Humana (NYSE: HUM) shares rose premarket Wednesday following a strong first-quarter performance. The health insurer reported a better-than-expected top line, with revenue expanding ~11% year-over-year (YoY) to $29.6 billion. This growth was primarily driven by increased premiums and membership in its Medicare Advantage (MA) business. However, Humana’s adjusted earnings per share (EPS) decreased by ~23% YoY to $7.23, primarily due to a rise in the benefit ratio. The benefit ratio, which measures the proportion of premium revenue spent on medical benefits, increased to ~89% in Q1 2024 from ~86% in the prior-year quarter. Despite this, Humana maintained that its benefit ratio was in line with expectations for the quarter.
For the full year, Humana reiterated its adjusted EPS target of ~$16.00 and benefit ratio of ~90% for its insurance segment. However, it raised its Medicare Advantage annual membership growth target by 50,000 to 150,000. This reflects the company’s continued focus on expanding its presence in the MA market, which is expected to grow significantly in the coming years.
However, Humana withdrew its previously issued 2025 guidance of $6–$10 for adjusted EPS growth. This decision was attributed to uncertainty surrounding Medicare’s recent final MA rate notice, which Humana believes was insufficient to cover rising medical costs. The company stated that it would provide more specific guidance for 2025 once it has greater clarity on the impact of the new MA rate structure.
Overall, Humana’s Q1 results were mixed. While the company exceeded expectations on the top line, the decline in EPS and the withdrawal of 2025 guidance raised concerns among investors. The market will likely continue to monitor Humana’s performance closely, particularly as it relates to the impact of Medicare’s recent MA rate notice and the company’s ability to manage its benefit ratio.
