Humana’s Second-Quarter Earnings Surprised on the Upside, Beat Forecasts

Key takeaways

• Healthcare insurer Humana beat estimates on earnings per share and revenue
• The company also increased its forecasts on how many new customers it expects for the year
• The share price jumped 5.3% at the earnings beat, but Humana shares are only up 0.2% in 2023

Insurance provider Humana was a stock market darling last week after the company revealed it had smashed its EPS and revenue guidance, upgrading its new members’ guidance at the same time. Wall Street was happy with the result, but a headwind about increased costs potentially looms. Here’s the lowdown.

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What was Humana’s earnings beat?

Medicare Advantage insurer Humana impressed Wall Street last week with better-than-expected quarterly results. It reported adjusted earnings of $8.94 per share, based on revenue of $26.75 billion. The consensus estimate had been EPS of $8.76 on $25.83 billion in revenue.

The business also downgraded its GAAP earnings per share guidance to at least $26.91, down from at least $27.88, but adjusted EPS was the same. Humana also anticipates individual Medicare Advantage memberships to grow by 825,000 new members in 2023 instead of the previously forecasted 775,000.

There was slight concern over the medical loss or cost ratios that cover medical expenses payouts, which came in higher than anticipated. Humana’s ratio arrived at 86.6% for the second quarter, just squeaking past the estimated 86.5%.

How did Wall Street react?

Investors were happy with the second quarter earnings, with Humana’s share price climbing 5.3% at the beat. The share price has gained nearly 8% in the last five days.

It hasn’t always been rosy for Humana in 2023. Back in June, UnitedHealth Group’s CEO made some comments about seniors accessing healthcare services for surgeries they may have delayed from the pandemic — which costs insurers more in payouts. Humana was one of the trading day’s biggest losers on the S&P 500 after dropping 12%.

As a result of the fall, Humana’s been playing catch up ever since and the company’s share price is up just 0.2% this year to date.

The bottom line

The cost of backlogged surgeries is likely still a concern for the industry and investors alike, but for now, Humana is on top with its earnings beat. It was also good news for the share price after the disastrous June performance, but the same could happen again if investors’ fears come true.

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