Humana's Third-Quarter Profit Beats Estimates

(Reuters) – Humana beat Wall Street estimates for third-quarter profit on Wednesday, driven by higher-than-expected premiums in its government-backed Medicare Advantage insurance for older adults.

The health insurer, reliant on Medicare Advantage plans, now expects "at least $16" in adjusted profit for the full year, an increase from its previous forecast of "approximately $16.00".

The Medicare Advantage sector has faced challenges since late 2022 due to rising healthcare costs among older adults. Recent government payment rates have compounded these issues, complicating insurers' responses to higher utilization trends.

Louisville, Kentucky-based Humana reported higher than anticipated revenue in its MA business and gained from strength in its primary care segment, CenterWell.

For the full year, Humana (NYSE:HUM) anticipates individual net membership growth in its MA business of about 265,000, up from a previous estimate of 225,000.

Humana reported a third-quarter medical cost ratio of 89.9%, up from 86.6% a year earlier. This ratio tracks costs as the percentage of premiums spent on medical care. Analysts had expected a ratio of 89.94% for the quarter.

On an adjusted basis, Humana reported a profit of $4.16 per share, exceeding the average analyst estimate of $3.40, according to data from LSEG. The company reported quarterly adjusted revenue of $29.3 billion, surpassing estimates of $28.67 billion.