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Humana 8-K Report, Financial Results (Jan 18, 2024)

Reports
Earnings & Results·Regulation FD
Filing Date
Filed January 18, 2024
Period End
January 18, 2024
Security
HUM
In the record · 2016–202610-K1110-Q328-K199

HUM filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 199 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Aug ’18Aug ’18
  2. Material agreement8-K · Mar ’20Mar ’20
  3. Leadership change8-K · Sep ’22Sep ’22
  4. Leadership change8-K · Jul ’26Jul ’26

01—Abstract

Summary

Summary of the 8-K filed January 18, 2024. Cited figures are marked; the original filing is the authoritative source.

Humana Inc. reported that its individual Medicare Advantage (MA) membership growth outlook for 2024 is now approximately 100,000 members, or 1.8 percent growth over about 5.4 million members at December 31, 2023.

Previously, the company had expected growth at or slightly above the industry average. Actual annual election period (AEP) growth was approximately 120,000 members, but that is expected to decline slightly by year end because of limited post-AEP sales opportunities and higher expected attrition in Dual Special Needs Plans as members lose dual eligibility during Medicaid redeterminations. Management attributed the lower share of industry growth to its balanced pricing approach, with a higher proportion of sales coming from existing members changing plans and fewer new member sales than expected.

Humana also revised its full-year 2023 earnings expectations. Higher Medicare Advantage medical cost trends, mainly inpatient utilization in November and December and rising physician, outpatient surgery and supplemental benefit costs, pushed the fourth-quarter 2023 Adjusted Insurance segment benefit ratio to approximately 91.4 percent, versus a prior expectation of 89.5 percent. The full-year 2023 Adjusted Insurance segment benefit ratio is now approximately 88.0 percent, versus 87.5 percent previously.

The company now expects GAAP EPS of approximately $20.00a and Adjusted EPS of approximately $26.09 for 2023, and it could not fully offset the higher costs through cost containment initiatives. Humana said the emerging utilization trends are being assessed for their impact on 2024 and are expected to be material if they continue, with an update to come on the fourth-quarter earnings call. The company believes the trends affect the industry broadly and expects them to be reflected in the 2025 Medicare Advantage pricing cycle.

The fourth-quarter 2023 earnings call has been rescheduled to January 25, 2024, at 9 a.m. Eastern time.

02—Key points

Key Highlights

  1. Individual Medicare Advantage membership growth outlook for 2024 revised to approximately 100,000 members (1.8 percent growth over about 5.4 million members at December 31, 2023), down from the prior commentary of at or slightly above industry average growth.
  2. Actual AEP growth of approximately 120,000 members, expected to decline slightly by year end due to limited post-AEP sales and higher expected D-SNP attrition from Medicaid redeterminations.
  3. Fourth-quarter 2023 Adjusted Insurance segment benefit ratio now approximately 91.4 percent, compared with the previous expectation of 89.5 percent, due to higher inpatient and non-inpatient Medicare Advantage cost trends.
  4. Full-year 2023 Adjusted Insurance segment benefit ratio now approximately 88.0 percent, compared with the previous expectation of 87.5 percent.
  5. Expected 2023 results: GAAP EPS of approximately $20.00 and Adjusted EPS of approximately $26.09.
  6. The impact of emerging utilization trends on the 2024 outlook is anticipated to be material if current trends continue; an update will be given on the fourth-quarter earnings call.
  7. Fourth-quarter 2023 earnings call rescheduled to Thursday, January 25, 2024, at 9 a.m. Eastern time, and the company remains in its quiet period until then.

03—Questions

Frequently Asked Questions

  1. Why did Humana lower its 2024 individual Medicare Advantage membership growth expectations?

    The company said its balanced approach to pricing resulted in a lower share of overall industry growth. A higher proportion of AEP sales came from existing members changing plans rather than new members, and new member sales were lower than expected. Attrition during AEP was also slightly higher than expected.

  2. What caused the higher 2023 medical costs?

    Humana said Medicare Advantage medical cost trends increased further in the fourth quarter, driven by higher than anticipated inpatient utilization in November and December. Non-inpatient trends also rose, mainly in physician, outpatient surgery and supplemental benefit categories, as shown in the November and December paid claims data.

  3. What are the revised 2023 earnings expectations?

    The company now expects GAAP EPS of approximately $20.00 and Adjusted EPS of approximately $26.09 for the year ended December 31, 2023. The Adjusted Insurance segment benefit ratio is approximately 91.4 percent for the fourth quarter and approximately 88.0 percent for the full year.

  4. What does Humana expect for 2024 and 2025?

    Humana is still assessing the expected impact of emerging utilization trends on its 2024 outlook, which it said is anticipated to be material if current trends continue. It will provide an update on the fourth-quarter 2023 earnings call. The company believes the trends are affecting the industry broadly and expects them to be contemplated in the 2025 Medicare Advantage pricing cycle.

  5. When is the next earnings update, and why was it moved?

    The fourth-quarter 2023 earnings call was rescheduled to Thursday, January 25, 2024, at 9 a.m. Eastern time. The company said this was to provide additional detail to its stakeholders.

04—Continue

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