Humana (HUM) came out with quarterly earnings of $11.58 per share, beating the Zacks Consensus Estimate of $9.98 per share. This compares to earnings of $7.23 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 16.03%. A quarter ago, it was expected that this health insurer would post a loss of $2.24 per share when it actually produced a loss of $2.16, delivering a surprise of 3.57%.Over the last four quarters, the company has sur ...

Financial Data and Key Metrics Changes - The company reaffirmed its full-year guidance, indicating a strong start to 2025 with Q1 results ahead of expectations [7][14] - Adjusted EPS guidance for the year is approximately $16.25, with an expected insurance segment benefit ratio of 90.1% to 90.5% [15][14] - G&A costs for the quarter were slightly better than expectations, attributed to the timing of costs expected to be incurred in the second and third quarters [11][14] Business Line Data and Key Metrics Changes - No changes to membership guidance for 2025, with strong performance in the Open Enrollment Period (OEP) and a positive outlook for the rest of the year [9] - Significant progress in closing care gaps, with expectations to reduce gaps in care by 25% year over year and medication adherence campaigns showing a 30% to 50% reduction in members with weight refills [10][11] - CenterWell and Medicaid businesses are experiencing robust patient and membership growth, with 30 new centers added through acquisition and partnership [12][14] Market Data and Key Metrics Changes - The company is seeing strong year-to-date performance in markets with high concentrations of members, particularly in Florida, Illinois, and Texas [41] - Medicaid is performing in line with expectations, with approximately 100,000 growth year-to-date, aligning with the anticipated growth of 175,000 to 250,000 for the year [74][75] Company Strategy and Development Direction - The company is focused on operational efficiencies, increasing flexibility, and improving member outcomes while positioning for long-term success [14] - Emphasis on capital allocation and growth in CenterWell and Medicaid, with a focus on unlocking substantial value over the mid to long term [16][12] - The integration between the insurance segment and CenterWell is aimed at delivering better health outcomes and improving STARS performance [59][60] Management's Comments on Operating Environment and Future Outlook - Management noted that while challenges remain, there are no surprises in the external environment, and they are executing against controllable factors [7][8] - The company is optimistic about the underlying progress of the business, despite external regulatory headwinds [49][51] - Management expressed confidence in the ability to manage medical costs and G&A effectively while focusing on STARS outcomes [51][92] Other Important Information - The company is actively monitoring changes in consumer behavior due to the Inflation Reduction Act (IRA) [7] - Management highlighted the importance of the upcoming investor conference to provide clarity on earnings power and progress tracking [8][16] Q&A Session Summary Question: How much of your investments moved out of Q1? - Management indicated that most of the impact of incremental investments flowed through the MLR in Q1, with expectations for higher levels in the second through fourth quarters [19][20] Question: Update on the path to the 3% MA margin target? - Management reiterated focus on achieving a 3% margin, with timing tied to STARS outcomes, but no significant changes from previous communications [22][23] Question: Update on STARS initiatives and bids? - Management expressed confidence in progress made on STARS initiatives and ongoing bid processes, emphasizing a balanced approach to membership and margins [25][30] Question: Experience in Part D relative to expectations? - Trends in Part D are consistent with expectations, with mid-single-digit growth on the medical side and low double-digit growth on the pharmacy side [34][35] Question: Visibility on risk adjustment and Group MA? - Management reported strong membership changes and performance in Group MA, with no significant changes in behavior due to recent repricing activity [40][42] Question: Comments on Medicaid visibility and utilization? - Medicaid is performing in line with expectations, with strong growth and modest margin improvements anticipated [72][75] Question: Clarification on GAAP EPS and valuation adjustments? - Management clarified that the adjustment in GAAP EPS guidance is unrelated to structural impairment and is a complex calculation [88][94]

Financial Data and Key Metrics Changes - The company reaffirmed its full-year guidance, indicating a strong start to 2025 with Q1 results ahead of plan [5][14] - Adjusted EPS guidance for the year is approximately $16.25, with an expected insurance segment benefit ratio of 90.1% to 90.5% [15][14] - G&A costs for the quarter were slightly better than expectations, attributed to the timing of costs expected in the second and third quarters [11][14] Business Line Data and Key Metrics Changes - The Medicare product and experience maintained membership guidance for 2025, with strong performance in the Open Enrollment Period (OEP) [8] - CenterWell and Medicaid businesses showed robust patient and membership growth, with 30 new centers added through acquisition and partnership [12][14] - The company reported a 30% to 50% reduction year over year in members with weight refills due to medication adherence campaigns [11] Market Data and Key Metrics Changes - The company is seeing strong year-to-date performance in markets with high concentrations of members, particularly in Florida, Illinois, and Texas [41] - Medicaid membership growth is on track, with approximately 100,000 growth year-to-date, aligning with the expected annual growth of 175,000 to 250,000 [74] Company Strategy and Development Direction - The company is focused on operational efficiencies, increasing flexibility, and operating leverage while making investments to improve member outcomes [14] - The integration between the insurance segment and CenterWell is aimed at delivering better health outcomes and improving STARS performance [58][60] - The company is committed to returning to a 3% pre-tax margin in Medicare Advantage (MA) by 2027, with ongoing focus on quality and operational excellence [48][90] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying progress of the business despite external challenges, emphasizing control over medical costs and operational efficiencies [50][52] - The company is monitoring changes in consumer behavior due to the Inflation Reduction Act (IRA) and is prepared for potential impacts on future performance [6][14] - Management highlighted the importance of navigating regulatory headwinds while focusing on controllable factors [51][52] Other Important Information - The company is actively working through STARS strategy and bids, with a focus on balancing membership and margins [32][33] - Recent fulfillment agreements with multiple companies are expected to contribute positively to growth [12][63] Q&A Session Summary Question: How much of your investments moved out of Q1? - Management indicated that most of the impact of incremental investments flowed through the MLR in Q1, with expectations for higher levels in the second through fourth quarters [20] Question: Update on the path to the 3% MA margin target? - Management reiterated focus on achieving the 3% margin, with timing tied to STARS outcomes, and no significant changes from previous communications [23] Question: Update on STARS initiatives and bids? - Management expressed confidence in progress made on STARS initiatives and ongoing work on bids, emphasizing a balanced approach to membership and margins [27][32] Question: Experience in Part D relative to expectations? - Trends in the business are consistent with expectations, with mid-single-digit growth on the medical side and low double-digit growth on the pharmacy side [36] Question: Visibility on risk adjustment and Group MA? - Management reported strong membership changes and visibility into risk adjustment, with no significant behavioral changes noted in Group MA [41][43] Question: Comments on Medicaid visibility and utilization? - Medicaid is performing in line with expectations, with strong growth and positive trends in member engagement and outcomes [75][76] Question: Clarification on GAAP EPS and valuation adjustments? - Management clarified that the adjustment in GAAP EPS guidance is unrelated to structural impairment and is part of a complex calculation [93]

Financial Performance - 1Q25 earnings per share (EPS) reported at $10.30 (GAAP) and $11.58 (Adjusted) compared to $6.11 and $7.23 in 1Q24, representing a year-over-year increase of 68% and 60% respectively[3] - Consolidated revenues for 1Q25 reached $32,112 million, up from $29,611 million in 1Q24, reflecting a year-over-year growth of 8.5%[8] - Humana's consolidated revenues for Q1 2025 reached $32,112 million, up from $29,611 million in Q1 2024, reflecting an increase of 8.4%[40] - Humana Inc. reported a net income of $1,242 million for Q1 2025, up from $739 million in Q1 2024, representing a 68% increase[64] - Total revenues for Q1 2025 reached $32,112 million, compared to $29,611 million in Q1 2024, marking an increase of 8.5%[65][66] Insurance Segment Performance - The Insurance segment reported revenues of $30,937 million in 1Q25, an increase from $28,699 million in 1Q24, marking a growth of 7.7%[20] - The Insurance segment reported revenues of $30,937 million in Q1 2025, compared to $28,699 million in Q1 2024, marking a growth of 7.7%[40] - The Insurance segment's benefit ratio improved to 87.4% in Q1 2025 from 89.3% in Q1 2024, indicating better cost management[41] - Income from operations for the Insurance segment increased significantly to $1,574 million in Q1 2025, up from $898 million in Q1 2024, representing a growth of 75.2%[45] - The benefit ratio improved to 87.0% in Q1 2025 from 89.3% in Q1 2024, indicating better cost management in claims[65][66] Membership and Enrollment - Individual Medicare Advantage annual membership is expected to decline by approximately 550,000 due to exiting unprofitable plans and counties[3] - The total Medicare Advantage membership decreased to 5,788.4 thousand as of March 31, 2025, down 5.1% from 6,100.4 thousand a year earlier[67] - Humana expects to see growth of approximately 200,000 in Medicare stand-alone PDP membership[56] Operational Efficiency - The benefit ratio for the Insurance segment improved to 87.4% in 1Q25 from 89.3% in 1Q24, indicating enhanced operational efficiency[20] - Days in claims payable (DCP) decreased to 38.8 days in 1Q25 from 42.5 days in 1Q24, indicating improved claims processing efficiency[15] - Humana's operating cost ratio for Q1 2025 was 10.6%, slightly higher than 10.4% in Q1 2024, with adjusted (non-GAAP) figures showing 10.5% versus 10.2%[42] - Operating expenses for Q1 2025 were $30,098 million, an increase from $28,375 million in Q1 2024, reflecting a rise of 6.1%[66] Cash Flow and Capitalization - Operating cash flows decreased to $331 million in 1Q25 from $423 million in 1Q24, primarily due to unfavorable working capital items[17] - Humana's cash and cash equivalents at the end of Q1 2025 were $4,250 million, down from $5,910 million at the end of Q1 2024[64] - The company reported a significant increase in proceeds from the issuance of senior notes, totaling $1,481 million in Q1 2025 compared to $2,232 million in Q1 2024[64] - Debt-to-total capitalization improved to 42.8% in 1Q25 from 45.1% in 1Q24, reflecting a stronger balance sheet[8] Future Projections - Humana affirms its Adjusted FY 2025 EPS guidance at approximately $16.25 while revising GAAP EPS guidance to approximately $14.68 from $15.88[6] - Total revenues for 2025 are expected to be between $126 billion and $128 billion, with the insurance segment contributing $121 billion to $123 billion[56] - The CenterWell segment is projected to generate revenues between $20.5 billion and $21.5 billion[56] - The benefit ratio for the insurance segment is projected to be between 90.1% and 90.5%[56] - Operating cost ratio for consolidated operations is expected to be between 11.3% and 11.7%[56] - Cash flows from operations are projected to be between $2.4 billion and $2.9 billion[56] Segment Growth - The CenterWell segment revenues increased to $5,095 million in 1Q25 from $4,818 million in 1Q24, driven by growth in the primary care business[27] - The CenterWell segment's income from operations rose to $392 million in Q1 2025, compared to $282 million in Q1 2024, reflecting a growth of 39.1%[47] - The number of primary care patients served grew to 417,800 as of March 31, 2025, up from 318,000 a year earlier, indicating a year-over-year growth of 31.4%[72] - The total number of de novo primary care centers increased to 136 in Q1 2025, compared to 113 in Q1 2024, marking a growth of 20.4%[72] - The company aims to expand its market presence through new primary care centers and enhanced pharmacy solutions, focusing on improving patient engagement and care quality[77]

Core Viewpoint - Humana Inc. is expected to report strong first-quarter 2025 results, with earnings projected at $9.98 per share and revenues at $32.22 billion, indicating significant year-over-year growth [1][3]. Financial Performance - The first-quarter earnings estimate reflects a 38% year-over-year increase, while revenues are expected to grow by 9.8% [1]. - For the current year, Humana's revenue consensus estimate stands at $126.55 billion, representing an 8% year-over-year rise, and the EPS consensus is $16.36, indicating a growth of approximately 0.9% [3]. Earnings Expectations - Humana has consistently beaten earnings estimates in the past four quarters, with an average surprise of 15.4% [3]. - The company has a positive Earnings ESP of +0.57% and a Zacks Rank of 3 (Hold), suggesting a likelihood of an earnings beat this quarter [4]. Revenue Drivers - Revenue growth in Q1 is anticipated to be driven by higher premiums, with the consensus estimate for premiums at $30.7 billion, reflecting an 8.6% year-over-year increase [5]. - Revenues from Medicare stand-alone PDPs are expected to reach $1.7 billion, indicating a substantial year-over-year increase of 110.8% [5]. Membership Trends - Despite the expected revenue growth, total medical memberships are projected to decline by 3.8% year-over-year, primarily due to decreases in individual Medicare Advantage units and ASO commercial memberships [6]. Operating Expenses - Total operating expenses for the Insurance segment are estimated to grow by 7.6% year-over-year, attributed to higher operating costs [7].

Core Insights - Humana (HUM) is expected to report quarterly earnings of $9.98 per share, reflecting a 38% increase year over year, with revenues projected at $32.22 billion, a 9.8% increase from the previous year [1] - The consensus EPS estimate has been revised upward by 3.4% over the past 30 days, indicating analysts' positive reassessment of the company's performance [1][2] Revenue Estimates - Analysts estimate 'Revenues- Premiums' to be $30.68 billion, representing an 8.6% year-over-year increase [4] - 'Revenues- Services' are projected to reach $1.20 billion, indicating a 12.8% increase year over year [4] - 'Revenues- Investment income (loss)' is expected to be $275.11 million, reflecting a 4.5% decrease year over year [4] - 'Revenue- Insurance' is forecasted to be $31.15 billion, showing an 8.5% increase from the year-ago quarter [5] Membership Metrics - 'Medical Membership - Medicare stand-alone PDP' is expected to reach 2.45 million, up from 2.35 million in the same quarter last year [6] - 'Medical Membership- State-based contracts and other' is projected at 1.5 million, compared to 1.26 million in the previous year [6] - 'Medical Membership - Group Medicare Advantage' is estimated at 557.22 thousand, slightly up from 551.5 thousand year over year [7] - 'Medical Membership - Medicare Supplement' is forecasted at 375.88 thousand, an increase from 323.2 thousand in the previous year [7] - 'Medical Membership - Individual Medicare Advantage' is expected to be 5.2 million, down from 5.55 million year over year [7] - Total 'Medical Membership - Medicare' is projected to reach 8.21 million, down from 8.45 million in the previous year [8] - 'Medical Membership - Military services' is expected to be 5.32 million, down from 5.96 million in the same quarter last year [8] Stock Performance - Humana shares have shown a return of -0.1% over the past month, compared to a -4.3% change in the Zacks S&P 500 composite [9] - The company holds a Zacks Rank 3 (Hold), indicating expected performance in line with the overall market [9]

Company Overview - Humana (HUM) is expected to report quarterly earnings of $9.98 per share, reflecting a year-over-year increase of +38% [3] - Revenues are anticipated to reach $32.22 billion, which is a 9.8% increase from the same quarter last year [3] Earnings Expectations - The earnings report is scheduled for April 30, 2025, and could influence stock movement based on whether actual results exceed or fall short of expectations [2] - The consensus EPS estimate has been revised 3.41% higher in the last 30 days, indicating a more optimistic outlook from analysts [4] Earnings Surprise Prediction - The Zacks Earnings ESP for Humana is +0.57%, suggesting a potential positive deviation from the consensus estimate [11] - However, Humana currently holds a Zacks Rank of 4, which complicates the prediction of an earnings beat [11] Historical Performance - In the last reported quarter, Humana was expected to post a loss of $2.24 per share but actually reported a loss of $2.16, resulting in a surprise of +3.57% [12] - Over the past four quarters, Humana has successfully beaten consensus EPS estimates four times [13] Industry Context - In the Zacks Medical - HMOs industry, Centene (CNC) is projected to report earnings of $2.36 per share, marking a year-over-year increase of +4.4% [17] - Centene's revenue is expected to be $43.47 billion, up 7.6% from the previous year [17] - The consensus EPS estimate for Centene has been revised 1.7% lower, but a higher Most Accurate Estimate results in an Earnings ESP of 8.17%, indicating a likely earnings beat [18]

Core Insights - The medical sector, particularly health insurance carriers, faced significant challenges in 2024 due to rising utilization costs associated with Medicare Advantage (MA) plans, which negatively impacted profits [1][2] - Despite the difficulties in 2024, health insurers are expected to perform well in 2025, benefiting from tariff-free status and recession resistance [2][3] Humana Inc. - Humana, the second-largest Medicare Advantage plan provider, experienced a stock decline of 46% in 2024, closing at $253.70 on December 31, 2024, but has seen an 11.3% increase year-to-date as of April 14, 2025 [2][3] - The company reported an EPS loss of $2.16 in Q4 2024, although revenues rose 10.4% year-over-year to $29.21 billion, surpassing consensus estimates [7] - Humana's adjusted benefits ratio increased by 120 basis points year-over-year to 91.9%, indicating rising costs [7][8] - The Centers for Medicare and Medicaid Services (CMS) raised MA reimbursement rates by 5.06% for 2026, resulting in an additional $26 billion for MA plan providers, with Humana set to benefit significantly [5][6] - However, Humana faces potential penalties of up to $2 billion due to a drop in Star Ratings, which could reduce net MA revenues to $3.4 billion [6][8] CVS Health - CVS Health has shown a turnaround, with stock prices increasing by 54% year-to-date as of April 14, 2025, and operates a more diversified business model compared to Humana [10][12] - The company reported an EPS of $1.19 in Q4 2024, beating consensus estimates, with revenues rising 4.2% year-over-year to $97.71 billion [13] - CVS Health's MA membership is expected to decline by high-single digits in unprofitable regions, but the 5.06% reimbursement rate increase could lead to an estimated $3 billion increase in 2026 reimbursements [12][17] - The Health Care Benefits segment reported an adjusted operating loss of $439 million, primarily due to higher MA utilization and lowered Star Ratings [13][14] - CVS Health's management aims to restore target margins of 3% to 5% in 2026, supported by the recent reimbursement increase [17]

Core Viewpoint - UnitedHealth Group is positioned as the more attractive investment compared to Humana, driven by its diversified revenue streams, consistent earnings performance, and strategic focus on technology and innovation [21][22]. Group 1: UnitedHealth Overview - UnitedHealth has a market capitalization of $480 billion and operates through two main segments: UnitedHealthcare and Optum, providing health benefits and data-driven healthcare services [3]. - The company serves 50.68 million people as of December 31, 2024, and has consistently exceeded earnings expectations, with an average surprise of 2.5% over the past four quarters [4]. - Financially, UnitedHealth ended 2024 with $29.1 billion in cash and short-term investments, with a total debt-to-capital ratio of 43.9% [5]. - In 2024, UnitedHealth returned $16 billion to shareholders through share repurchases and dividends, with a dividend yield of 1.52% [6]. - Strategic investments in technology and value-based care through Optum position UnitedHealth as a leader in healthcare innovation [7]. Group 2: Humana Overview - Humana has a market capitalization of $30.7 billion and focuses heavily on government-sponsored programs, particularly Medicare Advantage (MA), covering 16.3 million members as of December 31, 2024 [8]. - The company has shown earnings strength, surpassing analyst estimates with an average surprise of 15.4% over the last four quarters [9]. - However, Humana faces challenges, including a profit warning due to high medical costs, with a benefits expense ratio rising to 89.8% in 2024 [10]. - Humana's lack of diversification and reliance on MA make it more vulnerable to policy changes and demographic shifts [11]. Group 3: Comparative Analysis - The Zacks Consensus Estimate for UnitedHealth's 2025 sales and EPS indicates a year-over-year increase of 12.7% and 7.5%, respectively, while Humana's estimates are only 8% and 0.9% [13][14]. - In terms of valuation, UnitedHealth trades at 18X forward 12-month earnings, slightly less than Humana's 18.27X, both above the industry average of 15.55X [16]. - Over the past month, UnitedHealth's shares have outperformed Humana, the industry, and the S&P 500 Index [18]. Group 4: Conclusion - UnitedHealth is deemed the better investment opportunity due to its diversified business model and robust performance, while Humana's recent challenges and higher valuation make it a less attractive option [21][22].

Company Overview - Humana (HUM) shares increased by 10.7% to $281.95 in the last trading session, with a higher-than-average trading volume [1] - The stock has gained 1.4% over the past four weeks [1] Revenue Drivers - The increase in Humana's stock price was primarily driven by the U.S. government's decision to raise Medicare Advantage payment rates by 5.06% for 2026, significantly higher than the initially proposed 2.23% increase [2] - This adjustment is projected to generate over $25 billion in additional revenue for insurers, benefiting companies like Humana [2] Earnings Expectations - Humana is expected to report quarterly earnings of $9.95 per share, reflecting a year-over-year increase of 37.6% [3] - Revenue for the upcoming quarter is anticipated to be $32.22 billion, which is a 9.8% increase compared to the same quarter last year [3] Market Sentiment - The consensus EPS estimate for Humana has remained unchanged over the last 30 days, indicating stability in earnings expectations [4] - The stock's price typically does not continue to rise without trends in earnings estimate revisions, suggesting that monitoring future earnings revisions will be crucial for assessing stock performance [4] Industry Context - Humana operates within the Zacks Medical - HMOs industry, which includes other companies like Select Medical (SEM) [4] - Select Medical's stock closed 0.6% higher at $15.75, but has seen a decline of 10% over the past month [4]