Signs are displayed at a Humana Inc. office building in Louisville, Kentucky, U.S., Sunday, February 3, 2019. Humana is scheduled to release earnings numbers on February 6. Photographer: Luke Sharrett/Bloomberg via Getty Images
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Actions of human plunged Thursday after the health insurer issued dismal full-year profit guidance, citing rising medical costs that are impacting the broader insurance industry.
Those expenses have skyrocketed as increasing numbers of older adults return to hospitals for procedures they had delayed during the pandemic, such as joint and hip replacements.
Humana, which primarily offers government-backed insurance through the Medicare Advantage program, expects adjusted earnings of about $16 per share by 2024. That's a little more than half the $29.10 per share analysts were expecting. , according to LSEG, formerly known as Refinitiv.
The guidance adds to Wall Street's concerns about falling health insurance company profits as medical costs rise. UnitedHealth on Friday also reported its own increase in medical costs, although it was less extreme than Humana's.
Humana shares plunged more than 10% on Thursday.
Its forecast dragged down other health insurance stocks. UnitedHealth Stock and CVS Health they fell more than 6% and 4%, respectively. Cigna'actions and rye Both stocks fell about 4%.
Health elevation It also fell 2% on Thursday. But unlike Humana, the insurer on Wednesday forecast 2024 profits above estimates, after higher premiums in its commercial business helped rein in medical costs in the fourth quarter.
Expectations for Humana's 2024 earnings guidance were already low after the company warned last week that medical costs were running higher than expected in the fourth quarter. It noted that higher expenses could reduce its profits in the coming year.
Humana confirmed that pessimism on Thursday. It reported a medical benefit ratio (the percentage of claims payments compared to premiums) of 90.7% for the fourth quarter. Analysts had estimated the ratio would be 89.7% for the period, according to LSEG.
The insurer cited an increase in outpatient services, such as orthopedic surgeries, and an increase in inpatient care in November and December among patients enrolled in Medicare Advantage.
Medicare Advantage plans are private versions of the federal government's Medicare program, primarily for people age 65 and older. Those plans are one of Humana's largest forms of coverage in addition to the insurance it offers to military families and retirees.
Humana posted revenue in the fourth quarter of $26.46 billion, which surpassed analysts' estimate of $25.42 billion, according to LSEG data.
But the company posted a loss of $591 million, or $4.42 per share, in the fourth quarter. That compares with a loss of $71 million, or 12 cents per share, during the same period a year ago.
Excluding certain items, Humana reported a loss of 11 cents per share. Analysts expected the company to post earnings of 15 cents per share, according to LSEG.
