Louisville, KY – Humana Inc. (HUM, +0.28%) experienced a 2.6% increase in premarket trading on Wednesday, following the release of its second-quarter earnings report. The health insurance company surpassed earnings expectations and highlighted positive developments in the Medicare Advantage utilization environment based on recent claims activity.
Strong Financial Performance
Humana reported per-share earnings of $7.66 for the quarter, a significant increase from $5.48 compared to the same period last year. Adjusted per-share earnings stood at $8.94, outperforming the FactSet consensus estimate of $8.76.
The company also recorded robust revenue figures, as it reported $26.747 billion for the quarter, up from $23.662 billion in the prior year. This revenue increase also surpassed the FactSet consensus estimate of $25.825 billion.
Moreover, Humana noted that its benefits expense ratio slightly rose to 86.3% from 85.8% in comparison to the previous year. Despite this increase, the ratio remained within its projected range of 86.3% to 87.3% for 2023. A higher expense ratio indicates elevated costs associated with providing insurance.
Addressing Challenges
During June, both Humana and its competitors experienced a decline in their stock prices due to concerns over pent-up demand for hip and knee surgeries among senior citizens, which had been delayed by the COVID-19 pandemic. The surge in demand resulted in increased costs, leading to a significant sell-off within the sector.
Humana acknowledged this challenge but emphasized that recent claims activity suggested an improvement in the Medicare Advantage utilization environment.
Positive Outlook
Based on its strong performance in Q2, Humana raised its adjusted EPS forecast for the full year. The company now expects adjusted EPS to reach at least $28.25, slightly below the FactSet consensus estimate of $28.29.
Stock Performance
In the year-to-date period, Humana’s stock has experienced an 11% decline, contrasting with the broader market’s performance. The S&P 500 (SPX, -0.27%) has gained 19% during the same period.