Humana (NYSE:HUM) shares plummeted over 15% in the early session today after the insurance and healthcare services provider dished out disappointing fourth-quarter numbers and a dismal outlook.
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In Q4, revenue jumped by 17.9% year-over-year to $26.4 billion. However, EPS of -$0.11 was a surprise versus the Street’s estimates of $0.76. In comparison, the company generated an EPS of $1.97 in the year-ago period. Humana’s fourth-quarter performance was marked by increases in Medicare Advantage medical cost trends as inpatient utilization remained higher than anticipated.
Further, its benefits expense ratio, measured as insurance coverage costs divided by revenue earned from insurance premiums, increased to 90.7% from 87.3% in the year-ago period. Days in claims payable, on the other hand, dropped to 41.4 from 45.9. The company’s Centerwell segment generated $387 million in operating income. Its Insurance segment, in contrast, witnessed $426 million in operating losses compared to an operating profit of $46 million a year ago.
For Fiscal Year 2024, Humana expects an adjusted EPS of $16. The figure stood at $26.09 for 2023. The company expects higher Medicare Advantage medical costs to persist throughout 2024.
Is HUM a Good Stock to Buy?
Overall, the Street has a Strong Buy consensus rating on Humana alongside an average price target of $539.61. In contrast, the stock is currently trading at $343.3 at the time of writing.
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