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Humana (HUM) Exits Business Line to Focus More on Core Units
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Humana Inc. (HUM - Free Report) recently made an exit from the Employer Group Commercial Medical Products business. The decision was taken owing to the incapability of the business to effectively address HUM’s commercial members’ needs in the long term or aid its future strategic plans.
The departure from the business, comprising all fully insured, self-funded and Federal Employee Health Benefit medical plans coupled with the linked wellness and rewards programs, will take place over the successive 18-24 months.
The latest move of Humana won’t likely inflict any effect on the overall adjusted earnings per share (EPS) and the benefit ratio outlook of its Insurance segment for 2023. However, owing to the seasonal nature of the Employer Group Commercial Medical Products earnings, HUM presently anticipates first-quarter 2023 earnings to account for around 33% of full-year adjusted EPS guidance.
The earlier outlook released with fourth-quarter 2022 results, which did not consider the non-GAAP treatment of the Employer Group Commercial Medical business, estimated first-quarter earnings to make up for roughly 35% of full-year guidance.
The Insurance segment’s benefit ratio is also expected to bear the impact of the business exit in the first quarter of 2023. The metric is projected to witness an uptick of around 30 basis points in the first quarter.
Humana seems to be prudent in deciding to depart from the underperforming Employer Group Commercial Medical Products business. Membership of fully-insured commercial plans declined 17.5% year over year as of Dec 31, 2022.
Another notable fact inevitably highlighted by the recent move is Humana’s intensified focus and intent to invest higher resources to better serve its core business lines within the Insurance segment. The business lines comprise Government-funded programs of Medicare Advantage, Group Medicare, Medicare Supplement, Medicare Prescription Drug Plans, Medicaid and Military. Specialty business consisting of Dental, Vision and Life plans also form a part of its core Insurance business lines.
The business exit has also been made to enable Humana to bolster the capabilities of its healthcare services brand, CenterWell. Through this business, HUM actively expands the number of senior-focused primary care centers throughout the United States and caters to a rapidly growing nationwide aging population.
The Government business of Humana continues to witness growing membership and new collaborations or contract extensions with renowned healthcare systems. This has been bolstering HUM’s partner networks and strengthening its U.S. footprint. For 2023, Humana anticipates individual Medicare Advantage membership to witness a minimum increase of around 625,000 or 13.7% from the 2022 reported figure.
Shares of Humana have gained 16.8% in a year compared with the industry’s 2.4% growth. HUM currently carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks in the Medical space are Henry Schein, Inc. (HSIC - Free Report) , Edwards Lifesciences Corporation (EW - Free Report) and Thermo Fisher Scientific Inc. (TMO - Free Report) . While Henry Schein sports a Zacks Rank #1 (Strong Buy), Edwards Lifesciences and Thermo Fisher Scientific carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Henry Schein’s earnings surpassed the Zacks Consensus Estimate in three of the last four quarters and matched the mark once, the average beat being 2.97%. The Zacks Consensus Estimate for HSIC’s 2023 earnings suggests an improvement of 8.7%, while the same for revenues indicates growth of 1.6% from the respective 2022 estimates.
The Zacks Consensus Estimate for HSIC’s 2023 earnings has moved 5.7% north in the past 30 days. Shares of Henry Schein have declined 6.4% in a year.
Edwards Lifesciences’ earnings surpassed estimates in two of the last four quarters, matched the mark once and missed the same on the remaining one occasion, the average being 1.69%. The Zacks Consensus Estimate for EW’s 2023 earnings indicates a 1.6% rise, while the same for revenues suggests an improvement of 8.8% from the respective 2022 estimates.
The consensus mark for EW’s 2023 earnings has moved 1.2% north in the past 30 days. Shares of Edwards Lifesciences have lost 32.1% in a year.
Thermo Fisher Scientific’s earnings outpaced estimates in each of the trailing four quarters, the average being 9.96%. The Zacks Consensus Estimate for TMO’s 2023 earnings indicates a 1.4% rise, while the same for revenues suggests an improvement of 1% from the respective 2022 estimates.
The consensus mark for TMO’s 2023 earnings has moved up 2.8% in the past 30 days. Shares of Thermo Fisher Scientific have dipped 0.2% in a year.
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Humana (HUM) Exits Business Line to Focus More on Core Units
Humana Inc. (HUM - Free Report) recently made an exit from the Employer Group Commercial Medical Products business. The decision was taken owing to the incapability of the business to effectively address HUM’s commercial members’ needs in the long term or aid its future strategic plans.
The departure from the business, comprising all fully insured, self-funded and Federal Employee Health Benefit medical plans coupled with the linked wellness and rewards programs, will take place over the successive 18-24 months.
The latest move of Humana won’t likely inflict any effect on the overall adjusted earnings per share (EPS) and the benefit ratio outlook of its Insurance segment for 2023. However, owing to the seasonal nature of the Employer Group Commercial Medical Products earnings, HUM presently anticipates first-quarter 2023 earnings to account for around 33% of full-year adjusted EPS guidance.
The earlier outlook released with fourth-quarter 2022 results, which did not consider the non-GAAP treatment of the Employer Group Commercial Medical business, estimated first-quarter earnings to make up for roughly 35% of full-year guidance.
The Insurance segment’s benefit ratio is also expected to bear the impact of the business exit in the first quarter of 2023. The metric is projected to witness an uptick of around 30 basis points in the first quarter.
Humana seems to be prudent in deciding to depart from the underperforming Employer Group Commercial Medical Products business. Membership of fully-insured commercial plans declined 17.5% year over year as of Dec 31, 2022.
Another notable fact inevitably highlighted by the recent move is Humana’s intensified focus and intent to invest higher resources to better serve its core business lines within the Insurance segment. The business lines comprise Government-funded programs of Medicare Advantage, Group Medicare, Medicare Supplement, Medicare Prescription Drug Plans, Medicaid and Military. Specialty business consisting of Dental, Vision and Life plans also form a part of its core Insurance business lines.
The business exit has also been made to enable Humana to bolster the capabilities of its healthcare services brand, CenterWell. Through this business, HUM actively expands the number of senior-focused primary care centers throughout the United States and caters to a rapidly growing nationwide aging population.
The Government business of Humana continues to witness growing membership and new collaborations or contract extensions with renowned healthcare systems. This has been bolstering HUM’s partner networks and strengthening its U.S. footprint. For 2023, Humana anticipates individual Medicare Advantage membership to witness a minimum increase of around 625,000 or 13.7% from the 2022 reported figure.
Shares of Humana have gained 16.8% in a year compared with the industry’s 2.4% growth. HUM currently carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks in the Medical space are Henry Schein, Inc. (HSIC - Free Report) , Edwards Lifesciences Corporation (EW - Free Report) and Thermo Fisher Scientific Inc. (TMO - Free Report) . While Henry Schein sports a Zacks Rank #1 (Strong Buy), Edwards Lifesciences and Thermo Fisher Scientific carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Henry Schein’s earnings surpassed the Zacks Consensus Estimate in three of the last four quarters and matched the mark once, the average beat being 2.97%. The Zacks Consensus Estimate for HSIC’s 2023 earnings suggests an improvement of 8.7%, while the same for revenues indicates growth of 1.6% from the respective 2022 estimates.
The Zacks Consensus Estimate for HSIC’s 2023 earnings has moved 5.7% north in the past 30 days. Shares of Henry Schein have declined 6.4% in a year.
Edwards Lifesciences’ earnings surpassed estimates in two of the last four quarters, matched the mark once and missed the same on the remaining one occasion, the average being 1.69%. The Zacks Consensus Estimate for EW’s 2023 earnings indicates a 1.6% rise, while the same for revenues suggests an improvement of 8.8% from the respective 2022 estimates.
The consensus mark for EW’s 2023 earnings has moved 1.2% north in the past 30 days. Shares of Edwards Lifesciences have lost 32.1% in a year.
Thermo Fisher Scientific’s earnings outpaced estimates in each of the trailing four quarters, the average being 9.96%. The Zacks Consensus Estimate for TMO’s 2023 earnings indicates a 1.4% rise, while the same for revenues suggests an improvement of 1% from the respective 2022 estimates.
The consensus mark for TMO’s 2023 earnings has moved up 2.8% in the past 30 days. Shares of Thermo Fisher Scientific have dipped 0.2% in a year.