Humana Inc. (HUM Quick QuoteHUM - Free Report) is scheduled to release fourth-quarter 2024 results on Feb. 11, before the opening bell. The Zacks Consensus Estimate for earnings is pegged at a loss of $2.26 per share, wider than the prior-year quarter’s loss of 11 cents per share.  

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The fourth-quarter earnings estimate has witnessed one downward revision over the past 30 days. Meanwhile, the Zacks Consensus Estimate for revenues is pegged at $28.8 billion, indicating 12% growth from the year-ago quarter’s figure. 

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For the full year, the Zacks Consensus Estimate for HUM’s revenues is pegged at $116.8 billion, implying a rise of 12.6% year over year. Also, the consensus mark for current-year earnings per share is pegged at $16.11, indicating a decline of 38.3% on a year-over-year basis.

Humana’s Earnings Surprise History

HUM’s bottom line beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 0.17%. This is depicted in the chart below:

What Our Quantitative Model Predicts for HUM

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 +0.23%. This is because the Most Accurate Estimate is currently pegged at a loss of $2.25 per share, narrower than the Zacks Consensus Estimate of a loss of $2.26 per share.  You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: HUM currently has a Zacks Rank #4 (Sell). 

You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors to Note Ahead of HUM’s Results

In the fourth quarter, Humana’s revenues are expected to have benefited from growth in membership within its Individual Medicare Advantage business, resulting in higher premiums for the health insurer. We anticipate 4.9% year-over-year growth in Individual Medicare Advantage membership. The Zacks Consensus Estimate for premiums from HUM’s Medicare business is pegged at $24 billion, which reflects a 10% rise from the prior-year quarter.

Additionally, Humana’s Group Medicare Advantage and Medicare Supplement plans are likely to have experienced membership growth. We estimate premiums from the two business lines to witness year-over-year improvements of 10.7% and 12.6%, respectively. 

The Medicaid business is expected to have been aided by contract wins from different state authorities, which are likely to have contributed to premium expansion. However, a decline in commercial fully-insured premiums is projected to have partially offset these gains. We expect premiums from this business line to plunge 68.8% year over year in the fourth quarter. 

These factors, along with increased per-member-per-month rates across most business lines, are anticipated to have driven the performance of the Insurance segment. The Zacks Consensus Estimate for the segment’s revenues is $27.7 billion, indicating an 8.2% increase from the prior-year quarter’s figure. We forecast a 7.2% year-over-year rise in the Insurance segment’s revenues.

Humana’s CenterWell segment is expected to have benefited from an expanding value-based home care model and higher revenues from its Primary Care business. The consensus estimate for the segment’s revenues is $4.9 billion, implying a 3.8% increase from the same period last year.

The company’s benefits expense ratio is likely to have remained elevated due to continued pressure from rising medical costs in Medicare Advantage and state-based contracts. The Zacks Consensus Estimate for the consolidated benefits expense ratio is 91.3%, which indicates a 560-basis point deterioration year over year.

Furthermore, investments in digital transformation initiatives and increased operating expenses are anticipated to have weighed on Humana’s margins . We estimate total operating expenses to be $28.7 billion, indicating a 6.9% increase from the prior-year quarter.

Stocks to Consider

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:

Rigel Pharmaceuticals, Inc. (RIGL Quick QuoteRIGL - Free Report) has an Earnings ESP of +53.85% and a Zacks Rank of 1 at present. The Zacks Consensus Estimate for RIGL’s fourth-quarter earnings is pegged at 42 cents per share. It reported break-even earnings in the prior-year quarter.

Rigel Pharmaceuticals’ earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 1,754.28%. 

Merit Medical Systems, Inc. (MMSI Quick QuoteMMSI - Free Report) currently has an Earnings ESP of +2.62% and a Zacks Rank of 2. The Zacks Consensus Estimate for MMSI’s fourth-quarter earnings is pegged at 83 cents per share, which implies a 2.5% rise from the year-ago quarter’s figure.  

Merit Medical Systems’ earnings beat estimates in each of the trailing four quarters, the average surprise being 6.42%.

Progyny, Inc. (PGNY Quick QuotePGNY - Free Report) has an Earnings ESP of +1.65% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for PGNY’s fourth-quarter earnings is pegged at 36 cents per share, which implies a 12.5% rise from the year-ago quarter’s figure.  

Progyny’s earnings beat estimates in each of the trailing four quarters, the average surprise being 99.26%.