Humana reports grim 2024 forecast due to soaring medical costs

Signage is displayed on a Humana Inc. office building in Louisville, Kentucky, U.S., on Sunday, Feb. 3, 2019. Humana is scheduled to release earnings figures on February 6. Photographer: Luke Sharrett/Bloomberg via Getty Images

Bloomberg | Bloomberg | Getty Images

Shares of Humana plummeted on Thursday after the health insurer issued dismal full-year earnings guidance, citing soaring medical costs that are dogging the broader insurance industry.

Those expenses have spiked as an increasing number of older adults return to hospitals to undergo procedures they had delayed during the pandemic, such as joint and hip replacements. 

Humana, which primarily provides government-backed insurance through the Medicare Advantage program, expects adjusted earnings of about $16 per share for 2024. That’s a little more than half of the $29.10 per share that analysts expected, according to LSEG, formerly known as Refinitiv. 

The guidance adds to Wall Street’s concerns about health insurance company profits falling as medical costs jump. UnitedHealth on Friday also reported its own jump in medical costs, though it was less extreme than Humana’s.

Humana shares plunged more than 10% on Thursday.

Its forecast dragged down other health insurance stocks. Shares of both UnitedHealth and CVS Health fell more than 6% and 4%, respectively. Cigna’s stock and Centene shares both slid about 4%.

Elevance Health also fell 2% on Thursday. But unlike Humana, the insurer forecast 2024 earnings above estimates on Wednesday, after higher premiums in its commercial business helped control medical costs in the fourth quarter.

Expectations for Humana’s 2024 earnings guidance were already low after the company warned last week that medical costs were running higher than expected in the fourth quarter. It signaled that higher expenses could cut into its profits in the year ahead. 

Humana confirmed that pessimism on Thursday. It reported a medical benefit ratio – the percentage of payout on claims compared with premiums – of 90.7% for the fourth quarter. Analysts had estimated that the ratio would be 89.7% for the period, according to LSEG.

The insurer cited an increase in outpatient services, such as orthopedic surgeries, and a swell in inpatient care in November and December among patients enrolled in Medicare Advantage. 

Medicare Advantage plans are privately run versions of the federal government’s Medicare program, mostly for people age 65 and older. Those plans are one of Humana’s biggest forms of coverage outside insurance it provides for military families and retirees.

Humana posted fourth-quarter revenue of $26.46 billion, which beat analysts’ estimate of $25.42 billion, according LSEG data. 

But the company posted a loss of $591 million, or $4.42 per share, in the fourth quarter. That compares with a loss of $71 million, or 12 cents per share, during the same period a year ago. 

Excluding certain items, Humana reported a loss of 11 cents per share. Analysts had expected the company to post earnings of 15 cents per share, according to LSEG.

FOLLOW US ON GOOGLE NEWS

Read original article here

Denial of responsibility! Secular Times is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – seculartimes.com. The content will be deleted within 24 hours.

Leave a Comment