Humana Inc. (HUM) shares have plummeted 30.2% in the past month, driven by a downgrade in Medicare Advantage plan ratings. This has raised concerns about the company’s future profitability and member growth. Despite the decline, some investors see this as a potential buying opportunity. However, with rising costs, debt, and a bearish outlook, caution is advised.
Humana (HUM) reported better-than-expected Q1 results, with revenue growth of ~11% YoY to $29.6 billion. However, adjusted EPS fell ~23% YoY to $7.23 due to an increase in the benefit ratio, which rose to ~89% from ~86% a year ago. Despite this, the company reaffirmed its full-year EPS target of ~$16.00 and benefit ratio of ~90% for its insurance segment. However, it raised Medicare Advantage annual membership growth by 50,000 to 150,000. Humana also withdrew its previously issued 2025 guidance due to uncertainty surrounding Medicare’s recent final MA rate notice.
