The country's five largest insurers released their second quarter earnings in late July and early August, revising their 2012 projections, for better and worse.
Wellpoint and Humana both cut their projected earnings, while Aetna, Cigna and United Health Group each upped their profit forecasts. The companies showed signs of interest in growing Medicare and Medicaid markets, which were also sources of growing pains for some.
UnitedHealth Group
UnitedHealth Group posted second quarter earnings of $1.34 billion, up 5.5 percent from $1.27 billion a year earlier.
The nation's largest insurer with some 70 million members in its United Healthcare division, UnitedHealth Group raised its 2012 earnings estimate by about $0.10, to between $4.90 and $5 a share.
[See also: UnitedHealthcare snaps up two Florida Medicare Advantage companies]
In the past year, the company saw an 18 percent increase in its Medicare Advantage members, along with growth in expanded Medicaid services.
In July, after some legal wrangling, UnitedHealth Group secured a five year $20.5 billion contract with the Pentagon to provide insurance to nearly three million active and retired military personnel and their families.
WellPoint
The nation's second largest insurer, WellPoint, posted second quarter profits of $643.6 million, down 8 percent from $701.6 million a year earlier.
The company reduced its 2012 earnings outlook by about $0.25 a share, to a range of $7.30 to $7.40.
Executive VP and CFO Wayne S. DeVeydt in part blamed rising medical costs for outpatient and physician visits.
WellPoint had 33.5 million members in its medical plans as of June 30, a number set to grow with its pending $4.9 billion acquisition of Amerigroup, which has some 2.7 million Medicaid members in more than a dozen states. Amerigroup recently secured a contract to run a managed care organization for Kansas Medicaid beneficiaries -- a move, pending federal approval, the industry as a whole may be watching.
"We think there's organic growth opportunities in the Medicaid business independent of the Medicaid expansion," WellPoint president and CEO Angela Braly said in a conference call.
[See also: WellPoint to acquire managed care specialist Amerigroup for $4.9 billion]
Indeed, some analysts think many payers are mulling expansions in Medicaid and Medicare.
"Medicaid is going to be a big growth market for the big health insurers," Edward Kaplan, a senior vice president of the Segal Company, told The New York Times DealBook blog, after Wellpoint announced the Amerigroup acquisition in early July.
The Medicare Advantage market is growing too thanks to retiring baby boomers, potentially prompting a race of sorts, noted Zacks Investment Research in a health insurance stock outlook.
Aetna
Aetna's second quarter earnings fell to $457.6 million, down nearly 15 percent from $536.7 million a year ago.
Still, the company upped its yearly forecast, expanding its earnings range by $0.10 a share, to a high of $5.10, with Mark Bertolini, Aetna CEO and president, citing growing membership and revenue.
[See also: Aetna adds Memorial Hermann to network of Medicare advantage hospitals in Houston]
Aetna recently won contracts to administer health benefits for Missouri Medicaid members and Maine state employees, and won a Medicare Advantage contract for the Texas Teacher Retirement System.
The company's medical membership increased in the second quarter by 114,000, to just over 18 million.
Humana
Humana took the biggest dive, posting earnings of $356 million, down nearly 23 percent from $460 million a year earlier.
In part blaming costs associated with new Medicare Advantage members, Humana lowered its earnings estimates for the year by about $0.40 a share, to between $6.90 and $7.10.
[See also: Humana turns to multimedia program for diabetes self-care]
Those "short-term operational challenges" aside, CEO Michael McCallister said the company wants to expand Medicare membership long-term. He said in a conference call that "Medicare Advantage membership growth significantly exceeded expectations in 2011 and 2012."
But those Medicare members came wth higher than anticipated benefit ratios and medical costs -- a potential sign of financial challenges across the industry for payers expanding their Medicare enrollment.
Cigna
Cigna was the last of the big five to announce second quarter earnings, and had the smallest percentage decrease in earnings compared to a year ago, reporting second quarter earnings of $380 million, down just under 3 percent from $391 million a year ago.
With medical membership now at 13.8 million, up 1.2 million from a year ago, Cigna has been sliding into the Medicare market, with a $3.8 billion acquisition of HealthSpring in January.
[See also: Cigna bets 3.8B on Medicare market]
Cigna upped its 2012 forecast by about $0.25 a share, to a range of $5.25 and $5.60.
"Cigna's results look good enough to please, particularly given the mixed bag of results reported by industry peers thus far," Susquehanna analyst Chris Rigg told Dow Jones.