David Holmberg, president and CEO of Highmark Health.
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PITTSBURGH, Penn. – Executives at Highmark Health cited the solid performance of its HVHC, Inc’s Visionworks and Davis Vision businesses, part of its Diversified Businesses division, as the larger company announced last Friday its overall financial results and performance during 2015.

Highmark said that its Diversified Businesses, which also includes the HM Insurance Group and United Concordia, a leader in dental care, “continued to deliver strong operating margins in 2015, with combined earnings of $229 million, driven by near record performance in the vision business and a strong turnaround at HM Insurance Group.”

HVHC delivered revenues of $1.5 billion and an operating gain of $122 million. Visionworks, which operated 700 retail stores in 42 states in 2015, added 56 new stores last year in key metro markets such as Detroit, Michigan and the Boroughs of NYC and realized a 5.3 percent increase in comparable store retail sales. Davis Vision, the managed care component of HVHC, increased insurance enrollment by 1.9 million, putting it on track to provide coverage to more than 22 million members in 2016, the company said.

When asked to cite the factors leading to the Visionworks/Davis 2015 performance, David Holmberg, Highmark Health president and CEO, told VMail, “W’ve long been investing in rebranding the retail component of our business and now have 700 stores under that banner. That enabled several things, since we renovated all locations, repositioned the brand and could go to network advertising with a national profile. We see consumers and patients seeing the benefits of our integrated delivery and business platform in the vision space, as Davis brings members to our stores and our partners’.”

He added, “Visionworks continues to look at adding more locations, where are we going into new markets as well as being strategic about filling in. We’ve had a presence in metro NY for many years but we’re opening stores in Queens, Brooklyn and other boroughs now. In Seattle we’ve just begin to expand, benefitting our clients there, as well as in Detroit and Michigan overall which supports, among other things, the extension of our long relationship with the United Auto Workers.”

While Highmark Health, one of the largest insurance companies in the country, reported operating revenues of $17.7 billion for fiscal 2015, an increase of 5 percent over 2014 revenues, the company also reported a deficit of revenue over expenses of $85 million, holding results flat with prior year despite losses in the Affordable Care Act (ACA) business. The enterprise had net investment earnings of $294 million in 2015, an increase of $40 million over the prior year, and a gain of $249 million associated with the acquisition of BCNEPA.

These gains were offset by an operating loss of $565 million, attributable primarily to the performance of its ACA exchange products, which sustained a high level of medical costs for the duration of 2015, similar to the experience of many insurance carriers across the nation. Despite the ACA losses, the company continues to have a solid financial position, which includes $6.3 billion in cash and investments and net assets of $5.2 billion.

“Highmark Health is pleased with our strong, consistent year-over year financial performance despite the impact of the ACA population,” commented Holmberg. “We continue to invest in our core and growing businesses with nearly $500 million in capital investments in 2015 to improve health care quality and access for our members and other health plan members on our platform.

"Our strong retention in the commercial and senior insurance markets, near record earnings in two of the diversified businesses, and the continued volume growth at Allegheny Health Network accompanied by another year of progress made in its financial turnaround is encouraging. The western Pennsylvania market has recognized the quality and value that Allegheny Health Network offers and we expect this trend to continue as the regional market shifts due to the pending expiration of the Consent Decrees in 2019. We are confident that Highmark Health is well positioned for future growth and success.”

“We continue to make progress towards our goal of delivering an outstanding customer experience, all while maintaining a solid financial profile,” added Karen Hanlon, executive vice president and CFO. “We are committed to stabilizing our ACA line of business and early 2016 indicators are positive as we have already achieved what we believe is an appropriate level of membership in our ACA individual plans. We also continue to take steps to recover the estimated more than $500 million in risk corridor funding due to us and are focused on sustaining the positive growth trends in all of our affiliated businesses.”

The Health Plan performance in the commercial markets continued to be strong with a gain of $217 million, while the government market was significantly impacted by the ACA businesses, bringing the total health plan loss to $438 million for the year. Highmark Health continued to take a conservative position on the risk corridor reimbursement due from the federal government in 2015

Within the Diversified Businesses, the HM Insurance Group delivered operating gains of $69 million, a nearly 70 percent improvement over prior year. United Concordia, Highmark’s dental care provider, continued to focus on growth in 2015 while contributing $38 million in operating profits. In addition, the company was awarded the Tricare Dental Program contract as part of a 5 year, $2.9 billion contract, which is scheduled to begin in 2017.

United Concordia currently provides dental care to the TRICARE Active Duty Dental Program (ADDP), which serves active duty service members in the U.S. Air Force, U.S. Army, U.S. Coast Guard, U.S. Marine Corps, U.S. Navy, National Oceanic and Atmospheric Administration (NOAA) and National Guard and Reserve Component Sponsors.

Allegheny Health Network continues to make progress in its turnaround, executives said, both financially and in its quality of care, recording an operating loss of $36 million, which includes significant cost increases associated with capital investments being made in the system. Highmark Health’s information technology services company, HM Health Solutions, which is focused on meeting the platform and technology needs of the Highmark Health enterprise as well as other health insurance plans, reported an operating gain of $7 million.

HM Health Solutions currently has 8.3 million members on the insurance platform, a 36 percent increase since 2010, and is on track to add an additional 2.1 million members by early 2017.