Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

CVS Health, Centene lead health insurers lower after 2023 Medicare ratings

Published 10/07/2022, 12:52 PM
Updated 10/07/2022, 01:26 PM
© Reuters. FILE PHOTO: CVS Health logo is seen displayed in this illustration taken, May 3, 2022. REUTERS/Dado Ruvic/Illustration

(Reuters) -Shares of drugstore operator CVS Health (NYSE:CVS) fell as much as 10% and insurer Centene (NYSE:CNC) slumped 8%, leading declines in major U.S. health insurers after performance ratings for health insurance plans from a federal government program were released.

CVS' largest health insurance plan for Medicare recipients received a lower performance rating, the company said on Thursday, leading to more than $11.6 billion being wiped off its market value by 11:30 a.m. ET on Friday.

The company's shares have fallen more than 13% this year.

Centene, which has fallen more than 10% this year, also lost $3.5 billion of its market value by 11:30 a.m. ET.

Year-over-year declines in Star Ratings were expected due to expiry of the one-time COVID-specific disaster relief program, Oppenheimer analysts said, adding that CVS and Centene were among the biggest decliners.

"CVS will not reduce benefits to offset the impact, meaning the company will fully absorb the 5% margin hit from lost quality bonus payments," according to J.P. Morgan analysts.

© Reuters. FILE PHOTO: CVS Health logo is seen displayed in this illustration taken, May 3, 2022. REUTERS/Dado Ruvic/Illustration

Health insurers UnitedHealth Group (NYSE:UNH), Cigna Corp (NYSE:CI), Elevance Health, Alignment Healthcare and Humana Inc (NYSE:HUM) also fell between 1% and 3%.

The downward shift in Star Ratings will present sector-wide revenue headwind in 2024, Stephens analysts said, adding that a sharp reduction in Centene and CVS members in 4+ Star plans for 2023 will lead to operational hurdles for both the companies.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.