Read today’s Kaiser Health News
About health insurance/insurers
With Medical Costs Up and Earnings Down, UnitedHealth Group Leaves PPOs Behind: With medical costs increasing much higher than expected and earnings falling far short of earlier projections, UnitedHealth Group executives announced during an earnings call [yesterday] that the company is exiting Medicare Advantage plans next year that currently serve 600,000 members, most of them organized as preferred provider organizations (PPO)
During the same call, a company executive announced that its Optum division would “cease arrangements” next year for about 200,000 patients in valued-based PPO.
Fitch revises UnitedHealth’s outlook to negative : Fitch affirmed UnitedHealth Group’s “AA-” rating July 30 but revised the company’s outlook to negative from stable.
Fitch said the revision reflects new information disclosed by UnitedHealth during its second quarter earnings call held July 29.
“The company provided guidance on its significantly diminished operating performance for the remainder of 2025, which suggests that it will meet its financial leverage downgrade sensitivities for the year, with a partial recovery expected in 2026,” Fitch said.
CVS posts $1B profit in Q2, raises annual outlook: CVS Health raised its annual earnings outlook following strong performance at Aetna and the pharmacy segment in the second quarter, according to the company’s July 31 financial report.
The company reported total revenue of $98.9 billion in the second quarter, up from $91.2 billion posted during the same period last year.
Net income was $1 billion, down from $1.8 billion during the same period last year.
The company raised its 2025 outlook, projecting an adjusted earnings per share of $6.30 to $6.40 from $6.00 to $6.20.
Cigna posts $1.5B profit in Q2: The Cigna Group reported a net income of $1.53 billion in the second quarter of 2025, compared to $1.55 billion during the same quarter last year, according to its July 31 financial report.
Total revenue was $67.2 billion for the three months ended June 30, up 11% year over year. Cigna said the increase was primarily driven by Evernorth Health Services and includes growth of existing client relationships and strong specialty pharmacy growth.
Adjusted income from operations was $1.93 billion, up 1% over the same period last year.
About hospitals and healthcare systems
Hospital drug expenses soar nearly 10%: Drug expenses for hospitals continue to soar as inflation, tariffs and more hit the pharmaceutical industry, according to Strata’s “Monthly Healthcare Industry Financial Benchmarks.”
The healthcare data firm surveyed leaders from more than 1,850 hospitals across the U.S. to compile financial information and trends. In June, drug expenses increased almost 10% over the same period last year. The impact of increasing drug expenses varied by region; hospitals in the Northeast reported 17.7% drug expense increases while the West reported a 14.7% jump.
Drug expenses growth is now outpacing labor and purchased service expenses. Average labor expenses increased 3.8% year over year while purchased services were up nearly 7%.
Despite the high year over year growth, average drug expenses dropped 4.8% nationwide from May to June.
About pharma
In latest Trump salvo, pharma giants face 60-day ultimatum on price cuts: President Donald Trump has ramped up his campaign against high prescription drug costs, sending letters to a slew of major pharmaceutical companies demanding they take steps to cut US prices to match international benchmarks within 60 days or face aggressive government intervention.
The letters, posted individually on Trump's social media platform, targeted 17 companies including AbbVie, Amgen, AstraZeneca, Bristol Myers Squibb, Boehringer Ingelheim, Eli Lilly, Gilead Sciences, GSK, Johnson & Johnson, Merck & Co., Merck KGaA, Novo Nordisk, Pfizer, Regeneron Pharmaceuticals, Roche via its Genentech unit, and Sanofi…
Trump's demands include four specific actions: extending MFN [most favored nation] rates to all Medicaid patients for existing drugs; guaranteeing MFN pricing for newly launched medications across Medicare, Medicaid and commercial payers; requiring companies to "repatriate" increased foreign revenues to lower US prices through explicit agreements with the US; and participating in direct-to-consumer or direct-to-business distribution models that eliminate middlemen.
Pharmaceutical costs expected to rise 3.35% in 2026: Vizient: Pharmaceutical prices are expected to rise by 3.35% in 2026, according to Vizient’s latest Spend Management Outlook report, released in July.
The report found that price pressures are easing in certain areas due to biosimilar competition, especially with respect to drugs such as Humira and Stelara. High-use inpatient medications are also expected to see price declines. Pediatric drugs are expected to have the highest inflation rate, at 3.93%, while prices in the self-administered medication segment dropped from 4.53% to 3.3%.
Long-term data on anti-amyloid mAbs show increasing benefits for Alzheimer's patients: Eisai and Eli Lilly presented long-term data on their respective Alzheimer's disease treatments at the Alzheimer's Association International Conference (AAIC) on Wednesday, suggesting that the potential for Leqembi (lecanemab) and Kisunla (donanemab) to protect against cognitive decline increases beyond the shorter timeframe used to win FDA approval for both drugs.
After three years, the degree by which Leqembi and Kisunla reduced cognitive decline roughly doubled, compared with 18-month results.
AbbVie in talks to acquire psychiatric pharma Gilgamesh in $1 billion deal: AbbVie is in talks to acquire mental health therapeutics company Gilgamesh Pharmaceuticals in a deal highlighting growing takeover interest in the sector, according to people familiar with the matter.
A potential deal could value privately held Gilgamesh at about $1 billion, the people said, asking not to be identified because the information is private. An announcement could be made in the coming weeks, the people said.
About healthcare IT
Illumina Inc. to Pay $9.8M to Resolve False Claims Act Allegations Arising from Cybersecurity Vulnerabilities in Genomic Sequencing Systems: lumina Inc. has agreed to pay $9.8 million to resolve allegations that it violated the False Claims Act when it sold to federal agencies certain genomic sequencing systems with cybersecurity vulnerabilities. Illumina is a Delaware corporation, headquartered in California, that manufactured and sold genomic sequencing systems throughout the United States.
Research: Gen AI Makes People More Productive—and Less Motivated: Our findings point to two contrasting outcomes of human-Gen AI collaboration:
Immediate Performance Boost: Gen AI enhanced the quality and efficiency of tasks. For instance, performance reviews written with gen AI were significantly longer, more analytical, and demonstrated a more helpful tone compared to reviews written without assistance. Similarly, emails drafted with gen AI tended to use warmer, more personable language, containing more expressions of encouragement, empathy, and social connection, compared to those written without AI assistance. This highlights how gen AI can help workers deliver outputs that are polished, engaging, and well-structured.
Psychological Costs: Despite the performance benefits, participants who collaborated with gen AI on one task and then transitioned to a different, unaided task consistently reported a decline in intrinsic motivation and an increase in boredom. Across our studies, intrinsic motivation dropped by an average of 11% and boredom increased by an average of 20%. In contrast, those who worked without AI maintained a relatively steady psychological state. This finding reveals a critical nuance to collaborations’ benefits: While using gen AI tools can feel productive and empowering at first, it may leave workers feeling less engaged when they shift to tasks that don’t involve AI support—a common reality in workflows where not every task can or should be AI-assisted.
About health technology
Baxter stock plunges as FDA scrutiny, lingering storm fallout damage outlook: Deerfield-based Baxter International is still feeling battered by Hurricane Helene and problems with its Novum infusion pumps as it decreased its full-year guidance for 2025 this morning, resulting in a stock plunge of as much as 20%.
Baxter expects sales growth on an operational basis of 3% to 4%, down from 2025 guidance of 4% to 5% issued last quarter. The company said in a press release this morning that it expects adjusted earnings from continuing operations, before special items, of $2.42 to $2.52 per diluted share.
