We’re taking a look at some of the major companies reporting earnings in the week of October 28 – November 1, across a variety of sectors. Managed Care providers Humana and Cigna reported significant growth, driven by their health insurance offerings. The eHealth space saw Teladoc Health and American Well Corp. navigating competitive pressures and market shifts, highlighting the dynamic nature of digital health. Meanwhile, Stryker Corp.‘s strong earnings performance in the Medical Devices segment contrasted with Avanos Medical‘s struggle with cost pressures. These earnings reports offer a comprehensive view of the healthcare industry’s current performance and future direction.
Managed Care
Humana exceeded earnings expectations during the third quarter of 2024, with $29.4 billion in revenue, an 11.4% increase over Q3 2023. The company’s performance was driven by its Medicare Advantage business and CenterWell Primary Care. However, Humana faced challenges in the form of rising benefit expense ratios and higher-than-anticipated Medicaid medical costs, indicating some underlying pressures.
Additionally, Humana CEO Jim Rechtin informed investors during the earnings call on October 30 that the company is working on addressing issues with its star ratings performance. Humana revealed a significant decrease in its star ratings for 2025, with only 25% of its members enrolled in plans rated at least four stars. This decline was primarily due to a major contract dropping from 4.5 stars to 3.5 stars. The company is investing in improvements to enhance its future ratings.
Cigna delivered strong financial results, with total revenues of $63.7 billion, a 30% increase compared to Q3 2023. The company’s adjusted income from operations was $2.1 billion, or $7.51 per share, exceeding Wall Street expectations. This performance was driven by significant expansions within Evernorth Health Services, particularly in Specialty and Care Services, as well as an increase in customer relationships, which rose by 12% to 183.5 million.
The Managed Care industry on the whole faces significant hurdles. Rising healthcare costs, increased competition and evolving regulatory landscapes are putting pressure on companies to maintain profitability. The shift towards value-based care, while offering opportunities for innovation and improved patient outcomes, also presents significant concerns in terms of risk management and cost control.
The Managed Care industry is at a crossroads. While there are opportunities for growth and innovation, companies must navigate a complex and uncertain environment. To succeed, they must focus on cost containment, operational efficiency and the development of innovative solutions to address the evolving needs of patients and providers. The recent earnings reports of Humana and Cigna reflect both the potential and the challenges facing the Managed Care market, highlighting the need for strategic adaptation in this dynamic landscape.
eHealth
The eHealth sector continues to experience significant growth, driven by the increasing adoption of digital health technologies and the shift towards virtual care. Recent earnings reports from Teladoc Health and American Well Corp. offer a revealing look into the current state of the eHealth and telehealth sectors.
Teladoc Health reported revenues of $640.5 million, a 3% decrease compared to the same period in 2023, and a net loss of $33.3 million, or $0.19 per share. This marks an improvement from the $57.1 million net loss in the previous year. The company’s Integrated Care segment saw a 2% increase in revenue to $383.7 million, while the BetterHelp segment experienced a 10% decline to $256.8 million. International revenue grew by 15% to $104.3 million, whereas U.S. revenue declined by 6%. Adjusted EBITDA decreased by 6% to $83.3 million.
American Well Corp. reported total revenue of $61 million, which was nearly the same as the revenue in the year-ago quarter. Subscription revenue was $26.2 million, down 5% from the last quarter. Visit volume was approximately 1.4 million visits, a 4.6% decrease from a year ago, while average revenue per visit increased by 7% to $83. The company’s gross profit margin remained flat at 37%, and adjusted EBITDA was negative $31 million, an improvement from negative $35 million last quarter.
These earnings reports highlight several key trends and challenges facing the eHealth and telehealth markets. Both companies faced revenue issues, with Teladoc experiencing a slight decline and American Well’s revenue remaining flat, indicating ongoing market saturation and competitive pressures. Teladoc’s Integrated Care segment showed growth, while its BetterHelp segment declined, suggesting a shift in consumer preferences and the need for diversified service offerings. Teladoc’s international revenue growth highlights the potential for expansion in global markets, which could be a strategic focus for other telehealth companies.
Both companies are focusing on cost management and efficiency improvements, as seen in American Well’s improved EBITDA guidance. Teladoc’s CEO emphasized the importance of 2025 as a pivotal year for repositioning and long-term value creation, indicating a strategic shift towards sustainable growth and market leadership. The recent earnings reports of Teladoc Health and American Well Corp. underscore both the growth prospects and hurdles facing the eHealth and telehealth market, highlighting the need for strategic adaptation and innovation.
Medical Devices
Recent earnings reports from Stryker Corp and Avanos Medical have shed light on the broader Medical Devices market.
Stryker Corp, a leading medical device company, showcased substantial growth with net sales climbing by 11.9% to reach $5.5 billion, driven by both increased unit volume and higher prices. The company also succeeded in expanding its operating margins and earnings per share, reflecting strong performance across its diverse product lines. Key financial highlights include a reported operating income margin of 19.7%, while the adjusted operating income margin rose by 130 basis points to 24.7%. Earnings per share (EPS) saw a significant boost, with reported EPS up by 20% to $2.16 and adjusted EPS rising by 16.7% to $2.87.
Stryker’s MedSurg and Neurotechnology segment led the charge with a 12.8% sales increase, followed by a 10.7% rise in Orthopaedics and Spine sales. Looking forward, Stryker remains optimistic about its growth trajectory, setting a target for full-year organic net sales growth between 9.5% and 10.0%. The company expects adjusted net earnings per share to be in the range of $12.00 to $12.10, buoyed by continued demand and strategic product innovations.
Meanwhile, Avanos Medical reported a slight increase in net sales but faced hurdles in its operating margins due to increased costs and competitive pressures. Avanos Medical’s net sales grew by 3.2% to $450 million, with the Advanced Wound Care segment leading the growth with a 4.5% increase in sales. However, the company’s adjusted operating income margin declined by 50 basis points to 15.2%, reflecting the impact of higher costs and pricing pressures. Despite these hurdles, Avanos Medical remains focused on its strategic initiatives to drive growth and improve profitability.
The contrasting performance of Stryker Corp. and Avanos Medical highlights the diverse dynamics within the Medical Devices market, which has been impacted by a variety of factors, including supply chain disruptions, regulatory obstacles and changing reimbursement policies. Stryker’s strong growth and margin expansion underscore the company’s ability to innovate and capture market share, while Avanos Medical’s challenges reflect the competitive and cost-sensitive nature of the industry. The Medical Devices market continues to show resilience and growth potential, driven by technological advancements and increasing demand for medical solutions.
As the earnings season wraps up, key trends across Managed Care, eHealth and Medical Devices point to both evolving opportunities and mounting pressures. Companies are sharpening their focus on operational efficiency, cost control and strategic investments to maintain growth. Looking into the next quarter, the healthcare industry’s ability to navigate these challenges while seizing innovation-driven opportunities will be critical to sustained success in a rapidly shifting healthcare landscape.
