The Louisville-based insurer again raised its earnings per share
guidance for 2019, this time due to expected Medicare Advantage growth.
KEY TAKEAWAYS
The
Louisville-based insurer also updated its earnings per share guidance for 2019
to a range between $16.63 to $16.88.
However,
Humana's operating cash flows slid significantly, down from $3.7 billion in Q1
2018 to $896 million in Q1.
CEO Bruce
Broussard said the company is "pleased to be able to deliver"
Medicare Advantage membership growth.
Humana has experienced "better than expected
utilization" in its Medicare Advantage (MA) offerings, leading the company
to project membership growth between 415,000 and 440,000 for the full year,
according to its latest earnings report
released Wednesday morning.
In its Q4 earnings report, the insurer originally stated that
it expected MA membership growth between 375,000 and 400,000
members in 2019.
The Louisville-based insurer also updated its earnings per share
guidance for 2019 to a range between $16.63 to $16.88. At the end of Q4 2018,
the company posted an EPS guidance in a range of $16.60 to $17.10.
Pretax income totalled $746 million for Humana, up from $707
million in Q1 2018, while total revenues reached $16.1 billion, up nearly $2
billion year-over-year.
C-SUITE PERSPECTIVE:
"In a year of strong Medicare Advantage membership growth for
the industry, driven in no small part by the health insurance industry fee
suspension and the resulting increased benefits offered to seniors nationwide,
we are pleased to be able to deliver industry leading individual Medicare
Advantage membership growth of 415,000 to 440,000 members together with above
target earnings growth for 2019," Bruce Broussard, CEO of Humana,
said in a statement. "Each day, more and more seniors are choosing
Medicare Advantage, a program that today has over 22 million members,
demonstrating the compelling value of a program that delivers affordable,
quality care for seniors and improved clinical outcomes as payers and providers
work together to understand each member’s whole health and help them navigate
the complex healthcare system."
Humana's operating cash flows slid significantly, down from $3.7
billion in Q1 2018 to $896 million in Q1. The company's adjusted operating cash
flows remained the same but exceeded the operating cash flows from Q1 2018,
which totalled $351 million.
As he did in the Q4 earnings report, CFO Brian Keane praised the
company's robust MA utilization and said it is a component of the predicted 19%
to 20% growth in Humana's adjusted EPS.
Jeff Becker,
a senior analyst at Forrester, told HealthLeaders that Humana's discussion of its Kindred Health acquisition points
to the company taking a "more active role in chronic disease
management," while reducing acute and ER utilization.
Becker added that Humana weighed in on two hot button healthcare
topics being discussed in Washington: the proposed 'Medicare for All'
legislation and PBM reform.
Broussard told analysts that he remains strongly opposed to
Medicare for All or any legislative efforts to eliminate privatized MA plans,
Becker said, but supports efforts to modify PBM rebates.
He stated that Humana is ready to implement point of sale rebates,
according to Becker, but will operate at the status quo until regulatory
requirements become mandatory.
ADDITIONAL HUMANA Q1 EARNINGS REPORT
HIGHLIGHTS:
·
Retail segment revenues grew to a little more than $14 billion, up
nearly $2 billion compared to Q1 2018.
·
Debt-to-capitalization ratio rose from 33.9% to 36%
year-over-year.
·
Healthcare services segment revenues topped $6 billion, up nearly
$500 million compared to this time last year.
For complete financial information, review Humana's filing with the Securities and Exchange
Commission.
Editor's
note: This story has been updated to include commentary from Jeff Becker of
Forrester.
Jack
O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.
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