Highmark reports $150M net loss in 1st quarter, citing market volatility, inflation

Highmark Health reported a net loss of $150 million in the first quarter of 2022, driven by losses from the company’s stock market portfolio and increased costs at the company’s large hospital system, Allegheny Health Network.

Financial reports released by Highmark showed the company brought in $6.4 billion in revenue during the first three months of 2022, up about $1.5 billion compared to the first quarter of last year. In 2021, Highmark posted $22 billion in total revenue.

Highmark also posted a $100 million operating gain in the first quarter of 2022.

The Pittsburgh-based Highmark Health is made up of several companies. Highmark Chief Financial Officer Saurabh Tripathi said some of its subsidiaries — including United Concordia Dental, its health insurance provider Highmark Health Plan and its information tech service company enGen — all recorded profits and added about $200 million in earnings during the first quarter.

Tripathi said stock market volatility contributed to Highmark’s overall net losses in the first quarter. The company reported a $200 million loss in equity portfolio value.

Allegheny Health Network also reported operating losses of about $100 million in this year’s first quarter. Patient volumes in the first quarter remained fairly flat compared to the same span a year ago, with a 2% decrease in discharges and observations, a 14% increase in outpatient registrations excluding vaccination appointments, a 4% increase in physician visits and a 17% increase in emergency room visits.

“We are a constellation of companies, and overall we did really, really well,” said Tripathi. “But when you look at the provider side, there are some challenges, like inflation and costs associated with labor shortages.”

James Rohrbaugh, chief financial officer and treasurer of AHN, said the hospital system saw a lot of pressure from staffing shortage issues and led AHN to use contract employees to fill shortages. He said AHN is similar to most health care providers, which are dealing with increased costs caused by inflation and staff shortages.

“Like other not-for-profit health care providers across the country, AHN is facing ongoing cost pressures related to staffing, inflation, supply chain and continuing covid-19-related impacts, which we are proactively addressing through our operational and enterprise strategies,” Rohrbaugh said in a release.

Rohrbaugh added that AHN has made investments over the years to try to maintain competitiveness in the health care worker market, including boosting its nursing schools. He said AHN has several strategies to grow its labor pipeline.

“That work combined with the investments, we think, is positioning ourselves looking forward into the future,” Rohrbaugh said.

Highmark maintained a balance sheet with nearly $12 billion in cash and investments, as well as net assets of nearly $10 billion as of March 31, 2022.