Humana Stock Falls Despite Q2 Earnings Beat, Lowers Profit Forecast

Humana Inc reported a second-quarter adjusted EPS of $6.96, down from $8.94 a year ago and above the estimate of $5.85.

“This outperformance was driven by higher than anticipated revenue in our MA business, combined with favorable claims development and lower than planned administrative expenses, some of which is considered timing in nature,” according to the firm.

The company posted revenues of $29.54 billion, up from $26.75 billion and exceeding the estimate of $28.51 billion.

Higher per-member Medicare premiums, as well as greater enrollment in Medicare Advantage and state-based contracts, drove up sales.

Humana’s management team reported that revenue for the quarter was somewhat higher than expected due to membership growth and better member risk scores.

Humana had 16.3 million medical members at the end of the second quarter, a decrease from 17.13 million the previous year.

Medicare Advantage membership increased to 5.62 million from 5.27 million a year ago.

The benefit ratio rose to 89.0% from 86.3% the previous year, thanks to better-than-expected claims development and slightly higher member risk scores. This favorable outcome was somewhat offset by higher MA net inpatient costs.

Humana saw positive claims development in the quarter, owing to lower inpatient unit expenditures, observation stays, and greater claim recoveries.

This favorable trend was largely offset by higher-than-expected inpatient admissions in the second half of the quarter.

Humana increased its 2024 individual Medicare Advantage annual membership growth forecast by 75,000 to a new target of 225,000.

The company confirms 2024 adjusted EPS of ~$16.00, compared to the estimate of $20.31. Humana anticipates a benefit ratio of about 90% for the insurance segment in 2024.

“Looking ahead to 2025, we are focused on driving growth and further productivity across the enterprise to support sustainable earnings growth,” Humana said.

HUM stock is down 6.32% at $378.97 at the last check on Wednesday.

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