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During its fourth-quarter and
full-year 2022 earnings call on Feb. 1, Humana Inc. said that it will have
strong adjusted earnings per share (EPS) growth and see a significant
increase in its individual Medicare Advantage (MA) enrollment this year.
Humana anticipates MA
enrollment trends to continue
- Humana projects its adjusted
EPS in 2023 will be at least $28, which “is slightly favorable to prior
statements” and is 10.9% higher than its $25.24 adjusted EPS for 2022,
Jefferies analyst David Windley wrote in a note to clients on Feb. 1.
- Meanwhile, the
company expects its individual MA membership will increase by at least
625,000 covered lives this year, representing a 13.7% increase from the
end of 2022.
- During the 2023
Annual Election Period (AEP), Humana added 163,000 members in Texas,
Georgia, Florida and Illinois, up significantly from the 29,000 members
added in the 2022 enrollment period. Bruce Broussard, Humana’s president
and CEO, told
analysts on Humana’s earnings call that most of those members are
in value-based arrangements.
- “Our strong
2023 membership growth was broad-based across our geographic footprint
and benefits not only our MA business, but also our growing and maturing
payer-agnostic CenterWell platform, enhancing our ability to drive more
penetration and integration of our CenterWell assets,” Broussard said.
Humana's fourth-quarter
MLR was ‘elevated’
- In 2023, Humana
expects its medical loss ratio for its insurance segment to be between
86.3% and 87.3%, which compares to last year’s 86.6% MLR. Susan Diamond,
Humana’s chief financial officer, told analysts the MLR guidance is
“driven by the targeted investments made in our Medicare Advantage plan
designs in 2023 as well as Medicaid growth, which carries a higher
[MLR].”
- Whit Mayo, an
SVB Securities analyst, wrote in a note to investors on Feb. 1 that the
company’s 87.3% MLR in the fourth quarter was slightly above the 87.1%
consensus. The company’s retail segment had an 88.4% MLR, which was
above the 87.8% consensus, while the group and specialty segment had a
78.5% MLR, below the 83.3% consensus.
- “Given the
sizeable delta between the two segments’ MLR, we suspect the higher
upper respiratory season was a primary driver of the elevated retail and
consolidate[d] MLR,” Mayo wrote.
- Diamond told
analysts that medical costs in the MA business during the fourth quarter
were greater than expected “driven by higher-than-anticipated flu and
COVID costs, as well as higher reimbursement rates implemented for 340B
eligible drugs.” However, she added that “these are discrete items in
the quarter and do not have a carryover impact into 2023. Excluding
these items, total medical costs in our Medicare Advantage business were
modestly below our previous expectation.”
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