Humana, Elevance Realign Business Segments, Anticipate Strong 2023 AEP

by Lauren Flynn Kelly

 

After seeing improved medical cost trends and, in some cases, lower administrative costs, Humana Inc. and Elevance Health, Inc. recently lifted their earnings projections for the full year. Conference calls to discuss second-quarter 2022 earnings were full of questions about pricing and changes related to their Medicare Advantage (MA) products as the 2023 Annual Election Period (AEP) approaches, but executives were more focused on touting efforts to serve members holistically, including through rebranding strategies as companies attempt to align their various business segments.    Humana raises earnings despite COVID cases on the rise  For the quarter ending June 30, Humana reported better-than-expected adjusted earnings per share (EPS) of $8.67, compared with $6.89 in the year-ago quarter. That improvement was largely driven by favorable medical cost trends in the company’s individual MA and Medicaid businesses and lower-than-anticipated administrative costs, the company explained.  Although analyst predictions varied, Humana said its consolidated medical loss ratio met expectations and its individual MA MLR was better than expected, primarily due to lower inpatient utilization in the quarter. The company recorded a consolidated MLR of 85.8%.   Executives raised the company’s end-of-year earnings projection by 25 cents — a move that Oppenheimer & Co. analyst Michael Wiederhorn said “reflect[s] some conservatism” — to approximately $24.75.   While Humana in recent weeks has observed an uptick in COVID cases, hospitalization rates remain lower than in previous surges, explained Susan Diamond, chief financial officer, during a July 27 earnings conference call. Nevertheless, ongoing uncertainty related to the pandemic influenced the company to maintain 50-cent “COVID contingency” in its revised guidance.  Elevance lasers in on government markets after “very strong” AEP  During a July 20 earnings conference call, Elevance Health executives discussed the company’s own realignment. After gaining shareholder approval, Anthem, Inc. on June 28 officially changed its name to Elevance, reflecting its transformation from a “traditional health insurance company to a lifetime trusted health partner” with a focus on whole health.  When asked about the company’s MA positioning for 2023, Government President Felicia Norwood said the company started off 2022 after a “very strong” AEP and has stayed on track to deliver double-digit growth in the individual MA business. While she said it’s too early to talk about 2023 or specific growth projections, she said the company expects to “continue to have strong growth” and that its supplemental benefit offerings will “continue to resonate with customers,” according to a Motley Fool transcript of the call.  Moreover, she said Elevance continues to be “very focused on going deeper in our markets,” particularly in states where it has Blue Cross and Blue Shield plans. Of the more than 2.7 million net new medical members Elevance gained over the last year, 1.5 million were government-sponsored health plan lives, added Boudreaux.  Elevance reported second-quarter adjusted EPS of $8.04, up 14% from the prior-year quarter, and raised its full-year EPS expectation to greater than $28.70 (from a starting point of $25.20 provided at the beginning of the year).