Humana Inc. (HUM) delivered a strong performance in the third quarter, exceeding analysts’ expectations on both earnings and revenue. The company reported adjusted earnings per share (EPS) of $4.16, surpassing the consensus estimate of $3.40. Revenue came in at $29.30 billion, a 14.7% increase year-over-year and exceeding the $28.67 billion consensus forecast. This growth was primarily driven by higher per-member Medicare premiums and a surge in Medicare Advantage and state-based contract memberships.
Humana’s Medicare Advantage membership reached 5.659 million, a significant increase from 5.374 million a year ago. However, the company’s total medical membership declined to 16.358 million from 16.963 million in the same period last year. Despite the decline, Humana’s performance was bolstered by a higher benefit ratio, reaching 89.9% compared to 86.6% a year ago. The company attributed this improvement to strong performance in its CenterWell Primary Care segment.
Looking ahead, Humana has raised its 2024 guidance for individual Medicare Advantage annual membership growth. The company now expects growth of 265,000 members, up from its previous guidance of 225,000. This upward revision is attributed to better-than-expected retention rates and non-DSNP sales. Humana anticipates GAAP EPS of at least $12.89 for 2024, compared to prior guidance of around $12.81. The company also expects adjusted EPS of at least $16, exceeding its previous guidance of $16.00.
However, despite these positive developments, Humana acknowledged challenges to its Medicare Advantage margin target. The company aims for a margin of at least 3%, but the impact of the 2025 MA Star ratings could make reaching this goal by 2027 more difficult.
Humana remains optimistic about its future prospects, and its strong performance in the third quarter highlights its commitment to growth in the Medicare Advantage market. The company’s ability to navigate the evolving healthcare landscape and achieve its financial objectives will be key to its continued success.
