Humana Inc. (HUM) on Q3 2021 Results - Earnings Call Transcript

Operator: Good day and thank you for standing by. Welcome to the Humana Incorporated Quarterly Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. I would now like to hand the conference over to your speaker today, Ms. Lisa Stoner, Vice President of Investor Relations, please go ahead. Lisa Stoner: Thank you, and good morning. In a moment, Bruce Broussard, Humana's President and Chief Executive Officer, and Susan Diamond, Chief Financial Officer, will discuss our third quarter 2021 results and our updated financial outlook for 2021. Following these prepared remarks, we will open up the lines for a question-and-answer session with industry analysts. Joe Ventura, our Chief Legal Officer, will also be joining Bruce and Susan for the Q&A session. We encourage the investing public, and media to. Listen to both management's prepared remarks and the related Q&A with analysts. This call is being recorded for replay purposes. That replay will be available on the Investor Relations page of Humana's website, humana.com later today. Before we begin our discussion, I need to advise call participants of our cautionary statement. Certain of the matters discussed in this conference call are forward-looking and involve a number of risks and uncertainties. Actual results could differ materially. Investors are advised to read the detailed risk factors discussed in our latest Form 10-K and other filings with the Securities and Exchange Commission. In our Third Quarter 2021 earnings press release, as they relate to forward-looking statements and to note in particular that forward-looking statements could be impacted by risks related to the spread of in response to the COVID-19 pandemic. Our forward-looking statements should therefore be considered in line of these additional uncertainties and risks along with other risks discussed in our SEC filings, we undertake no obligation to publicly address or update any forward-looking statements and future filings or communications regarding our business or results. Today's press release, our historical financial news releases, and our filings with the SEC are all also available on our Investor Relations website. All participants should note that today's discussion includes financial measures that are not in accordance with Generally Accepted Accounting Principles or GAAP. Management's explanation for the use of these non-GAAP measures and reconciliation of GAAP to non-GAAP financial measures are included in today's press release. Finally, any references to earnings per share or EPS made during this conference call refer to diluted earnings per common share. With that, I'll turn the call over to Bruce Broussard. Bruce Broussard: Thank you, Lisa. And good morning and thank you for joining us. Today we reported adjusted earnings per share of $4.83 for the third quarter of 2021, slightly above consensus estimates. Our year-to-date results reflect the strength of our core operations. As we continue to see strong underlying fundamentals across all lines of business, and have remained focused on ensuring our members received the right care at the right time despite the continued disruption caused by the pandemic. While our underlying fundamentals are strong, 2021 financial results have been impacted by the ongoing pandemic, which has resulted in an adjustment to our full-year adjusted EPS guidance. As detailed in our earnings press release, we have updated our guidance to approximately $20.50 from our previous guidance of 2125 to 2175. As Susan will share in more detail, this reduction of approximately $1 and adjusted EPS as a direct result of COVID and corresponds to our current expectation that the total Medicare Advantage utilization, inclusive of COVID costs or run 1% below baseline in the fourth quarter, which is 150 basis points less than our previous assumption of 2.5% below baseline. This update reflects a more conservative posture going into the final months of the year and notably, 2,150 remains the baseline of which to grow for 2022. As a reminder, prior to this guidance update, we had not recognized a COVID headwind in our 21 guidance as many of our peers did. Our adjusted EPS guidance has been above our long-term growth target as the point throughout the year, at 16% growth. This update results in an expected adjusted EPS growth at the lower end of our long-term range and importantly, is not reflective of any concerns with our core operations. I will now turn to our operational and strategic update. Our Medicare Advantage, individual above market growth in 2021 of 11% can be in part attributed to our industry-leading quality and consumer satisfaction scores. We are pleased to be recognized by CMS for having 97% of our members in 4-star or higher rated contracts for 2022. We also increased the number of contracts that received a 5-star rating from 1 contract in 2021 to 4 contracts in 2022, the most in our history. make adjustments to -- Operator: Excuse me, participants. This is the Operator; the conference will begin momentarily. Please stay on hold until the conference begins. Bruce Broussard: Well, welcome back. When we started, sorry for the technical glitch there. Let me maybe just go back to our guidance update here and re-ensure that the investors understand the guidance and in addition, how it reflects in the -- as we looked at the future year. First, the guidance reflects a much more conservative posture going into the final months of the year and notably, 2,150 remains the baseline of which to grow for 2022. As a reminder prior to the guidance update, we had not recognized the COVID headwind in our 2021 guidance as many of our peers did. Our adjusted EPS guidance has been above our long-term growth target at the midpoint throughout the year at 16% growth. This update results an expected adjusted EPS growth at the lower end of our long-term range and as importantly, is -- does not reflect any concern with our core operations. I will now turn to our operational and strategic update. Our Medicare advantage individual above-market growth in 2021 of 11% can be in part attributed to our industry-leading quality and consumer satisfaction stores scores. We are pleased to be recognized by CMS for having 97% of our members in four-star or higher contract for 2022, we also increased the number of contracts that received a five-star rating from 1 contract in 2021 to 4 contracts in 2022, the most in our history. And while CMS did make adjustments to the 2022-star ratings due to the possible impact of the COVID-19 pandemic, These adjustments had minimal impact on our ratings. This further demonstrates our enterprise-wide focus on quality, clinical outcomes, and best-in-class customer service, which has been recognized from notable organizations such as Forester, JD Power, and USAA. Importantly, the stars bonus allows us to maintain a strong value proposition for our members and provided value plus supplemental benefits that address social determinants of health and other barriers not addressed by fee-for-service Medicare. Looking ahead to 2022, we are pleased to be able to provide stable or enhanced benefits for the majority of our Medicare Advantage members, offering plans that support members whole health needs, while continuing to deliver the human care, our members have come to expect from us. Our strong clinical and quality programs drive improved clinical outcomes and cost savings that allow our Medicare Advantage plans to continue to expand member benefits on those covered by fee-for-service Medicare. Our plans include highly valuable extra benefits, including dental, vision, hearing, an over-the-counter medication allowance, transportation support, fitness program memberships, and home delivered meals founding following an in-patient hospital stay. Over the last few years, we've made great progress in addressing social determinants of health and health equity by expanding our Medicare Advantage benefits. Examples of those impactful areas include, Respite Care, distributing 1.5 million meals during COVID, sending fans to seniors with COPD during a heat wave, and providing support for financial need, impacting a senior’s health and well-being. Giving the increasing demand for health equity across America, we have aggressively expanded our efforts to address it. We continue to advance our consumer segmentation efforts, developing plans that are tailored to the unique needs of specific member populations. This has allowed us to provide benefits that enhance and complement an individual's existing coverage through programs like Medicaid or entities such as Veterans Affairs. This approach leads to disproportionate growth. As you've seen in our D-SNP plans designed for dual eligible members, where we have grown our membership approximately 40% in both 2022 and 2021. We've expanded our D-SNP offerings for 2022 to cover nearly 65% of the dual eligible population nationally. To reduce food and security, 97% of our members enrolled in our decent plans, and will have a healthy foods cart, which provides a monthly allowance to purchase approved food and beverages at various national chains. New for 2022, many of our D-SNP members will have reduced Part D drug co-pays as a result of the D-SNP prescription drug savings benefit, which will help address the financial barriers some members face when accessing needed prescriptions, leading to better medication adherence, an important driver of members health -- overall health outcomes. As previously shared, we took a more conservative approach to our 2022 bids, recognizing the continued uncertainty associated with COVID-19 and potential impacts to premium and claims assumption, allowing us to prioritize long-term benefits stability for our members. While it is early in the selling season, we believe we struck the right balance and are competitively positioned for our continued growth in Medicare Advantage. Our brand promise to deliver human care resonates with seniors given our comprehensive set of offerings and focus on providing a patient - centric experience based on their specific needs. Susan will provide more detailed 2022 commentary in our remarks, including high-level EPS and membership guidance. I now would like to highlight the continued progress of our strategy through the build-out of our healthcare service platform, starting with primary care business and then moving to our growing home solutions offerings. We have the largest senior-focused, value-based primary care organization in the country, which by year-end will include approximately 200 clinics serving 300 thousand patients across 24 markets in 9 states. We are accelerating organic and inorganic growth nationally and plan to open a total of 30 DeNova senior-focused centers in 2022, up from 24 in 2021. This will include launching in 2 new major metropolitan areas, Dallas and Phoenix next year. This faster pace expansion comes as we continue to gain conviction in our DeNova's center model with panel growth in centers launched in '20 and 2021, exceeding plan. And clinical performance in our more mature markets continuing to improve. And our more mature centers, hospitalizations, and ER visits are down 12% year-to-date versus 2019 pre - COVID level. With stars performance tracking to 4.5 stars. An NPS score of 90. We will also continue to expand through inorganic growth, completing seven acquisitions through the third quarter of this year, bringing 21 newly wholly-owned centers to our portfolio. We plan to continue this pace of acquisitions focused on the markets where we have established presence to provide more access and high-quality care to our patients. Turning to the home, we completed the acquisition of Kindred at Home in the third quarter, and now the largest home health and hospice organization in the nation. As previously shared, we will be migrating Kindred at Home to Humana's payer agnostic health care service brand CenterWell. Our efforts to transform home-health to a value-based model come at a pivotal time for the industry, seniors increasingly choose Medicare Advantage, there is a meaningful opportunity for home health organizations to engage differently with patients in Medicare Advantage payers, to more holistically address patient needs and improve health outcomes, reduce the total cost of care for health plans, and share appropriately in this value creation. We've made substantial progress towards our goal of scaling on maturing a risk-bearing, value-based model that manages the provision of home-health, durable medical equipment and home infusion services. With the acquisition of One Home earlier in 2021, a delegated post-acute management services organization for the home. We have the capabilities to be a value-based convener, providing risk-based contracting and referral management, and continue to develop technology enabling us to coordinate with other adjacent services. These services include gap-in-care, closure, primary or emerging care in the home, as well as coordination of meals, transportation, and other services to positively support social determinants of health. We currently care for approximately 270,000 Humana members on your value-based home care models in South Florida and South East Texas, where we have seen improved outcomes, including emergency room usage, being a 100 basis points better than Humana's national average. We now are focused on expanding to select markets in North Carolina and Virginia, which we've chosen based on multiple criteria, including market density, opportunity to significantly reduce homecare expense, and a robust Kindred at Home footprint. We expect to begin the roll out in the second quarter of 2022 with the goal of covering nearly 50% of Humana Medicare Advantage members, under this value-based home health model within the next 5 years. We are excited about the continued progress of our strategy in the home. But consistent with our home-health peers, we recognize that the national nursing labor shortage poses a significant risk to the industry. And we are taking proactive steps to address it as part of our well-developed integration process with Kindred at Home. In some markets, the nursing shortages resulting in adequate capacity to meet demand negatively impacting our ability to grow the top line. We believe that Humana's Center Well brands supported by our patient - centric culture will bolster recruiting and retention efforts for nurses. We've seen increased nurse satisfaction and engagement in pilot markets, where we have deployed value-based concepts with voluntary and nursing turnover, improving nearly 10% among home health nurses in 2021. In addition to sufficient capacity to meet our growth goals, we are implementing broader operational improvements and benefit enhancements, while also making targeted investments in capacity constrained areas to enhance nurse recruiting and retention. With respect to hospice, our intent remains to ultimately divest a majority interest in this portion of the asset. As our experience has demonstrated, we can deliver desired experiences and outcomes for patients transitioning from restorative care to hospice through partnership models. Since we closed the transaction in August, we have continued to explore alternatives for the long-term ownership structure for the business, and have initiated steps to reorganize the hospice business for standalone operations, also ensuring business continuity and monitoring underlying trends. We do not have a further update on the specific transaction structure, or expected transaction timing, but we will provide additional updates as appropriate moving forward. Given the continued expansion of interest in our healthcare service platform, we are committed to providing additional disclosure to give further transparency into the performance of these businesses, beginning with our first quarter 2022 reporting. Before closing, I want to touch on the current regulatory and legislative landscape. As you know, last week the White House and congressional leaders released their plan, known as Build Back Better, which includes several proposed changes to the Medicare program, including establishing a hearing benefits starting in calendar year 2024, which will be included in the Medicare Advantage benchmark. Given that today more than 40% of Medicare beneficiaries, over 27 million seniors, and those with disabilities are enrolled in Medicare Advantage, we were encouraged to see that the package did not include any payment reductions to the program. As this legislation continues to advance and likely be modified, and as we look ahead to the annual CMS call letter and rate notice period, we will continue to work with policymakers and the Biden administration to further improve Medicare Advantage. Building on the programs, innovation, and significant progress in areas like value-based care, social determinants of health, affordability, and financial protection for beneficiaries, as well as reducing the total cost of care. These attributes, along with the deep consumer popularity of Medicare Advantage, are what have enabled it to have a strong bipartisan support with hundreds of members of Congress on record supporting the program. As Medicare Advantage serving as a leading example of a successful private public partnership, I am optimistic we can continue to lead on important healthcare issues facing both individuals and society, including addressing health and equities and proving held outcomes, and expanding value-based care. With that, I will turn the call over to Susan. Susan Diamond : Thank you, Bruce. And good morning, everyone. Today, we reported adjusted EPS of $4.83 for the third quarter and updated full-year 2021 adjusted EPS guidance to approximately $20.50 to reflect a net unmitigated COVID headwind resulting from our current view of utilization levels for the balance of the year. Before beginning, I would point you to Page 4 of our earnings press release for details of our previous assumptions for Medicare Advantage utilization in the second half of the year, actual third quarter utilization results, as well as current projections for the fourth quarter. I will now walk you through this details, starting with a reminder of our previous commentary. And to our second quarter call, full-year guidance has seen non-COVID Medicare Advantage utilization was run 2.5% below baseline in the second half of the year, with a further assumption of minimal COVID testing and treatment costs for the same period. In September 2021 as a result of the surgeon COVID cases due to the Delta variant, we updated our commentary on full-year guidance to indicate we expected non COVID Medicare Advantage utilization to be 5.5% below baseline in the back half of the year, while being partially by 3% of COVID costs. Therefore, again assuming total utilization would be 2.5% below baseline in the back half of 2021. What we've seen develop for the third quarter is that total utilization is running 1% below baseline versus the previously anticipated 2.5%. COVID costs have been higher than initially anticipated as the Delta variant resulted in hospitalization levels on par with what we experienced in January of 2021, and we're overwhelmingly driven by the 20% of our Medicare Advantage members believed to be unvaccinated. These higher-than-expected COVID costs were fully offset by the press non - COVID utilization in the quarter. As COVID hospitalizations increased or decreased, we continue to see an approximate one-to-one offset and non-covalent hospitalization levels. We also continue to see significantly reduced non-inpatient utilization when surges occur, offsetting the higher average cost of a COVID admission. However, for the third quarter, in total, we saw 1% incremental reduction and utilization beyond the level needed to offset COVID costs versus a 2.5% contemplated in our previous guide. As a result, we have adjusted our full-year guide to now reflect the fourth quarter running similarly with total Medicare Advantage utilization running 1% below baseline, inclusive of estimated COVID costs, consistent with what we experienced in the third quarter. We realized higher than expected positive current period claims development and Medicare advantage in the third quarter, as well as other operating outperformance, largely mitigating the lower than anticipated depressed Medicare Advantage utilization, allowing us to report results that were slightly favorable to the street estimates. Our revised guidance does not assume that the higher levels of favorable current period development seen in the third quarter will continue. Taken together, our updated full-year 2021 adjusted EPS guidance takes a more conservative posture going into the final months of 2021. And it's important to note, as we consistently shared throughout the year the midpoint of our original guidance range of $21.50 remains the correct baseline for 2022, given our approach to pricing. I will now briefly touch on operating results across our segments before sharing early thoughts on 2022 performance. Our Medicare Advantage growth remains on track and consistent with previous expectations. We have refined our full year individual Medicare Advantage membership guidance to up approximately 450,000 members consistent with the midpoint of our previous guidance of up 425,000 to 475,000 members. This outlook represents above-market growth with an increase of 11.4% year-over-year. Our Medicaid results continued to exceed initial expectations due to higher than anticipated membership increases, largely attributable to the extension of the public health emergency. We now expect to add 125,000 to 150,000 Medicaid members in 2021 up from our previous expectation above 100,000 to 125,000 members. Utilization trends continue to be favorable to initial expectations and the Medicaid team is working diligently toward a successful implementation in Ohio with go-live anticipated in July. In our Group and Specialty segment, fully insured medical results were impacted by higher-than-expected COVID costs in the quarter, while our Specialty business results continued to exceed expectations as utilization, particularly for dental services remain lower than previously anticipated. Recall that our guidance as of the second quarter did not contemplate significant COVID costs in the back half of the year. And the commercial business is not seeing the same level of utilization offset experienced in Medicare Advantage. From a membership perspective, we have increased our expected group medical membership losses from 100,000 to 125,000, reflecting the expectation of additional losses in the fourth quarter and the result of rating actions taken to account for the expected impact of COVID in 2022. Finally, within our Healthcare Services Operations, the pharmacy and provider businesses continue to perform slightly better than expected, with pharmacy benefiting from increased mail order penetration as a result of customer experience improvements and marketing campaigns. And the provider business seeing continued operating improvements in our more mature centers, which are now aligned under the same leadership in our DeNova centers. As Bruce mentioned in his remarks, we are actively integrating the Kindred at Home operations and results post integration have largely been in line with expectations. Similar to home health and hospice peers, the business is being impacted by COVID and labor shortages. For the third quarter, home health admissions grew low single-digits year-over-year, while hospice experienced a low single-digit decline year-over-year. We will continue to closely monitor trends as we make targeted investments to sustainably improve the recruitment and retention of nurses. Now let me take a few moments to share an early outlook for 2022, starting with membership. As you're aware, the overall PDT market continues to decline as more and more beneficiaries, including dual eligible to Medicare Advantage. In addition, as we have discussed previously, PDT plans to become a commodity, with the low-price leader capturing disproportionate growth. Consistent with 2021, the Walmart value plan will offer competitive benefits that will not be the low premium leader in 2022.As a result, we expect a net decline in PDT memberships of a few, 100,000 members in 2022, we continue to focus on creating enterprise value for our PDT plans by driving increased mail-order penetration and conversions to Medicare Advantage. With respect to Group Medicare Advantage, we expect membership to be generally flat for 2022 as we do not anticipate any large accounts will be gained or lost as we continue to maintain pricing discipline in a highly competitive market. Moving to individual Medicare Advantage as previously shared, we took a more conservative approach to our 2022 bids, reflecting the continued uncertainty associated with the pandemic. We expect to grow our individual Medicare Advantage membership in a range of 325,000 to 375,000 members in 2022 or approximately 8% year-over-year. Reflective of our prudent approach, we took the pricing for 2022 and a competitive nature of the market. It is early in the AEP selling season and the outlook we're providing today could change depending on how sales and voluntary dis-enrollment ultimately come in. And consistent with prior years, we have very little member dis-enrollment data at this point in the AEP cycle. I will now turn to our expected 2022 financial performance. As previously mentioned, I want to reiterate that the $21.50 midpoint of our original 2021 guidance continues to be the appropriate jumping off-point for 2022 adjusted EPS growth, given our approach to pricing. In addition, we feel comfortable that the risk adjustment assumptions in our 2022 pricing are appropriate, as providers have been actively engaging with our members to ensure their conditions are fully documented and that care plans are established to address and care. Provider interactions and documentation of clinical diagnoses that we anticipate will impact 2022 revenue are approximately 92% complete to-date in line with both our expectations for 2021, as well as the estimated completion rate for the same time period in 2019. We also assumed it's medical costs would return to baseline levels reflective of pre - COVID historical trending. From an earnings perspective, we believe the conservative approach we took in 2022 pricing strip the appropriate balance between membership and earnings growth. Given the ongoing uncertainty surrounding the COVID-19 pandemic, we expect to enter the year with an appropriately conservative view of our initial 2022 financial outlook. Accordingly, we anticipate that our initial EPS guidance will target the low end of our long-term growth range of 11% to 15%. We expect that COVID will be neutral to the Medicare business in 2022, as we do not anticipate a risk-adjustment headwinds and expect COVID utilization to be offset by reduction in non - COVID utilization. However, our initial guide will allow for an explicit COVID -related headwind that we can tolerate should it emerge similar to the approach some of our peers took in 2021. We believe entering the year with this more conservative approach is prudent in the current environment and sets the Company up for success in 2022. We look forward to providing more specific guidance on our first -- fourth quarter earnings call in early February. With that, we will open the lines up for your questions. In fairness to those waiting in the queue, we ask that you limit yourselves to one question. Operator, please introduce the first caller. Operator: Thank you. And again, participants, . Your first question comes from the line of Kevin Fischbeck from Bank of America. Your line is now open. Kevin Fischbeck : Alright, great. Thank you. I appreciate all the color on the 2022 guidance, I think a lot of people are just wondering. The Company had a hard time forecasting where costs are going to be on the upcoming quarter for the last few quarters, obviously, to some degree understandable during the pandemic. But just wanted to see how you felt about your visibility into costs and how good of a handle you feel like that cost trend as you develop your pricing for next year has come in. How do you think about that visibility into the costs as you thought about next year. Susan Diamond : Sure, Kevin. I'm happy to take that one. To your point, estimating the impact of COVID has proven to be more challenging, particularly given the environment that we were in 2020 is quite different than what we're experiencing obviously in 2021. In 2020, no one was vaccinated, various taste of lockdowns throughout the year, and as we acknowledged in our Q2 call, anticipating how behavior might emerge in an environment where largely people were back to normal and a large percentage of our Medicare population are vaccinated, it is recognized that it was difficult to anticipate whether we see the same level of offset through the surge. The good news is, as we saw the surge emerge in the third quarter despite it being just as high as what we experienced the last time, we did continue to see a full offset. The hospitalization offsets have been pretty consistent throughout 2020 and 2021, is on the non-inpatient side where we tend to see more variation. And as we explained in the second quarter, that claims service category is one where we don't have the same level of near-term visibility. Having said that, we've studied all of historical patterns based on what we saw in the third quarter and our estimates of the continued decline in the COVID curve in the fourth quarter, we feel very comfortable with the assumptions underlying our revised guide and feel like we have sufficient visibility to feel confident we can deliver against that. Your question about 2022 is a good one as we've explained in all of our calls, given this late surge in 2021, getting visibility to where baseline trend is actually running, obviously, will be more challenging. However, given how we approach the pricing for 2022, meaning that we've started with pre - COVID historical levels and assumed historical trending factors, not anticipating any ongoing depressed utilization into 2022, we feel confident that that's an appropriate baseline expectation. So, we'll continue to watch it. And certainly. if we see something different emerge, if any of the depression continues, that would be positive for us, but we are not contemplating it. Which is what gives us confidence about our approach to 2022. Kevin Fischbeck : Okay. Thanks. Operator: Your next question comes from the line of Matt Borsch from BMO Capital Markets. Your line is now open. Matthew Borsch : Yeah, so I was just hoping that you could maybe comment on the competition in Medicare Advantage. I know you said it's competitive but, just relatively speaking, we've seen geographic expansions by really almost all of the major public companies over the last few years and a number of new entrants and yet it doesn't seem like it's had a noticeable impact in profit margins. I guess I'm just wondering how you see the dynamic, is the greater availability of products actually, in essence, expanding the Medicare advantage market more than it's necessarily leading to competition that would push down margins? Thank you. Bruce Broussard : Yeah Matt, think I'll take that. The -- what we see as a few things, I mean, first we do see more and more intensity in the local markets. And similar to -- in the past, we see some players being more aggressive to try to gain market share while others are a little more aligned with the pricing that -- and a little more stability in the market quest. So, we do see a bell curve in just how people are approaching it as their strategic plan is pushing them to make those decisions. We are seeing more awareness in the marketplace as a result of the amount of education that's going on through marketing and through the sales efforts that are going on. And I think that is a positive for the industry because it really brings a live all the benefits that members receive. It creates more competitive major for that for those members, but it does create, I think more growth industry-wide. For us, as an organization, we were one of the early adopters of the telemarket market in the tail of sales ever area and we have benefited from that, I think in multiple different ways, benefited from it in the way of both our market growth, and in addition, our ability to reach a population that we haven't been able to reach in the past, so I do think it's a benefit for us. But to answer your question, more competitive in the local market, more awareness as in the industry, that is a good thing in the industry, and I could I feel that we have been a beneficiary of that. Susan Diamond : One thing I would add to that is well, and our focus on increase mentioned any comments or consumer segmentation efforts by designing products that more specifically addressing consumer needs, you've seen in our duals offerings as well as our veteran offerings that we can direct it proportionate growth. If you think that's a differentiator, something you'll see us continue to focus on. Matthew Borsch : Thank you. Operator: Your next question comes from the line of Stephen Baxter of Wells Fargo. Your line is now open. Stephen Baxter : Yeah. Hi, thanks for the question. Was hoping to come back to the commentary on assuming baseline utilization in 2022. Just to clarify, it seems pretty clear that there will be some level of ongoing COVID costs into 2022, so does that mean you're continuing to assume non-COVID costs will be below baseline in 2022? And then just any color or context you can provide on the magnitude of this EPS hedge that you're talking about in relation to baseline would be appreciated. Thanks. Susan Diamond : Sure. Great question. Just to be clear, what we -- right now, all of our experience we would expect that to the degree we experienced additional COVID costs in 2022 that we would see an offsetting depression and non-COVID utilization, but the net of that would be neutral. We're not expecting net favorability like we've seen this year. That 1% we're projecting for the fourth quarter, consistent with these on the other quarter. So, what we would say is we are expecting the -- if the off-COVID costs would be offset and that we would still be at baseline. But as I mentioned in my comments, what we intend to do with our initial guide though, is despite the belief that that's a reasonable assumption, we will allow for unexplicit that net COVID headwind shouldn't emerge such that it is then we would run actually above baseline levels, should that emerge, then our guide will contemplate and allow for some of that, if it should emerge. And while not giving a specific amount obviously today, when we do give a specific guidance on our fourth quarter call, we will be explicit about how much of a COVID headwind we can tolerate within the guide. So, we will be explicit about that at that time. Operator: Your next question comes from the line of Ricky Goldwasser of Morgan Stanley. Your line is now open. Ricky Goldwasser : Yeah, Hi. Good morning. So, one follow-up and then longer-term question. Just to understand, Susan, if we think about 80% of your MA members are vaccinated based on your estimate, I just feel like it’s trying to reconcile what you're saying versus what some of your peers are saying. What do you think happened that drove COVID hospitalization to the levels experienced back in January, was that sort of a specific geography or anything else that you can explain it? And then the longer-term question is really around sort of virtual. Many of your peer’s launch ed a virtual first offering on the commercial side for 2022. Do you see room for some virtual first type offering in the Medicare population, especially when you consider the Kindred capabilities? Susan Diamond : Okay, great. So, to take your question, so with respect to the high COVID levels and you're right and honestly, this was something that was a bit surprising to us as well, and we did see levels on par with what we experienced in the last surge despite the high vaccination rates. And what we learned, and to your point, some of that was a reflection of our geographic mix. States like Florida, and Texas, and Louisiana did see higher levels than even the previous surge. It represents a new all-time high and we have disproportionate share there. So that was part of it. But the main driver is that if we look at the hospitalization rate between vaccinated and unvaccinated, the unvaccinated fairly consistently saw hospitalization rate that was 10 or more times the vaccinated population. And so that again, as I mentioned in my comments, was the overwhelming driver. And because of the spread of the Delta variant, through that unvaccinated population, and that much higher hospitalization rate, that is what drove the levels on par with what we saw historically. To your second question about Virtual-first and Medicare, we were pleased with the COVID and I could see that primary care providers and specialists really did take -- adopt telemedicine at a higher rate to ensure that they could continue to support their patients and their permitted needs. I think as a result of that, frankly providers gained a better appreciation of the range of care and the quality of care that they can provide through virtual, which frankly pre -pandemic they really been appreciate we're adopting. So, I think we will see some continued use of virtual technology to enhance the operating model and allow for more touch points with their patients than we do pre -pandemic. Your question about home health is definitely a good one and something we are looking at, particularly with the challenges we have in terms of nursing labor shortages. Virtual is one strategy we're looking at to see how it can be leveraged so we can create more touch points with the patient and improve the efficiency of the operating model to just create more overall capacity. And so, we'll be testing with Kindred appropriate uses of that, and where we can implement it and still see the high-quality outcomes that we would expect. So, we'll be testing that and I hope would be that you will see expansion of that in the future. Bruce Broussard : Just a few other comments to that. We did a launch a few years ago our virtual first with Doctor On Demand product and that was a success for us on the commercial side. But on the Medicare side, what we do find is that there's a great opportunity to see the patient both to understand the patient in a physical setting. And unlike more episodic of care versus a chronic care management, that there's a good come -- there is an importance of being able to have a physical and encouraging a physical interaction. We see the telehealth as being an opportunity to have a complementary and more interaction. But I don't know if it would be a replacement for or we would want to motivate highway chronic members to have a virtual first interaction for a whole host of reasons, both from a care point-of-view and from the ability for us to establish the proper care plan. Operator: Your next question comes from the line of Joshua Raskin from Nephron Research LLC. Your line is now open. Joshua Raskin : Thank you, guys. Good morning. Wanted to ask about the shorter short-term. So just the assumption that non - COVID utilization will be down in 4Q. I'm just curious, are you seeing script trends, pure authorizations, or anything that would indicate that level of decline, just in light of what seems to be an abatement in COVID cases currently, and then specifically, are you seeing any different trends with members that are in your centers, or with other value-based providers, are the underlying trends underneath that capitation any different? Operator: Excuse me, participants this is -- I'm the Operator. I'll just turn the music on for the speakers, one moment. Bruce Broussard : Go out there and dial Susan Diamond : Hi, Josh. Are you there? Joshua Raskin : Yeah. Can you guys hear me okay? Susan Diamond : We can begin airing. Bruce Broussard : Your question must've been so insightful that it just dropped off the line. Joshua Raskin : I thought I was so scary that you ran for it. So, I'll ask my question again, sorry. Just in the very, very short-term. My question is, why are you assuming that non-field utilization will be down as much as 4% in the fourth quarter, especially in light of what we're seeing in terms of the big reduction in COVID costs and COVID director of the cases in the fourth quarter? And is there a script trends, is there pre -authorizations, is there something that would indicate that level of decline that you're seeing today? And then long or sort of adjacent to that, are you seeing different trends with members that are in your centers or even with other value-based providers, the underlying trends underneath the capitation? Susan Diamond : Your questions. So, we'll just take it a fourth-quarter. As we said before, we have really analyzed all the prior surgeons to understand the patterns coming out of a surge. And you might recall from our previous commentary what you typically see is a tale of depressed utilization. Anytime you come of a curve, which is what allows you to fully recapture the cost of that COVID fee. And so, we've -- with this started to take, I was kind of interesting is different states, as I mentioned before have seen different levels of utilization relative to previous surges. Texas, Florida were examples where we saw very high peak and a very rapid decline. There are some other states, like New York and Michigan, where we're actually seeing a much more moderate and sort of gradual increase without further seeing the same sharp peak in decline. So, as we've seen that in total, that on a national basis, what we're seeing in this slow of the downturn from coming off of the peak isn't quite as sharp as what we've seen historically. We've drilled into each of those states and are consistently seeing -- irrespective of that difference in peak level we're still seeing that one-to-one offset regardless. And so, to some degree, we think there's just an overall capacity constraint, particularly on the inpatient side as they come into play and the rest is just that behavior change in terms of providers and patients as they manage through it. So, based on what we've seen emerge and predicting the third quarter with that 1% offset, everything we've seen suggests that assuming the same level of offset as we continue to come off that third quarter peak is reasonable. To your point about early indicators. We do -- as we've said before, having really good real-time information on inpatient activity that continues to hold whereas the COVID utilization comes down, we'll see a bounce back on a one-to-one offset in the non-COVID hospitalization. That has been very consistent. And we'll continue to watch the non-inpatient, but again, based on everything we've seen, we believe that is a reasonable assumption. In terms of your question about buy-in providers. Interestingly enough, most of our -- both our own centers and some MLR high-performing partners, they have indicated that they are not seeing the same sort of neutrality-oriented benefit from a COVID event that we do. And the theory there is that in general, they manage the unnecessary hospitalization events as lower value is out of the system more routinely. And so, when you do see a surge, there's not as much utilization to manage -- to be depressed because they've already managed it out on a more run rate basis. And so, we're still frankly trying to assess and use some analytics on that. I think they may take a little bit more time for their claims to fully develop and have a full view of that. But their belief is that they don't see the same level of net benefit that we do on the health plan side, generally. Joshua Raskin : They see COVID costs, but not be offset, you're saying? Susan Diamond : Correct. Now, on the flip side of that, though they tend to do better on a revenue basis than our non-risk spare than they were much better about making sure they got their patients in 2020, got their conditions document. It's on the revenue side, say they would make some of that up. But on the utilization side, the typical way you are saying they're not seeing a benefit. Operator: Your next question comes from the line of Kevin Caliendo of UBS. Your line is now open. Kevin Caliendo : Thanks, and thanks for taking my call. In thinking about 2022, appreciate all the color, but I just wanted to know if there is any other sort of one-time things we should be thinking about, any other headwinds or tailwinds. Whether it comes to investments or benefits that you might be making that could impact the EPS growth for the year. Susan Diamond : So, I would say, obviously as we mentioned, COVID is the main one that we continue to evaluate. We've been clear that based on history, we think it would be an offset, but we will take a more conservative initial approach and allow for a headwind, should it emerge. And that really is reflective of the fact that, again, the environment continues to shift the level of vaccination, and we will continue to increase. But now there's the introduction of the need for boosters and so will people be as compliant with boosters as they were in the initial vaccine? to variance and all of those things we'll continue to monitor. As well as the ability for people to have re-infection breakthrough cases. So that's the main one. I would say, obviously with what comes out of the administrative priorities, certainly the tax -- taxes are more than we continue to watch and obviously investment, that something that we'll have to watch if there's any 22 impact. But otherwise, as we said before and Andrew sent in his remarks, we continue to support our Primary Care business. We certainly will continue to look for capital efficient ways to support that business. I would say we aren't expecting anything in 2022 that we can withstand within our guide, so obviously right now there's nothing that I would point to. This concern that we have and gives us any concern that we can't manage through in our -- wherever we go out with in terms of our initial guidance. Kevin Caliendo : Can I just maybe follow-up, is the guidance inclusive or exclusive of the incremental headwind that you're discussing here. Meaning like, is this sort of low-end or 11% net of the headwinds or not? I'm a little confused on how I should think about that. Susan Diamond : Yes. With what we go out in our initial guide, it will explicitly contemplate a net headwind, should it emerge, that no net impact then beyond our guide, so it is inclusive of that. So, if it does not emerge, then you would see that conservative and release throughout the year, but it will contemplate a potential headwind within the guidance. Kevin Caliendo : Got it. That's really helpful, thanks so much. Susan Diamond : You're welcome. Operator: Your next question comes from the line of Scott Fidel from Stephens. Your line is now open. Scott Fidel : Hi. Good morning. Just wanted to ask another question just on the Medicare Advantage annual enrollment period and I know you already talked about the competitive dynamics. Just interested in terms of what you're seeing on the consumer behaviors side, and in particular, just whether you're seeing any types of shifts and distribution channels in terms of where more of the sales are occurring or not. I just thinking about, obviously, 2021 was unusual a year for the AEP as it was playing out amidst COVID. So interesting whether -- it should whether you're seeing more of continuation of that 2021 type dynamic, in terms of consumer-buying practices or whether we're seeing more of a blended, post-pandemic and pre -pandemic dynamic more for 2022? Thanks. Bruce Broussard : Yeah, and Scott, thanks for the question. We are continuing to see an increasing use of the telephonic channel external -- our external partners. And as Matt had asked about, just on the competitive side, their marketing and their aggressiveness in the marketing, I think is bringing more individuals to that channel, as I mentioned also, it's also we feel, is a benefit for the industry because the industry is getting significant awareness and education from that. But we're seeing as a continuation of that trend, even pre 2021 AEP. It was also happening in the 2020 AEP. Susan Diamond : Thank you. Next question please. Operator: Your next question comes from the line of Ralph Giacobbe from Citi. Your line is now open. Ralph Giacobbe : Thanks. Morning. Sorry to come back to this, but I guess what does the 2,150 baseline incorporate at this time? Is it what you would've earned with normal utilization and no COVID in it? Is it some level of COVID but lower than normal core? I guess, I'm really just trying to understand what the 2,150 represents. Thanks. Susan Diamond : Yeah, so the 2150 is your and midpoint of our original guide. And if you remember the way we approached earnings for that was a bit different than many of our peers in the sense that we did not contemplate a net COVID headwind. And so that initial guide and the midpoint was actually above our more typical long-term growth range, recognizing some of the tailwinds that supported our pricing in -- towards 2021. So, by reaffirming that is the appropriate baseline, really just reinforces that the way we approached our 2022 pricing, acknowledged that despite -- however the results emerged in 2021 that our revenue instances would have seen that Medicare risk-adjustment return to more normalized levels for 2022, and that claims also returned to more normalized levels as if COVID, cannot occur. And so again, for claims we started with pre -pandemic levels in 2019 and using historical trend factors trended that forward. And so that's why we continue to reinforce, given that approach, 2,150 is the appropriate jumping off point, from which we would grow and expect to be in our long-term range than in 2022. Recognizing, however, from an initial guide perspective, we do intend to take a more conservative approach to ensure we're set up for success and target the lower end of that range. Ralph Giacobbe : Okay. All right, fair enough. Thank you. Operator: Your next question comes from the line of Justin Lake of Wolfe Research. Your line is now open. Justin Lake : Thanks. First had a quick numbers question. We're going to next year; Medicare Advantage yields probably be in the high single digits in the individual business. Just given the strong rates in the bounce back and risk scores offset, I guess, by a bit of sequestration. Is that a reasonable number? And then Bruce, can you tell us how to think about where you think the growth opportunity is within your positioning management kind of center business. I know you said you're adding 30. I know also that your the oil is up in the end of 2022 and you have to think about how to finance those again going forward, so how many do you think you could add post 2022. And how do you think you've financed these things going forward, post that and expiry. Thanks. Susan Diamond : Sure. So, I think the first one and then Bruce can take the second. So, we obviously haven't given specific detailed guidance points for 2020 yet, so I can't comment specifically. But certainly, as you think about the premium yield in 2022, there are some tailwinds, as you mentioned, there's the favorable rate notice, as well as the events and the expectation that risk-adjusted return to more normal level than the typical dynamics fringes member growth. So, to your point, they should produce tailwinds, but at this point we haven't given specific guidance obviously on premium. Bruce Broussard : And the primary care out of the two questions on the gross side. I think first -- obviously adding the number of organic units in the earlier years creates a drag as they mature. And we're seeing some great maturations in the cohorts that have been opened a year or 2, of both in a memberships side from a point of view on revenue, in addition on the cost side, so we feel very confident that's one of the reasons why we increase the number of cohorts this year as a result of our confidence and conviction in the business outcome. While we see over longer periods of time as we call it the J-curve will start to become into profitability of the ones that we open in the earlier years. And that will start to give us growth, so if you were to shut off the development, or actually we see a pretty quick growth rate within the existing business. We are extending that by two other opportunities for growth. One is the existing operations of the businesses that had been open for a while and mature centers and we're seeing some really great same-store growth in that area and they have done a great turnaround over the last few years and being able to improve that. And although it doesn't show up in the profitability because the J-curve override did a lot. We are seeing some really great improvement there with operationally and that also from a quality and experience point-of-view. And then the third area of growth for us as an organization is really in the NRC Kanik area. As many of you know, we do have a relationships with a number of providers, especially in our more mature markets, that we have the right of first refusal, and then offers us an advantage and being able to continue to densify markets that we're in and add additional sites. And we did that in 2021, and we anticipate doing that in 2022. And those are very synergistic inorganic opportunities from the standpoint that we're able to evolve, the management of it into our existing management team. We are able to in addition, bring some of our operating capabilities to those centers. So really three that continue of advancement of our J-curve and what we see there. The more mature centers continuing to improve that. And then the third, the inorganic growth and being able to leverage in some of the markets we have. I think over a period of time, you're going to see over a 5 to 7 period of time, I think you're going to see a fairly sizable business come out of this as a result of the investments we're making today on both in the organic and inorganic area. Really, today is the leading size clinic or clinics oriented to seeing your business. I think we'll continue to maintain that leadership long term. And relative to financing, we don't have a -- we haven't come to structure yet. And Justin, I think that will be an active conversation with the investors in probably the second quarter of 2022. We will come back to the investors and discuss how we will finance another cohort or number of clinics for the foreseeable future. We today have enough of the capital to invest from our off-balance sheet financing on to get us through to the 2022 openings. And so, we -- this doesn't cause any slowdown to our openings, but we do and are looking at all the different alternatives for financing and the most cost-effective for our shareholders as we think about the future. Operator: Your next question comes from the line of Steven Valiquette from Barclays. Your line is now open. Steven Valiquette : Great. Thanks. Good morning. Lot of questions already on Medicare Advantage. Just to maybe throw another one out there, curious to hear more about the pace of your county expansion. And obviously you already have -- you're in more counties than anybody else already. Even some of your larger peers seem to be growing their County footprint by double-digits for '22, I think you guys are somewhere around mid-single digits based on weak calculated, but just curious your more about your thoughts of pace of county expansion for next year, maybe just in general hear your strategy and thoughts around that. Susan Diamond : Sure. As you mentioned Humana really was ahead of many of our peers in terms of the rate of expansion, we had a number of years ago, and so we see from an accounting perspective, the same level of growth for us, as you might see for supports . Particularly, there's focus on Medicare Advantage annualized several years. What you'll typically instead see from us is product expansion within our existing geographies. That could be additional -- couple of years ago, when we really focused on our $0 premium LPPO product as an example. You see a continued to expand our dual-eligible SNP footprint and you will see county expansion there in 2022 as well as our veteran offering, both individuals’ innovator and as we said before, are great examples of where we focused on product and consumer segmentation and designing products that uniquely meet the needs of those consumers. And when we do that well, it's an opportunity for disproportionate growth. So, we'll continue to evaluate opportunities to do that. But again, I think you'll see more product expansion from Humana versus county exchange. And just because to your point, we've already got pretty broad coverage with some products. Operator: Your next question comes from the line of AJ Rice from Credit Suisse. Your line is now open. A.J. Rice : Thanks. Hi everybody. Two more, one on perspective and one more on just clarifying what you're saying about 2022. Again, I'm trying to understand, is it fair to say that the MA bids were due early in the summer? A.J. Rice : Obviously, from your perspective, at least the way it's coming across us, there's been a lot of developments from the back half of 2021 that maybe were different than what you would have said when bid would do. Is the right way to interpret what you're saying today is that you were so conservative when you constructed those bids, that even though the second half is turned out worse, you are still comfortable with the outlook? Is that the way to interpret what you're saying and then would you give us something on that Kindred? I had assumed, I think, that was going to be an incremental tailwind for next year. Obviously, home health business seems to have deteriorated a bit. Is that still a tailwind in your mind for next year and any way to size how much that might help you? Susan Diamond : Sure, I'm going to take that. So, for your first question on 2022, we're called that in 2021, when we came out with our second quarter commentary, we acknowledged that we had a net COVID headwind that had emerged that had emerged. And as I mentioned a few minutes ago, we did not contemplate that explicitly in our original guidance for 2021. So, as we found that emerge, as we explained in the second quarter, we were able to mitigate a fair amount of that through other business outperformance since they roll prior period development and other items. But in order to achieve our guide, it did require that base -- utilization continued to run below baseline throughout the year. That is not what we're considering in our 2022 pricing. We assumed that we'd bounced back. And so, it's really just a reflection -- the challenges in 2021 are just acknowledging that while we are seeing net utilization below baseline levels, is running less than we had previously anticipated or needed in order to achieve the guide and overcome that net COVID headwind that we discussed at the second quarter. Again, given the way we approach 22 pricing, well, our pricing didn't explicitly contemplate COVID costs beyond just through vaccination and testing. As we've consistently said, we did take a more overall conservative approach to pricing, recognizing there will be uncertainty that we would need to be want to navigate through. And also recognizing that it wasn't favorable rate environment. We had the Emeril headwinds you wanted to make sure that we can maintain long-term benefits stability for our members, and contemplated or maybe a less favorable rate environment in 2023. So again, those are all the reasons that we approached pricing the way we did, and the reason we continue to have confidence because we did not anticipate any ongoing net benefit as a respects to press utilization into 2022. On Kindred, and we've had this question a couple of times. I think we've addressed it both in the second quarter call and again, maybe in Morgan Stanley, is that we -- that was one of the items that helped us address the net COVID headwind in 2021, the contribution from the full integration. We knew at the time of bids that we would be integrating Kindred, so that was something we were off to consider as we aligned around our targets and our good pricing for 2022. We've always said that capital deployment is one of the leverage we have available and we'll use to sustainably deliver our long-term growth target of 11% to 15%, so that was something we specifically contemplated in pricing, so it wouldn't represent an incremental tailwind for 2022, but certainly expect -- the value that we expect to create from that value-based model and the continued growth of Kindred will certainly continue to contribute in the future to our sustainable ability to deliver against our long term target. A.J. Rice : Okay. Thanks a lot. Lisa Stoner : Thanks, AJ. Next question, please. Operator: Your next question comes from the line of Lisa Gill from JP Morgan. Your line is now open. Lisa Gill : Susan, I just want to go back to your comment around PDP shift to MA. Can you talk about your ability to retain any of those members and bring them over to MA? I think you talked about losing a couple of 100,000 lives. And then secondly, I know it's still fluid of what's going on down in DC around transparency and direct negotiation on the drug pricing side. But just curious if that will have any impact or you anticipate any impact around your PBM business? Susan Diamond : Surely. I think the first one, since PDP M&A, so that is something that we have been focused on for many years. And what we see is we actively work to you. Educate our key team members in Medicare advantage. In recent years as we've expanded our dual eligible SIP offerings that increase our ability to drive those conversions because of a large percentage of our peaking members are low-income dual eligible members. And so, what we consistently see is that we will be able to generate a disproportion of share of our PDT members who ultimately choose Medicare Advantage. And so, we will disproportionately capture share within a Humana plan relative to what you would see our share capture and just overall Medicare Advantage. so really pleased with that. And having said that and some of our members do choose other competitor MA plans and so we continue to focus on identifying if there are opportunities to enhance the product, you attract more CDC members who ultimately are likely to migrate to MA? Are there things we can do to enhance the marketing, product segmentation, all of those things we've talked about to continue to drive increased share capture for those PDT members who ultimately determine that MA provides a better value proposition for them? On your second question around some of the regions effective come out. We certainly are watching it closely. We've really represents a framework at this point. We will have to see some of the details texted ultimately comes through. And with the final proposals are and certainly -- certainly supportive of anything. As we done to reduce the cost of prescription drugs for our members. And something we certainly contemplate and take into consideration in our pricing each year. But I think, at this point, it's too early, we'll need to see what comes out of the final SEC. Bruce Broussard : Just on that, from our vantage point we continue to put rebates back into our pricing. So, I guess, back directly to the customer. We do not retain those rebates. So, any kind of opportunity to lower the cost of the drugs will directly benefit our members and not have an impact on us as a result of just -- we pass it through. Lisa Gill : Great. Thank you. Operator: Your next question comes from the line of Lance Wilkes from Bernstein. Your line is now open. Lance Wilkes : Great, thanks. Could you provide a little more color on the Primary Care centers? And what it was interested in is looking at the centers and the patient surge. Can you describe a little bit about the composition of patients, what percent are MA versus Medicare fee-for-service, and then how many of them are employer or other? And what percent of those are in full risk contracts versus maybe stages of that? And then how much of the membership -- or how much of the patient base is Humana membership as opposed with other payers? Thanks. Bruce Broussard : Okay. A few things, I heard that there's a lot in that question, so let me try to provide as much as I can here. They are built really for full risk Medicare advantage members. That's what they are built for. That's how the st
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Barclays Adjusts Humana Inc. Rating and Price Target Amid Legal Challenges

  • Barclays has updated its rating on Humana Inc. to Equal-Weight from Overweight and increased the price target to $370 from $326.
  • Humana faces legal challenges regarding allegations of misleading investors about the impact of increased medical costs on its adjusted earnings per share.
  • Despite these challenges, Humana's stock price has shown resilience, trading at $349.55 with a market capitalization of approximately $42.12 billion.

On Thursday, June 20, 2024, Barclays made a significant move by adjusting its rating on Humana Inc. (NYSE: HUM), a leading health insurance provider, to Equal-Weight from its previous stance. This change suggests that Barclays now views Humana's stock as a hold option for investors, indicating a neutral outlook on the company's future stock performance. The adjustment was notable not only for the change in rating but also for the increase in the price target to $370, up from $326, as reported by TheFly. This revised price target reflects an optimistic view of Humana's potential for growth, despite the challenges it faces.

The timing of Barclays' updated stance on Humana comes amidst legal challenges for the company. The Gross Law Firm has issued a notice to Humana shareholders, particularly those who purchased shares between July 27, 2022, and January 24, 2024. This notice is in relation to a lawsuit alleging that Humana made false and/or misleading statements and failed to disclose important information regarding the impact of increased medical costs on its adjusted earnings per share. These increased costs were attributed to a pent-up demand for healthcare procedures, leading to higher utilization rates and costs than the company had previously assured its investors.

The lawsuit claims that Humana downplayed these significant financial pressures, which could have misled investors about the company's financial health and future prospects. This situation underscores the importance of transparency and accurate reporting in maintaining investor trust and confidence. As Humana faces these allegations, the potential impact on its stock performance and investor relations is a critical concern, especially considering the recent downgrade by Barclays.

Despite these challenges, Humana's stock price has shown resilience, trading at $349.55, which represents a decrease of 1.60% from its previous close. The stock has experienced fluctuations, trading between a low of $349.19 and a high of $358.17 during the session. Over the past year, Humana's shares have seen a wide range of trading prices, from as high as $530.54 to as low as $298.61. With a market capitalization of approximately $42.12 billion and a trading volume of 664,596 shares, Humana remains a significant player in the health insurance market.

The legal challenges and the revised outlook from Barclays highlight the complex environment in which Humana operates. Investors and shareholders are closely watching how these developments will impact Humana's financial performance and stock valuation in the coming months. The increased price target from Barclays suggests some optimism about Humana's ability to navigate its current challenges, while the lawsuit underscores the importance of addressing the concerns raised by shareholders.

UBS Adjusts Rating on Humana to Underperform

  • UBS downgraded Humana's to underperform while maintaining a hold position, with a current stock price of $356.20.
  • Humana's collaboration with Privia Medical Group-Georgia and Bamboo Health aims to enhance care coordination for Medicare Advantage plan enrollees, receiving a Points of Light Award for its innovative approach.
  • Despite the underperform rating, Humana's efforts to improve healthcare through technology and partnerships could offer a long-term positive outlook for investors.

On Monday, May 20, 2024, UBS adjusted its rating on NYSE:HUM, Humana, to Underperform, maintaining a hold position. At the time of the announcement, the price of Humana's stock was $356.20. This update was covered in detail by Benzinga, with insights from 14 analysts on the matter. Humana, a prominent player in the healthcare insurance sector, has been making significant strides in improving care coordination for Medicare Advantage plan enrollees. This effort is part of their broader strategy to enhance healthcare outcomes and patient satisfaction, which could influence their market performance and investor sentiment.

Humana's collaboration with Privia Medical Group-Georgia and Bamboo Health has been a key initiative in this strategy. This partnership, recognized for its innovative approach to bridging care gaps through real-time data, received a Points of Light Award at the 2024 K2 Collaborative Summit, hosted by KLAS Research. Such recognition underscores Humana's commitment to leveraging technology for better healthcare management, a factor that could play a crucial role in its valuation and the perception of its stock in the market.

John Cope, Director of Stars Technology at Humana, highlighted the importance of this collaboration in enhancing the healthcare experience for Humana members. By integrating Bamboo Health's Real-Time Care IntelligenceTM, the partnership aims to deliver personalized, high-quality care experiences. This initiative not only demonstrates Humana's dedication to its members' healthcare journeys but also its potential to lead in the adoption of innovative healthcare solutions. This could be a pivotal aspect for investors to consider, especially in light of UBS's recent rating adjustment.

Despite the recent underperform rating by UBS, Humana's innovative efforts in care coordination and its recognition in the healthcare community could present a different picture to investors. The company's stock, currently trading at $355.75, has shown resilience with a year's trading range between $298.61 and $530.54. With a market capitalization of approximately $42.87 billion and a trading volume of 164,771 shares, Humana remains a significant entity in the healthcare insurance industry. Its commitment to improving patient care through technology and partnerships may well influence its market performance in the long term, offering a nuanced perspective to investors beyond the immediate impact of analyst ratings.

Humana Drops 5% Despite Q1 Beat

Humana (NYSE:HUM) saw its shares drop by around 5% intra-day today despite the announcement of its fiscal Q1/24 results, which surpassed analyst expectations in both earnings and revenue. The company reported an earnings per share (EPS) of $7.23 for the quarter, significantly above the consensus estimates of $6.12. Revenue also exceeded expectations, totaling $29.33 billion compared to the forecast of $28.52 billion.

While Humana adjusted its GAAP EPS forecast for the full year to $13.93, down from the previous estimate of $14.87, it maintained its adjusted EPS guidance at $16.00. Additionally, the company raised its 2024 outlook for individual Medicare Advantage membership growth. Humana now anticipates an annual increase of about 150,000 members, or 2.8%, which is an adjustment upward by 50,000 members from its previous projection.

Humana Shares Drop 11% on Disappointing Guidance

Shares of Humana (NYSE:HUM) experienced a significant drop of more than 11% today following the health insurance company's release of its 2024 profit guidance, which significantly underperformed analyst expectations.

Humana projected its adjusted earnings per share (EPS) for 2024 to be around $16.00, starkly lower than the consensus estimate of $26.09. The company attributed this outlook to the expectation that the higher Medicare Advantage medical costs seen in the fourth quarter of 2023 will continue throughout 2024.

Regarding its fourth-quarter performance, Humana reported an unexpected loss per share of 11 cents, in contrast to the anticipated $2.15 by analysts. However, the company did exceed revenue expectations, recording $26.46 billion for the quarter, which is higher than the forecasted $25.6 billion.

Humana Drops 11% on Profit Guidance Cut

Humana (NYSE:HUM) revised its profit forecast downward today, following adjustments in its projections for individual Medicare Advantage (MA) growth for the year ending December 31, 2024.

The revised expectations now point to an addition of approximately 100,000 new members, translating to a 1.8% growth from its membership tally as of December 31, 2023, which stands at around 5.4 million. This updated projection falls short of the company's previous goal of achieving growth "at or slightly above the industry average," as initially stated.

In response to this announcement, Humana's shares experienced a sharp decline, dropping over 11% intra-day today.

The company attributes this moderated growth outlook for 2024 to its strategic approach of balanced pricing, which has led to capturing a smaller portion of the overall industry growth. Although the total sales volume during the Annual Enrollment Period (AEP) aligned with Humana's expectations, a significant portion of this volume stemmed from existing members changing plans. This resulted in fewer new member sales than anticipated, as detailed in Humana's recent filing.

Humana Beats Q3 Estimates, Provides Guidance

Humana (NYSE:HUM) posted impressive third-quarter results, outperforming Wall Street analysts’ predictions. The company announced an adjusted EPS of $7.78, beating the projected $7.16.

Additionally, the quarter's revenue stood at $26.42 billion, beating the anticipated $25.57 billion. Bruce D. Broussard, Humana’s President and CEO, remarked on the robust earnings growth and highlighted a 19% rise in their individual Medicare Advantage membership.

However, for the full year 2023, the company expects an EPS of about $28.25, slightly lower than the expected $28.30.

Humana’s Investor Day Review, Guidance Raised

Analysts at RBC Capital raised their price target on Humana Inc. (NYSE:HUM) to $544 from $541 following the company’s Virtual Investor Day meeting on Thursday.

Management updated its outlook, raising its 2022 adjusted EPS guidance to $25.00 from $24.75, reflecting 21% year-over-year growth. Management cites continued favorable Medicare and Medicaid cost trends as seen through the first half of the year, as well as a lack of incremental headwinds from COVID baked into prior guidance.

The company expects adjusted EPS to reach $37.00 in 2025, representing a 14% CAGR, which is near the upper end of the company’s prior 11-15% long-term EPS growth target.