The largest publicly traded health insurers grew profits by a combined 66% in 2019, driven by the massive mergers and acquisitions several of them completed the year before.
Those deals boosted the group of seven companies' collective net income to $35.6 billion, according to Modern Healthcare's analysis of company earnings reports. Combined revenue increased 31% over 2018 to $913 billion.
The combined growth of the companies' top and bottom lines was propelled by deals with businesses other than insurance, including pharmacies and pharmacy benefit managers. These deals, which have escalated in recent years as insurers have sought to exert more control over healthcare spending, have made it harder to categorize the companies as insurers. Their operations are becoming much more varied.
"There are so many places where costs come from—the PBM, the hospital, the doctor's office—and everything is separate from each other. The vertical integration is an attempt to control more pieces of the cost while also growing scale," said Deep Banerjee, an insurance industry analyst with S&P Global.
Even insurers are reluctant to label themselves as such as they branch out into new businesses. Cigna Corp. CEO David Cordani has said he prefers the organization to be known as a "health service company." Cigna acquired pharmacy benefit manager Express Scripts at the end of 2018.