Investing.com — Humana (NYSE ) reported third-quarter earnings and revenue that beat estimates, marking a positive development for the health insurance group following recent setbacks.
Earlier this month, stocks fell after the U.S. government released the results of its quality ratings for Medicare health and prescription drug plans for 2025.
The numbers showed that 25% of Humana members had enrolled in plans with ratings of 4 stars or higher in 2025, up from 94% the previous year. Much of this decline was due to Humana's H5216 contract rating being lowered from 4.5 stars to 3.5 stars, the company said.
Humana has noted that the decline will affect its quality bonus payments in 2026. The Centers for Medicare and Medicaid typically awards a quality bonus to health plans that achieve 4 stars or higher.
Analysts have suggested that litigation could now be in Humana's future as it attempts to reverse some of the ratings results.
Humana has said it is taking steps to “mitigate” the expected impact on its 2026 revenue, although it has noted that the ratings decline is not expected to affect its financial outlook for the current year or 2025.
On Wednesday, the firm raised its forecast for annual individual Medicare Advantage membership growth in 2024 by about 5% to about 265,000. It also raised its full-year adjusted earnings per share guidance to “at least” $16, up from its previous outlook of “approximately” $16.
In the quarter ended September 30, adjusted earnings per share of $4.16 came well above consensus projections of $3.35, while revenue of $29.40 billion also beat expectations . In prepared remarks, Humana executives said the returns were driven by slightly higher-than-anticipated individual Medicare Advantage membership and superior performance at its CenterWell primary care centers.
The industry's “proactive anticipation” of higher costs, which are due in part to more people choosing to undergo elective surgeries delayed by the COVID-19 pandemic, also supported the results, executives said.
Humana shares rose in early U.S. trading.
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