Humana Reports $679 Million Profit As Medicare Business Improves

Humana Wednesday reported a $679 million second quarter profit thanks to higher-than-expected growth of its Medicare Advantage business.

Medicare Advantage plans, which are a big share of Humana’s business, contract with the federal government to provide extra benefits and services to seniors, such as disease management and nurse help hotlines with some also offering vision, dental care and wellness programs.

Humana raised its 2024 individual Medicare Advantage annual membership growth expectations by 75,000 to a new target of 225,000. That’s a 4.2% increase, according to the company’s second quarter earnings report.

Humana reported $29.5 billion in total revenue in the quarter compared to $26.7 billion in the year-ago period. “Revenue for the quarter was slightly favorable to expectations driven by the higher than anticipated membership growth, along with slightly higher than anticipated member risk scores,” Humana’s management team including new chief executive officer Jim Rechtin said in prepared remarks released Wednesday morning along with the earnings. Rechtin took over as CEO earlier this month from Bruce Broussard, who is retiring.

Humana’s stock had been suffering earlier this year after the company in late January reported a surprising 2023 fourth quarter loss and higher than expected medical costs from its Medicare Advantage business.

But Wednesday’s report was much improved with the company reporting second quarter net income of $679 million, or $5.62 per share. That compares to $959 million, or $7.66 per share, in the year-ago period.

Humana management’s prepared remarks said the company’s “outperformance was driven by higher than anticipated revenue in our MA business, combined with favorable claims development and lower than planned administrative expenses, some of which is considered timing in nature.”

Humana ended the quarter with 5.6 million individual Medicare Advantage enrollees, which was up from nearly 5.3 million a year ago.

“Second quarter results continued Humana’s solid start to 2024,” Humana management said. “And while Humana and the broader industry continue to navigate a dynamic environment, we remain confident in our ability to deliver full year Adjusted EPS of approximately $16.00 and drive margin expansion and Adjusted EPS growth in 2025 as a first step on our multiyear path to a normalized margin of at least 3 percent in our individual MA business, delivering compelling shareholder value over the long-term.”