Humana (NYSE:HUM) shares dipped 13% to its lowest levels since February 2022 after the health insurer revised its annual profit outlook citing higher-than-expected medical costs.
The company now expects $26.09 in adjusted earnings per common share for the year ended December 31, 2023 compared to previous guidance of at least $28.25. Analysts expect Humana (HUM) to earn $28.30 a share in the year.
“The company anticipated the higher level of medical utilization experienced during the third quarter in its Medicare Advantage business would continue for the remainder of the year. Actual fourth quarter results reflect an additional increase in Medicare Advantage medical cost trends, driven by higher than anticipated inpatient utilization, primarily for the months of November and December, as well as a further increase in non-inpatient trends,” said the company in a filing.
The Louisville, Kentucky-based firm is currently assessing the expected impact of emerging utilization trends on its 2024 outlook, which is anticipated to be material if current trends continue, and will provide an update on its fourth quarter 2023 earnings call, which has been rescheduled for January 25th, 2024.
“Humana believes the emerging trends are impacting the industry broadly and anticipates the trends will be contemplated in the 2025 Medicare Advantage pricing cycle,” the company added.
For 2024, the insurer expects individual Medicare Advantage growth of ~100,000 members, representing 1.8% growth over its membership of ~5.4M members as of December 31, 2023, compared to its previous commentary of ‘at or slightly above industry average growth.’
Humana (HUM) says its membership growth outlook for 2024 is impacted by its balanced approach to pricing which resulted in a lower share of overall industry growth.
UnitedHealth Group (UNH) is down 2.78% in sympathy. Other managed care insurers falling on the disappointing forecast include: Centene (CNC) -4.2%, Cigna (CI) -3.8% and Elevance Health (ELV) -4.3%, CVS Health (CVS) -2.65%
Humana stock slides after cutting profit outlook on higher medical costs
