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Will the Individual MA Unit Aid Humana's (HUM) Q4 Earnings?
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Humana Inc. (HUM - Free Report) is scheduled to release fourth-quarter 2023 results on Jan 25, 2024, before the opening bell.
Q4 Estimates
The Zacks Consensus Estimate for Humana’s fourth-quarter earnings per share is pegged at $2.13, indicating an improvement of 31.5% from the prior-year quarter’s reported figure.
The consensus mark for revenues is pegged at $25.4 billion, indicating 13.1% growth from the year-ago quarter’s reported number.
Earnings Surprise History
Humana boasts a solid earnings surprise history. Its bottom line beat estimates in each of the trailing four quarters, delivering an average surprise of 5.47%. This is depicted in the chart below:
In the fourth quarter, the top line of Humana is expected to have benefited from membership growth in its individual Medicare Advantage business, thereby fetching higher premiums to the health insurer. We expect individual Medicare Advantage membership to improve 18.9% year over year in the to-be-reported quarter. The Zacks Consensus Estimate for HUM’s fourth-quarter premiums from the Medicare business is pegged at $21.7 billion, implying a 20.1% rise from the prior-year quarter’s reported figure.
However, the customer base of its prescription drug plans (PDP) may have witnessed a decline due to the inclination of Medicare beneficiaries toward Medicare Advantage over original Medicare and PDP. The consensus mark for premiums from its Medicare Stand-Alone PDP products is pinned at $455 million, indicating a decline of 7.1% from the prior-year quarter’s reported figure.
Strength in the Medicaid business, resulting from numerous contract wins, is likely to have contributed to growing premiums in the fourth quarter. The consensus mark for its Medicaid and other premiums is pegged at $1.8 billion, suggesting 6.5% growth from the year-ago quarter’s reported number.
Apart from higher membership growth in individual Medicare Advantage and state-based contracts, the Insurance segment of Humana is likely to have been aided by a rise in commercial fully insured medical premiums and higher per member per month rates in a majority of its business lines. The Zacks Consensus Estimate for the segment’s revenues is pegged at $24.7 billion. We expect the unit’s revenues to be $25.2 billion in the to-be-reported quarter, up 16.5% year over year.
Results of HUM’s CenterWell segment are likely to have gained from the strength in pharmacy and primary care businesses in the fourth quarter. The consensus mark for the unit’s revenues is pinned at $4.7 billion. Our estimate anticipates the unit’s revenues to be $4.6 billion, indicating an improvement of 10.8% year over year.
The company’s benefits expense ratio is likely to have remained high due to continued investments to enhance its Medicare Advantage products suite. The Zacks Consensus Estimate for consolidated benefits expense ratio is pegged at 89%, which indicates a deterioration of 200 basis points year over year.
Additionally, investments to boost efficiencies of digital channels in CenterWell Pharmacy business are expected to have escalated costs for the health insurer in the fourth quarter. Higher costs related to broker commissions and marketing expenses in order to support individual Medicare Advantage growth may have exerted pressure on margins. We estimate total operating expenses to be $25.4 billion in the fourth quarter, indicating an increase of 13.9% year over year.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for Humana this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here, as you see below.
Earnings ESP: Humana has an Earnings ESP of 0.00%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: HUM currently carries a Zacks Rank of 3.
Stocks to Consider
While an earnings beat looks uncertain for Humana, here are some companies from the Medical space, which according to our model, have the right combination of elements to beat on earnings this time around:
The Zacks Consensus Estimate for NVO’s fourth-quarter 2023 earnings is pegged at 66 cents per share, indicating a surge of 57.1% from the prior-year quarter’s reported figure.
Novo Nordisk’s bottom line beat estimates in two of the trailing four quarters, met the mark in one and missed the same in another, the average surprise being 0.58%.
Surgery Partners, Inc. (SGRY - Free Report) has an Earnings ESP of +7.38% and a Zacks Rank of 2 at present. The Zacks Consensus Estimate for SGRY’s fourth-quarter 2023 earnings is pegged at 37 cents per share, indicating 37% growth from the year-ago quarter’s reported figure.
Surgery Partners’ bottom line beat estimates in each of the trailing four quarters, the average surprise being 316.07%.
AstraZeneca PLC (AZN - Free Report) has an Earnings ESP of +3.17% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for AZN’s fourth-quarter 2023 earnings is pegged at 79 cents per share, indicating a 14.5% increase from the prior-year quarter’s reported figure.
AstraZeneca’s earnings beat estimates in each of the trailing four quarters, the average surprise being 8.30%.
Image: Bigstock
Will the Individual MA Unit Aid Humana's (HUM) Q4 Earnings?
Humana Inc. (HUM - Free Report) is scheduled to release fourth-quarter 2023 results on Jan 25, 2024, before the opening bell.
Q4 Estimates
The Zacks Consensus Estimate for Humana’s fourth-quarter earnings per share is pegged at $2.13, indicating an improvement of 31.5% from the prior-year quarter’s reported figure.
The consensus mark for revenues is pegged at $25.4 billion, indicating 13.1% growth from the year-ago quarter’s reported number.
Earnings Surprise History
Humana boasts a solid earnings surprise history. Its bottom line beat estimates in each of the trailing four quarters, delivering an average surprise of 5.47%. This is depicted in the chart below:
Humana Inc. Price and EPS Surprise
Humana Inc. price-eps-surprise | Humana Inc. Quote
Factors to Note
In the fourth quarter, the top line of Humana is expected to have benefited from membership growth in its individual Medicare Advantage business, thereby fetching higher premiums to the health insurer. We expect individual Medicare Advantage membership to improve 18.9% year over year in the to-be-reported quarter. The Zacks Consensus Estimate for HUM’s fourth-quarter premiums from the Medicare business is pegged at $21.7 billion, implying a 20.1% rise from the prior-year quarter’s reported figure.
However, the customer base of its prescription drug plans (PDP) may have witnessed a decline due to the inclination of Medicare beneficiaries toward Medicare Advantage over original Medicare and PDP. The consensus mark for premiums from its Medicare Stand-Alone PDP products is pinned at $455 million, indicating a decline of 7.1% from the prior-year quarter’s reported figure.
Strength in the Medicaid business, resulting from numerous contract wins, is likely to have contributed to growing premiums in the fourth quarter. The consensus mark for its Medicaid and other premiums is pegged at $1.8 billion, suggesting 6.5% growth from the year-ago quarter’s reported number.
Apart from higher membership growth in individual Medicare Advantage and state-based contracts, the Insurance segment of Humana is likely to have been aided by a rise in commercial fully insured medical premiums and higher per member per month rates in a majority of its business lines. The Zacks Consensus Estimate for the segment’s revenues is pegged at $24.7 billion. We expect the unit’s revenues to be $25.2 billion in the to-be-reported quarter, up 16.5% year over year.
Results of HUM’s CenterWell segment are likely to have gained from the strength in pharmacy and primary care businesses in the fourth quarter. The consensus mark for the unit’s revenues is pinned at $4.7 billion. Our estimate anticipates the unit’s revenues to be $4.6 billion, indicating an improvement of 10.8% year over year.
The company’s benefits expense ratio is likely to have remained high due to continued investments to enhance its Medicare Advantage products suite. The Zacks Consensus Estimate for consolidated benefits expense ratio is pegged at 89%, which indicates a deterioration of 200 basis points year over year.
Additionally, investments to boost efficiencies of digital channels in CenterWell Pharmacy business are expected to have escalated costs for the health insurer in the fourth quarter. Higher costs related to broker commissions and marketing expenses in order to support individual Medicare Advantage growth may have exerted pressure on margins. We estimate total operating expenses to be $25.4 billion in the fourth quarter, indicating an increase of 13.9% year over year.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for Humana this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here, as you see below.
Earnings ESP: Humana has an Earnings ESP of 0.00%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: HUM currently carries a Zacks Rank of 3.
Stocks to Consider
While an earnings beat looks uncertain for Humana, here are some companies from the Medical space, which according to our model, have the right combination of elements to beat on earnings this time around:
Novo Nordisk A/S (NVO - Free Report) has an Earnings ESP of +0.89% and a Zacks Rank of 1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NVO’s fourth-quarter 2023 earnings is pegged at 66 cents per share, indicating a surge of 57.1% from the prior-year quarter’s reported figure.
Novo Nordisk’s bottom line beat estimates in two of the trailing four quarters, met the mark in one and missed the same in another, the average surprise being 0.58%.
Surgery Partners, Inc. (SGRY - Free Report) has an Earnings ESP of +7.38% and a Zacks Rank of 2 at present. The Zacks Consensus Estimate for SGRY’s fourth-quarter 2023 earnings is pegged at 37 cents per share, indicating 37% growth from the year-ago quarter’s reported figure.
Surgery Partners’ bottom line beat estimates in each of the trailing four quarters, the average surprise being 316.07%.
AstraZeneca PLC (AZN - Free Report) has an Earnings ESP of +3.17% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for AZN’s fourth-quarter 2023 earnings is pegged at 79 cents per share, indicating a 14.5% increase from the prior-year quarter’s reported figure.
AstraZeneca’s earnings beat estimates in each of the trailing four quarters, the average surprise being 8.30%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.