Humana sinks 10% after cutting profit guidance on tempered Medicare Advantage growth outlook
Humana Inc (NYSE:HUM) lowered its profit guidance today after it was forced to adjust its forecast for individual Medicare Advantage (MA) growth for the year ending December 31, 2024.
The company now anticipates approximately 100,000 new members, reflecting a 1.8% increase over its membership as of December 31, 2023, totaling around 5.4 million members.
This adjusted forecast deviates from the earlier expectation of achieving “at or slightly above industry average growth,” the company said.
Shares fell more than 10% in early Thursday trade.
“The Company’s membership growth outlook for 2024 is impacted by its balanced approach to pricing which resulted in a lower share of overall industry growth. While the Company’s overall AEP sales volume was in line with expectations, a higher proportion was driven by plan change activity by existing members, resulting in lower new member sales than expected,” HUM said in a filing.
The actual AEP growth for Humana stands at approximately 120,000 members, but it is expected to decrease slightly by year-end due to a more limited sales opportunity post-AEP and the anticipation of slightly higher attrition within its Dual Special Needs Plan (D-SNP) offerings.
“The Company continues to believe it took a prudent approach to 2024 pricing considering the current regulatory changes and evolving utilization environment.”
Along these lines, Humana adjusted its full-year outlook. It now expects adjusted EPS of $26.09, compared to the prior forecast for “at least $28.25.” Analysts were looking for FY EPS of $28.27.
Humana also rescheduled the earnings call for Thursday, January 25th, 2024.
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