CEOs of companies that benefited from the pandemic-driven boom in digital health and COVID-19 tests saw large rises in their compensation in 2020, while the heads of more traditional healthcare providers often experienced declines.
Amir Rubin, CEO of virtual primary care provider 1Life Healthcare Inc., topped a list of the 15 highest-paid U.S. healthcare provider and healthcare services CEOs in 2020 compiled by S&P Global Market Intelligence. Rubin earned $199.1 million in 2020, a year-over-year jump of 1,330%, of which all but $1.6 million consisted of stock options. The San Francisco-based company, which operates under the name One Medical, raised $281.8 million when it went public in January 2020, with its stock price rising nearly 98% by the end of the year.
Michael Pykosz of Medicare primary care provider Oak Street Health Inc. was another CEO from 2020's class of public market entrants to feature on the list of top earners. The third-highest compensated CEO on the list, Pykosz earned $73.5 million in stock awards, options and cash after a year that saw Oak Street's share price end 52.9% above its August 2020 debut.
Last year produced a record number of healthcare IPOs, with companies that utilize digital tools like telehealth or data and analytics as integral parts of their products faring well, and this trend has continued into 2021. The latest wave of IPOs has included telehealth and direct-to-consumer supplier Hims & Hers Health Inc., whose CEO Andrew Dudum took home $26.6 million — primarily in stock and options — for 2020, a year-over-year rise of over 10,000%.
Former athenahealth Inc. chief product officer Kyle Armbrester oversaw the public market debut of Signify Health Inc. — which uses data and analytics to connect providers virtually with patients — during the first quarter of 2021, raising $564 million. Armbrester's compensation rose 173.7% year over year to $15 million for 2020.
Other winners during the pandemic were healthcare services companies that produce COVID-19 tests, such as Laboratory Corp. of America Holdings and Quest Diagnostics Inc.
One Medical CEO Amir Rubin was the highest-paid U.S. provider and healthcare services CEO in 2020 according to S&P Global Market Intelligence data.
Source: One Medical
LabCorp CEO Adam Schechter saw his total adjusted compensation rise 160.4% to $14.7 million for 2020, with the company's share price rising 21.5% over the year. Quest CEO Stephen Rusckowski was not far behind, bringing in $14.1 million, a 39.2% year-over-year increase, which followed a more modest share price rise of 12.7% across 2020.
Helmy Eltoukhy, CEO of Guardant Health Inc., which provides blood tests and data sets to help detect cancer, ranked second on Market Intelligence's list with total 2020 adjusted compensation of $113.9 million — a more than 12,000% year-over-year increase — of which all but $300,000 consisted of stock awards. The company's remuneration committee agreed that these stock awards should take the place of Eltoukhy's base salary.
Hospitals' struggles reflected in CEO compensation
In contrast, CEOs of more traditional healthcare companies, such as distributors and hospital networks, saw their compensation drop as their businesses faced pandemic-related challenges on multiple fronts.
Tenet Healthcare Corp. CEO Ronald Rittenmeyer and Universal Health Services Inc.'s Alan Miller — who stepped down as CEO in January 2021 — saw their total adjusted compensations dip 31.3% and 46%, respectively, for a year in which the U.S. hospital groups drew on government funding to help cope with staffing shortfalls and canceled surgeries. Tenet's share price had still risen 4.1% by the end of 2020, while UHS ended the year down 3.4%.
HCA Healthcare Inc., the largest U.S. for-profit hospital company by market capitalization, faced similar challenges to UHS and Tenet, but CEO Samuel Hazen saw his total adjusted compensation rise 5.4% year over year to $18.1 million in 2020, with HCA's share price ending the year up 11.5%.
While executives at all three hospital companies have since noted recoveries during second-quarter 2021 earnings calls, a recent Kaiser Family Foundation and Epic Health Research Network report found that hospital admissions and utilization remained low through April. Additionally, a new wave of COVID-19 cases may lead to surgery cancellations and decreased visits once again, while UHS CFO Steve Filton warned that labor supply will be the "single biggest issue" for the company as infections rise.
CEOs of two major healthcare distributors, McKesson Corp. and Cardinal Health Inc., also saw their adjusted compensation fall as canceled elective procedures affected their lines of business. McKesson CEO Brian Tyler's adjusted gross compensation dropped 3.9% year over year to $14.8 million, while Cardinal's Michael Kaufmann saw his compensation fall 8.7% to $14.2 million in 2020.
AmerisourceBergen Corp. navigated similar challenges during 2020, but despite this and thousands of lawsuits faced by all three companies regarding the opioid crisis, CEO Steven Collis saw his compensation rise 26.4% year over year to $14.3 million. Most of the increase took the form of cash bonuses, which the company justified in a January regulatory filing by the company's outperformance in adjusted EPS, adjusted operating income and adjusted free cash flow, among other targets.