Talk about an industry that's in serious need of a doctor. The past week has been rough for health-care insurers, but intriguingly, the companies seem to suffer from different ailments.
Conventry lowered its guidance to $4.39 to $4.50 per share, from its prior forecast of $4.42 to $4.58 per share. The health insurer blamed higher costs from a strong flu season, and lower investment income because the Fed lowered interest rates. Even with the reduced guidance, Conventry expects at least a 10% increase in earnings-per-share growth over last year.
The whole industry has languished over the last week, amid earnings announcements that seem to have displeased Wall Street. Even Aetna
Only time will tell if the health insurance industry is headed for an extended bed rest, or if this is just a freak occurrence of multiple ailments happening simultaneously; I'd argue for the latter. While a recession might make it difficult for insurers to gain members as quickly as in an economic boom, I'm not sure the companies deserve the drastic share-price cuts they've suffered at investors' hands.