Delta Dental’s $7.4M Loss Tied to Tech Upgrade

Delta Dental (Madison Ogle)

Delta Dental Plan of Arkansas Inc. reported a loss of $7.46 million for 2024, but most of that is tied to a project to overhaul its technology systems that started in the summer of 2022.

The extensive $25 million project included changing the claim, eligibility and payment systems of the dental insurance nonprofit, based in Sherwood, said Debi Lowtharp, vice president and CFO. The project finished in the summer of 2024, she said.

“We actually had a gain of about $5.5 million from our operations, which is what we primarily focus on,” Lowtharp said.

She said Delta Dental changed its technology system to Delta on Demand, which is owned by Delta Dental of Washington, “because their strategic, forward-thinking technology seemed to follow in our footsteps of what we’re thinking.

“We want to get more into our customer experience, making it easier for our customers to do business with us, making it easier for brokers to do business with us, and also ensuring that we serve our customers in the best way we can,” she said.

Lowtharp said that she expects Delta Dental to see an operational gain of about $5.5 million in 2025.

Delta Dental also saw its revenue drop in 2024, according to its financial statement on file with the Arkansas Insurance Department. Its revenue fell 4.2% in 2024 to $211.69 million and is off from a recent high of $225 million in 2022.

Delta Dental’s revenue was hurt by the loss of an Arkansas Department of Human Services contract that ended on Nov. 1 and served 295,000 members. For seven years, Delta Dental and Managed Care of North America held the dental managed care contract.

Delta Dental Plan of Arkansas Inc.
Revenue, Net Income

(Sources: Financial statements from Delta Dental Plan of Arkansas Inc. on file with the Arkansas Insurance Department)

But in June, DHS said in a news release that it was ending its Medicaid managed care dental program. Beneficiaries who qualify for dental coverage now are served by a Medicaid fee-for-service program.

“DHS has determined that fee-for-service for Medicaid dental services is both the best and most cost-effective option at this time,” DHS Secretary Kristi Putnam said in the release.

Beneficiaries who were served by the managed care dental program will continue to be eligible for dental services, but DHS will administer the program instead of Delta Dental and MCNA.

“We were pretty disappointed in the state’s decision to rescind the contract,” Lowtharp told Arkansas Business.

She said that in the spring of 2024, DHS had awarded the contract to four carriers, even though Delta Dental scored the highest. “The state ultimately decided that they were going to pull that back in-house and handle it themselves, instead of managed care through carriers,” Lowtharp said.

The contract was worth about $65 million annually, said Dave Hawsey, a spokesman for Delta Dental.

Delta Dental has about 2.2 million members nationwide, with just under 782,000 members who live in Arkansas.

In 2024, Delta Dental also contributed $2.6 million to its Delta Dental of Arkansas Foundation. Lowtharp said the gift to the foundation is “to further our overall mission, which is improving the oral health of all Arkansans.”