Highmark Health sees $551M gain at midyear

Pittsburgh Post-Gazette

Highmark Health on Monday reported a $551 million net income — including $502 million in operating profit — on nearly $9.4 billion in operating revenue for the first six months of 2018.

The $9.4 billion represents $200 million more in revenue than for the first six months of 2017, due largely to a near $45 million operating gain in the first full year of servicing a fiveyear, $2.9 billion Tricare dental contract that covers 1.8 million U.S. military families worldwide.

Other Highmark Health subsidiaries showed gains as well:

The company’s information technology platform, HM Health Solutions, had $29 million in operating revenue, up from $5 million the previous year.

Highmark Health’s health care provider arm, Allegheny Health Network, recorded $24 million in operating revenue, up from $11 million for the first six months of 2017. AHN now has posted five consecutive quarters of positive operating margins.

The overall results demonstrate “we have a solid strategic plan in place that we continue to see working inside and outside our core markets,” said president and CEO David Holmberg during a telephone media briefing Monday morning. He noted that ratings agencies seem to agree, pointing to recent upgrades by Standard & Poor’s, AM Best and Moody’s.

Collectively, Highmark Health’s various business divisions recorded a near 6 percent operating margin.

Highmark’s health insurance division did see a dip in commercial business revenue, dropping from $196 million a year ago at the half-year point, to $155 million this year as more companies transitioned to selfinsured plans administered by Highmark.

Revenue from its diversified businesses also dropped, from $95 million to $82 million, due mainly to the sale of Davis Vision late last year and what officials described as “the slow recovery in the retail sector.”

Highmark Health officials said they had a 96 percent renewal rate last month in commercial health plan markets in Pennsylvania, West Virginia and Delaware, with a similar renewal rate locally where they compete directly with Pittsburgh-based rival UPMC.

Since 2014, Mr. Holmberg said, Highmark members’ medical spending within the Allegheny Health Network has increased from 17 percent to 31 percent of their total spending.

Highmark’s government