Shares of the company rose 3.3% in premarket trading after the health insurer also raised its 2024 individual Medicare Advantage growth target by 50,000 members.
The company, however, saw a jump in its medical benefit ratio – percentage of premiums spent on medical care – to 88.9% for the quarter from 85.5% last year. The growth was also higher than analysts’ expectation of 88.45%, according to LSEG data.
The company said it has taken a more conservative approach towards reserves for medical claims following disruptions caused by a recent hack at UnitedHealth tech unit Change Healthcare.
Chief Financial Officer Susan Marie Diamond said last month about 15% to 20% of Humana’s medical claims were dependent on the UnitedHealth unit.
The company also said it no longer believes adjusted earnings per share growth of $6 to $10 was possible in 2025 after the final government notice on Medicare reimbursement rates.
Humana, which primarily provides government-backed insurance plans including Medicare Advantage, has been facing multiple challenges.
It has already warned of a potential hit to profits this year and the next from increased demand for medical procedures especially among older adults who had delayed surgery during the pandemic.
Humana generated revenue of $29.61 billion in the first quarter, above estimates of $28.47 billion.
On an adjusted basis, Humana reported a profit of $7.23 per share, higher than the average analyst estimate of $6.12 per share.
The company also recorded a $1.08 per share adjustment in valuation for certain strategic partnerships, which boosted its adjusted profit.
© 2024 Thomson/Reuters. All rights reserved.
Read the full article here