Humana Lifts 2024 Profit Outlook As Q3 Earnings Beat Street View On Medicare Strength

Wednesday, Humana Inc HUM posted third-quarter adjusted EPS of $4.16, down from $7.78 a year ago, beating the consensus of $3.40.

The company reported revenues of $29.30 billion, up 14.7% year-over-year from $25.53 billion, beating the consensus of $28.67 billion, primarily driven by higher per-member Medicare premiums and Medicare Advantage and state-based contracts membership growth.

Humana ended the third quarter with 16.358 million in total medical membership, compared to 16.963 million a year ago.

Medicare Advantage membership reached 5.659 million, up from 5.374 million a year ago.

Also Read: Cigna And Humana Revive Early Merger Talks After Year-Long Pause As Medicare Cost Pressure Looms

The benefit ratio increased to 89.9% from 86.6% a year ago. The company, in its prepared remarks, said the benefit ratio was slightly better than expectations for the third quarter, driven by outperformance in CenterWell Primary Care.

The insurance segment benefit ratio reached 90.6% from 87.6%, in line with the company’s expectations, supported by slightly higher-than-anticipated member risk scores and in line medical costs in Medicare Advantage business, offset by higher-than-anticipated Medicaid medical costs.

Guidance: Humana raised its 2024 individual Medicare Advantage annual membership growth expectations by 40,000 to 265,000, driven by better-than-expected retention and non-DSNP sales compared to prior guidance of 225,000.

Humana Sees 2024 GAAP EPS of at least $12.89 versus prior guidance of approximately 12.81 compared to the consensus of $13.36.

The insurance giant expects adjusted EPS of at least $16 compared to prior guidance of around $16.00 and a consensus of $16.17.

The company states it is aiming for a Medicare Advantage margin target of at least 3%, though it acknowledges that reaching this goal by 2027 may now be more challenging due to the impact of the 2025 MA Star ratings.

For 2024, Humana reaffirms its insurance segment’s benefit ratio guidance of approximately 90%, with 91.5%-92% for the fourth quarter.

“We expect 2025 Adjusted EPS to be at least in line with final 2024 results inclusive of these investments, and provided our 2025 membership change is in line with current expectations,” Humana said.

Price Action: HUM stock is up 3.47% at $266.72 at the last check on Wednesday.

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Photo: T. Schneider via Shutterstock