Humana (HUM) reported first quarter earnings that topped Wall Street expectations Wednesday, helping drive shares 5% higher in premarket trading.
The healthcare company beat on adjusted earnings per share of $11.58, compared to Wall Street’s estimates of $10.09. Revenue came in at a slight miss of $32.11 billion, just under the consensus of $32.15 billion.
Humana results stayed in line with its own expectations, and it reaffirmed its full-year guidance. The company expects its medical loss ratio — the ratio of premiums taken in versus paid out — to be between 90.1% to 90.5% for the year.
While that is on the higher side of the Affordable Care Act’s required threshold of 85%, Humana said that it’s confident in its pricing strategies and that the Medicare Advantage spend is in line with expectations.
CEO Jim Rechtin said in on an earnings call Wednesday that the company is doing well with the items within its control.
“The best way to describe where we are in this moment is while there are challenges to navigate, there are no surprises,” Rechtin said.
Humana is one of the larger Medicare Advantage providers, and its quarterly report has been on investors’ watchlist after UnitedHealth Group’s (UNH) earnings miss earlier this month, which was in part related to higher costs in its Medicare Advantage book than expected. That impacted Humana’s stock as well, which sank more than 12% on April 17. It did not fully recover from that and was up only about 6% at the end of trading on Tuesday.
Humana has also faced other headwinds in its Medicare Advantage business, including losing the most star ratings among its peers this year. This means it could get lower revenue from Medicare payments and will likely see a loss of members as the plans’ ratings go down — the company is currently engaged in a lawsuit over these ratings.
Humana has about 18% of the Medicare Advantage market, while UnitedHealth boasts 29%. The third largest is CVS (CVS) at 12%, with its Medicare Advantage plans under Aetna. CVS reports earnings on May 1.
The company is focused on expanding CenterWell, its health services and mail-order pharmacy business unit. Humana said NovoCare, the online pharmacy for Novo Nordisk (NVO), was chosen as part of Novo’s latest effort to dispense the blockbuster weight-loss drug Wegovy directly to cash-paying patients.
Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. That includes GLP-1s, of course. Follow Anjalee as AnjKhem on social media platforms X, LinkedIn, and Bluesky @AnjKhem.
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