Humana Reports Strong Q2 Earnings Beat

by Warren Seah

Humana, one of the largest Medicare Advantage insurers, has announced impressive second-quarter earnings. The company reported adjusted earnings of $8.94 per share on revenue totaling $26.75 billion, surpassing analysts’ expectations. Analysts had projected earnings per share of $8.76 on revenue of $25.83 billion.

Amid the successful quarter, Humana has revised its 2023 earnings guidance. The company now expects a minimum of $26.91 in GAAP earnings per share, down from the previous estimate of at least $27.88. However, their adjusted earnings-per-share guidance remains steady at a minimum of $28.25. Analysts forecast 2023 adjusted earnings per share to be $28.29.

Following this positive news, Humana’s stock has increased by 5.3%, reaching $482.36 in premarket trading on Wednesday.

Humana is optimistic about its future membership growth in the individual Medicare Advantage market. The company projects an increase of approximately 825,000 new members in 2023, up from their previous estimate of at least 775,000 new members in April.

Despite slightly higher-than-expected medical loss ratios, which measure the portion of premiums used to cover medical expenses, Humana remains confident in its outlook. In the second quarter, their adjusted medical loss ratio was 86.6%, slightly above the expected 86.5% and up from 85.8% compared to the previous year.

Investors closely monitored this metric after Humana reported a higher-than-anticipated utilization rate in categories such as emergency room visits and dental services in June. Despite the increased expense ratio due to seniors receiving outpatient care and returning home the same day, Humana remains optimistic about its future growth.

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