Blue Cross and Blue Shield of North Carolina reported net income of $69 million and revenue of $11.9 billion in 2024, marking declines from the year earlier, the company said.
In 2023, the Durham-based not-for-profit insurer earned $136 million with revenue at $12.2 billion.
The results follow a May 2024 downward revision in Blue Cross’s outlook to negative by the Standard & Poor’s credit rating agency. It had been rated stable, but S&P says it expected the company’s operating income ratio would fall in 2024 below its long-term expectation of 2% to 4%.
Indeed, Blue Cross had a net income ratio of 0.6% in 2024, which includes investment results. It didn’t disclose its profit before interest and taxes.
“In a challenging environment, these results, just above break even, highlight our efforts to manage operating costs and help offset higher medical expenses and lower than anticipated investment returns,” Blue Cross said in response to a request for information about its results.
Claims and medical expenses increased 7.2% last year to $10.4 billion and 16% from 2023 results.
The company also said it had reserves equal to 3.3 months’ worth of medical claims and administrative expenses. While that is a decline from 5.3 months in the previous two years, Blue Cross said, “We remain a financially strong company.”
The insurer retains an A-plus rating from S&P, which the agency said reflects “its strong market position in the North Carolina health insurance market, well-recognized BCBS brand and long-standing local provider relationships.” The expansion of Medicaid in North Carolina also should benefit Blue Cross with as many as 130,000 new members in 2024-25, and expected improved financial performance in the segment, S&P said.
But Blue Cross faces challenges because it is concentrated in one state, which has an increasingly competitive marketplace, the agency added. It noted that about 17% of Blue Cross’ medical membership was tied to the State Health Plan for active and retired state workers. The plan is now administered by Aetna, which won the contract after a prolonged battle with Blue Cross, the incumbent insurer for decades.
Blue Cross’ profits are a fraction of the results posted by the state’s big hospital operators.
Charlotte-based Atrium Health said it booked a $705 million operating profit last year in its North Carolina and Georgia operations, which didn’t include its Atrium Wake Forest Health business in the Triad. The regional unit had revenue of $12.6 billion in 2024.
Winston-Salem-based Novant Health had $556.3 million in operating income last year, with revenue of $10.2 billion.
Blue Cross officials know they need to grow to stay relevant as the healthcare industry consolidates. They won state lawmaker approval last year to form a holding company, CuraCor Solutions, which CEO Tunde Sotunde expects to give it greater flexibility to diversify through investments and partnerships.
In addition to Blue Cross, CuraCor also owns FastMed, which operates more than 50 urgent and primary care clinics across the state, and two third-party administrative businesses.
At the end of 2023, Blue Cross covered 4.6 million members, with another 1.2 million members served on behalf of other Blue Cross health plans.
