Insurance Firm Humana Shares Fall After Q3 Performance - Here's Why

Humana Inc HUM reported Q3 adjusted EPS of $7.78 compared to $7.31 a year ago, beating the consensus of $7.16.

The insurer reported revenue of $26.42 billion, up from $22.78 billion a year ago, missing the consensus of $25.55 billion.

Sales increased on individual Medicare Advantage and state-based contracts membership growth and higher per member individual Medicare Advantage premiums.

Humana's individual Medicare Advantage enrollment was 5.37 million at the end of the third quarter, up 17.8%. Total Medical Membership decreased slightly by 0.8% to 16.96 million.

In the third quarter, Humana's profits fell 30% to $830 million.

Humana reported a benefits expense ratio of 86.4% for the quarter, up from 85.3% a year earlier. 

Citing Morningstar analyst Julie Utterback, Reuters noted that shares fell on disappointing that Humana did not increase its full-year guide despite a strong quarter.

The company's caution relates to elevated demand for non-urgent surgeries that has affected the insurance industry and may constrain Humana's Q4 results, Utterback added.

Guidance: Humana reaffirms adjusted EPS guidance of at least $28.25 versus the consensus Of $28.3.

Humana sees FY23 GAAP EPS of 'at least $26.31' from 'at least $26.91' prior.

Sees FY23 Insurance segment benefit expense ratio of around 87.5% versus 86.3%-87.3% expected earlier.

The company sees FY23 year-end medical membership Individual Medicare Advantage Growth of around 860,000 versus growth of approximately 825,000 expected earlier.

Price Action: HUM shares are down 3.91% at $503.21 on the last check Wednesday.