage plan, even though that is how it makes money today. Devoted Medical Group (enabled by its tech platform, Orinoco) is what will allow it to outperform the market, even, and perhaps particularly, in a deflationary market.
When I listen to Park talk in the interview above about how the MA plan is necessary to capture and manage the full healthcare dollar, I can hear that narrative emerge. If Devoted is successful here, in a few years, we won’t be talking about it as an MA plan; we’ll be talking about it as a new care delivery ecosystem that manages the entire healthcare dollar via any number of insurance products. The valuation seems indicative of that play — it seems to be valued in a way where the only successful outcome for recent investors is for it to remain an independent company and become a more modern version of UHG. That has to be the end goal here. It’s certainly an ambitious, moonshot-y idea.
Given that, I’d imagine Devoted thinks that a deflationary market actually increases the likelihood of achieving that vision, once you get past the oddity of hearing an MA CEO telling the government to pay it less.
CHART OF THE WEEK
Apollo shared a chart this week illustrating what it calls “the radiologist paradox”. As discussed on Slack, Apollo’s Chief Economist may have prioritized creating a chart that tells a specific story rather than the full story. Nonetheless, I find it worth pausing on it, given that the Chief Economist at one of the world's largest investment firms is choosing to tell this story:
I find the non-healthcare fascination with radiologists as a sort of “canary in the coal mine” of AI impacts to be quite interesting.
I also find the underlying story here even more interesting. Ben White made the case a few months ago in an excellent blog post that the radiology market dynamics have essentially nothing to do with AI and everything to do with the underlying supply/demand dynamics that have existed for decades. I think it makes for an interesting thought exercise to think about what that chart looks like over the next decade (on whatever axes you may choose to plot it on).
Other Top Headlines
Mark Cuban Cost Plus Drugs and Humana’s CenterWell Pharmacy announced a new partnership. On the one hand, this seems like a pretty straightforward partnership in which a startup struggling to gain market share teams up with a scaled player to leverage its scale. On the other hand, I must admit to being a bit confused as to how Cuban, who appears to view vertically integrated healthcare as the root of all problems in healthcare, could end up partnering with a vertically integrated insurer. Perhaps Cuban is simply too busy parroting populist tropes about healthcare on the speaker circuit to care — Cuban was just at yet another event this week where he apparently told lawmakers, “don’t be a wimp” and pass up the Break Up Big Medicine Act.
Cigna is exiting the ACA market in 2027 and is exploring strategic alternatives for eviCore. As mentioned on its earnings call, Cigna continues to streamline its core focus around specialty pharmacy and its employer business. Not hard to imagine the internal strategic conversations that led to this outcome, between the momentum in the specialty pharma/employer segments and the uncertainty around the ACA and prior authorization space. The commentary around eviCore was particularly interesting — with Cigna noting that the industry has made significant progress automating prior auths as a core driver. It sounds like eviCore's business model is evaporating, and Cigna noted that a partnership or “combination with other complementary industry participants” may emerge.
A handful of leading health system CEOs were called to DC this week for the standard dog-and-pony show before the Ways and Means Committee. Speaking were the CEO’s of HCA, CommonSpirit, New York Presbyterian, ECU Health, as well as the President of Protect Our Care. HealthcareDive did a nice job summarizing the conversation here, which seems to have been a pretty standard talk track on all fronts.
The Washington Post reported that CMS has conditionally approved Florida’s state-directed payment program. This topic was discussed on HCA’s earnings call last week, with HCA noting the potentially significant revenue upside associated with the approval. HCA seemed confident it would get done despite analyst questions about why it was taking so long.
HISTalk reported that OpenEvidence has withdrawn its clinical AI search product from the UK and EU markets due to regulatory uncertainty.
Funding Announcements
Aidoc, an AI imaging platform for health systems, raised $150 million. Growth Equity at Goldman Sachs Alternatives led the round. Aidoc is currently deployed in 2,000 hospitals worldwide, supporting clinical decision making for 60 million patients.
Photon, a marketplace for prescriptions, raised $16 million. Healthier Capital led the round. Hospitalogy did a nice job telling the bull case for Photon this week, focusing on rethinking the e-prescribing process dominated by Surescripts today.
Truentity, a network of community-based pharmacies, raised $3.5 million. Evidenced VC led the round. It sounds like Truentity is aligning with RHTP efforts to build care models for underserved communities via existing pharmacy infrastructure.
Koda Health, an advanced care planning software platform, announced an additional investment from UPMC as part of its recent $7m Series A round.
What I’m Reading
A RWJF article explores the growth in off-exchange plans, suggesting that they could outpace on-exchange plans next year. It argues that the growth in these plans is indicative of the insurer bullishness toward the ICHRA market
This JAMA perspective from some very smart authors (Alon Bergman, Bob Wachter, and Zeke Emanuel) explores how we could implement a new licensure framework for AI to help solve the regulatory crisis, by licensing AI like doctors versus evaluating it like a medical device.
Myoung Cha penned a nice look back at Tim Cook’s statement about Apple’s biggest impact being on health, and how he thinks it accomplished that, even in spite of never finding a P&L justification to support it.
Bloomberg highlighted the story of a healthy family that opted out of their employer's insurance offering because of the cost, instead choosing Zion Healthshare for the parents and moving the kids onto New York’s free CHIP offering.
The Virtue VC team shared its thesis about the opportunity in actuarial underwriting. I’d agree that there seem to be interesting opportunities to rethink underwriting across pharmacy, ACO, surgical episodes, medmal, and stop-loss.
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HTN Content from the Week
Community Brain Trust: Understanding newly analyzed perinatal mental health research, RTM documentation best practices, Q1 earnings coverage in Slack, and more. Read here.
Weekly Health Policy Briefing: As we watch Nebraska roll-out community engagement requirements, Devoted is navigating seemingly contradictory headlines, and Virtue hypothesizes about a new actuarial infrastructure layer. Read here.
The Grand Roundup: Q1 earnings, behavioral health market, Pair Team and Bold on ACCESS, future of MA brokers, Epic AI vs startups, AI prescribing, and more.
The state of behavioral health: demand, supply, direct-to-consumer, and emerging treatments | Alli Oakes (Trilliant Health)
AI and ACCESS: how Pair Team is scaling whole-person care to a broader population | Neil Batlivala
The evolution of MA brokerages: from volume to retention—and what’s next | Patrick Keavy & Rebecca Springer (Bailey & Company)
How ACCESS unlocks innovative digital care models for original Medicare | Amanda Rees (Bold)
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