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Humana's (HUM) Earnings Beat Estimates in Q1, Improve Y/Y
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Humana Inc.’s (HUM - Free Report) first-quarter 2020 operating earnings per share of $5.40 beat the Zacks Consensus Estimate by 11.6%. Moreover, the bottom line improved 20.5% year over year.
This upside can primarily be attributed to higher revenues witnessed by the company.
Operational Update
Revenues of $18.9 billion were up nearly 17.6% year over year. Moreover, the top line surpassed the Zacks Consensus Estimate by 3% on the back of higher premium revenues from improved membership and per member premiums in its Medicare Advantage and state-based contract businesses.
Adjusted consolidated pre-tax income of $1 billion increased 28.9% year over year on the back of solid segmental results, led by a robust Medicare Advantage.
Benefit ratio contracted 110 points (bps) to 85.1%.
Revenues from the Retail segment were $16.76 billion, up 20% year over year. This can primarily be attributed to higher premiums owing to membership strength and higher per member premiums in its Medicare Advantage and state-based contract businesses.
Benefit ratio of 86.6% contracted 170 bps year over year on the back of reinstatement of the non-deductible health insurance industry fee in 2020, engagement of Medicare Advantage members, continued shift in Medicare membership mix and an improved Medicare Advantage membership, etc.
The segment’s operating cost ratio of 9.2% expanded 100 bps year over year due to reinstatement of the non-deductible health insurance industry fee in 2020.
Group and Specialty
Revenues from the Group and Specialty segment were $1.87 billion, down 1.1% from the prior-year quarter due to a reduction in fully-insured group commercial membership.
Benefit ratio expanded 270 bps year over year to 79.1% due to the impact of deliberate pricing and benefit design changes in the commercial business as well as weekday seasonality including the leap-year impact on the first quarter.
Operating cost ratio expanded 120 bps year over year to 23.1%.
Healthcare Services
Revenues of $7.09 billion increased 16% year over year, primarily owing to Medicare Advantage membership growth, better pharmacy revenues on the company’s allowance of early prescription refills and additional pharmacy revenues associated with the Enclara Healthcare buyout.
Operating cost ratio contracted 60 bps year over year to 96%.
Financial Update
As of Mar 31, 2020, the company had cash, cash equivalents and investment securities of $17.55 billion, up 14% from the level at 2019 end.
Debt-to-total capitalization as of Mar 31, 2020 was 39.2%, expanding 720 bps from the level as of Dec 31, 2019.
For the first quarter, cash flows provided by operating activities came at $474 million, down 47.1% year over year.
Capital Deployment
The company did not complete any open-market transactions in the quarter under review.
It paid out cash dividends worth $73 million in the quarter under review. In February 2020, it declared a cash dividend of 62.5 cents per share, payable Apr 24, 2020 to its shareholders of record as of Mar 31, 2020. This new dividend indicates a hike of 14% from the previously announced payout.
2020 Guidance
After first-quarter results, the company revised its 2019 guidance. Adjusted EPS is now expected in the range of $18.25-$18.75. The full-year individual Medicare Advantage membership is anticipated to be around 300,000-350,000 members.
Humana reaffirmed its expectations for group Medicare Advantage net membership gains. It now expects a year-over-year increase of 90,000 members in 2020. For its stand-alone PDP business, it anticipates a membership decline of 550,000.
Of the medical sector, players that reported first-quarter results so far, UnitedHealth Group Incorporated’s (UNH - Free Report) earnings beat the Zacks Consensus Estimate while the bottom line of HCA Healthcare, Inc. (HCA - Free Report) and Anthem, Inc. missed the same.
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Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Humana's (HUM) Earnings Beat Estimates in Q1, Improve Y/Y
Humana Inc.’s (HUM - Free Report) first-quarter 2020 operating earnings per share of $5.40 beat the Zacks Consensus Estimate by 11.6%. Moreover, the bottom line improved 20.5% year over year.
This upside can primarily be attributed to higher revenues witnessed by the company.
Operational Update
Revenues of $18.9 billion were up nearly 17.6% year over year. Moreover, the top line surpassed the Zacks Consensus Estimate by 3% on the back of higher premium revenues from improved membership and per member premiums in its Medicare Advantage and state-based contract businesses.
Adjusted consolidated pre-tax income of $1 billion increased 28.9% year over year on the back of solid segmental results, led by a robust Medicare Advantage.
Benefit ratio contracted 110 points (bps) to 85.1%.
Operating cost ratio expanded 90 bps to 11.3%.
Humana Inc. Price, Consensus and EPS Surprise
Humana Inc. price-consensus-eps-surprise-chart | Humana Inc. Quote
Segmental Results
Retail
Revenues from the Retail segment were $16.76 billion, up 20% year over year. This can primarily be attributed to higher premiums owing to membership strength and higher per member premiums in its Medicare Advantage and state-based contract businesses.
Benefit ratio of 86.6% contracted 170 bps year over year on the back of reinstatement of the non-deductible health insurance industry fee in 2020, engagement of Medicare Advantage members, continued shift in Medicare membership mix and an improved Medicare Advantage membership, etc.
The segment’s operating cost ratio of 9.2% expanded 100 bps year over year due to reinstatement of the non-deductible health insurance industry fee in 2020.
Group and Specialty
Revenues from the Group and Specialty segment were $1.87 billion, down 1.1% from the prior-year quarter due to a reduction in fully-insured group commercial membership.
Benefit ratio expanded 270 bps year over year to 79.1% due to the impact of deliberate pricing and benefit design changes in the commercial business as well as weekday seasonality including the leap-year impact on the first quarter.
Operating cost ratio expanded 120 bps year over year to 23.1%.
Healthcare Services
Revenues of $7.09 billion increased 16% year over year, primarily owing to Medicare Advantage membership growth, better pharmacy revenues on the company’s allowance of early prescription refills and additional pharmacy revenues associated with the Enclara Healthcare buyout.
Operating cost ratio contracted 60 bps year over year to 96%.
Financial Update
As of Mar 31, 2020, the company had cash, cash equivalents and investment securities of $17.55 billion, up 14% from the level at 2019 end.
Debt-to-total capitalization as of Mar 31, 2020 was 39.2%, expanding 720 bps from the level as of Dec 31, 2019.
For the first quarter, cash flows provided by operating activities came at $474 million, down 47.1% year over year.
Capital Deployment
The company did not complete any open-market transactions in the quarter under review.
It paid out cash dividends worth $73 million in the quarter under review. In February 2020, it declared a cash dividend of 62.5 cents per share, payable Apr 24, 2020 to its shareholders of record as of Mar 31, 2020. This new dividend indicates a hike of 14% from the previously announced payout.
2020 Guidance
After first-quarter results, the company revised its 2019 guidance. Adjusted EPS is now expected in the range of $18.25-$18.75. The full-year individual Medicare Advantage membership is anticipated to be around 300,000-350,000 members.
Humana reaffirmed its expectations for group Medicare Advantage net membership gains. It now expects a year-over-year increase of 90,000 members in 2020. For its stand-alone PDP business, it anticipates a membership decline of 550,000.
Zacks Rank and Performance of Other Players
Humana carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Of the medical sector, players that reported first-quarter results so far, UnitedHealth Group Incorporated’s (UNH - Free Report) earnings beat the Zacks Consensus Estimate while the bottom line of HCA Healthcare, Inc. (HCA - Free Report) and Anthem, Inc. missed the same.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>