Humana raises Medicare Advantage outlook despite recent headwinds

Humana (NYSE:HUM) increased its annual membership guidance for its Medicare Advantage business with its Q3 2024 financials on Wednesday despite facing a series of setbacks for the segment this year.

The company, the second largest operator in the MA market after UnitedHealth (UNH), revised its outlook to indicate roughly 265K or 5%, growth in individual 2024 MA membership for 2024 compared to approximately 225K, or ~4%, it projected with its Q2 results in July.

Humana (NYSE:HUM) shares have lost ~43% this year, becoming one of the worst performers among its managed care peers as its MA business faced several headwinds.

The Louisville, Kentucky-based company was forced to lower its outlook twice in January due to higher-than-expected costs in its MA business. Early this month, HUM shares plunged to a 52-week low after indicating a sharp decline in membership enrolled in its top-MA plans for next year.

However, its Q3 results offered some hope. HUM’s revenue for the quarter climbed ~11% YoY to $29.4B, beating Street forecasts by $750M, as its insurance revenue added $28.4B to the topline with ~11% YoY growth.

Meanwhile, in line with consensus, the company’s benefits expense ratio, the share of premiums paid out for medical expenses, rose to 89.9% from 86.6% in the prior year period, and the company’s per-share earnings on a non-GAAP basis fell ~47% YoY to $4.16.

However, Humana (HUM) reiterated its insurance segment’s benefit ratio of ~90% while updating its earnings outlook to reflect “at least $16.00” in non-GAAP earnings per share compared to “about $16.00” previously and $16.16 in the consensus.