Humana reports $480 million in profit amid rising Medicare costs and enrollment

Humana on Wednesday reported earnings of $480 million and higher-than-expected growth in its Medicare Advantage business, which has been hit by higher costs.

Medicare Advantage plans, which make up a large share of Humana’s business, contract with the federal government to provide seniors with additional benefits and services, such as disease management and nurse helplines, and some also offer vision, dental care and wellness.

But Humana and rival Medicare Advantage plans have been hit this year with higher costs in part because seniors who put off medical care during the Covid-19 pandemic are now returning for treatments.

In Humana’s third quarter, benefit spending rose more than $3 billion to $25 billion compared to $21.7 billion in the year-ago period.

“The increased medical cost trend was partially offset by the impact of the company’s 2024 Medicare Advantage product pricing and benefit design, which included a reduction in benefits in response to the net impact of the 2024 final rate notice and the initial emergence of increased medical cost trends in 2023,” Humana said in its earnings report.

Humana said net income fell to $480 million, or $3.99 per share, in the third quarter compared with $832 million, or $6.71 per share. Total revenue rose to $29.4 billion compared to $26.4 billion a year ago.

In prepared remarks, Humana’s management team, including CEO Jim Rechtin, said Humana’s performance is improving, which allowed the company to raise its financial guidance for adjusted earnings per share for 2024 to “at least 16, $00 from our previous guidance of “about $16.00″. while considering additional investments to support long-term value creation.”

Humana raised its 2024 Medicare Advantage member annual growth expectations by 40,000 seniors to a new target of 265,000. Humana ended the third quarter with more than 5.6 million individual Medicare Advantage enrollees.