Humana Projects Decline in Medicare Advantage Memberships
Key Takeaways:
* Humana anticipates a decrease in Medicare Advantage members in 2025.
* Fourth-quarter revenue surpassed expectations, while adjusted loss was narrower.
* Humana's shares have underperformed in the past year.
Humana Inc. (HUM) announced that it forecasts a decline in Medicare Advantage memberships by 2025. This projection comes after the downgrade of one of its primary plans' quality rating.
Financial Performance:
The health insurer reported $29.21 billion in revenue for the fourth quarter, a 10% annual increase and exceeding analysts' estimates. Humana's adjusted loss per share reached $2.16, higher than last year's $0.11 loss but still within analysts' expectations.
For 2025, Humana predicts adjusted earnings per share of $16.25, surpassing 2024's $16.21 but falling slightly short of analysts' projections. The company also anticipates approximately a 10% reduction in individual Medicare Advantage members from 2024 levels.
Quality Rating Downgrade:
The Centers for Medicare & Medicaid Services (CMS) downgraded a Humana plan's quality rating from 4.5 to 3.5 stars last year, impacting nearly half of its Medicare Advantage memberships. This downgrade contributed to the decline in membership projections.
Market Impact:
Humana shares experienced a 5% intraday decline on Tuesday and have lost approximately 30% of their value over the past year. The company's stock performance reflects concerns about its declining Medicare Advantage business.