Humana (New York Stock Exchange:Ham) shares plunged more than 15% in early trading today after the insurance and healthcare provider reported disappointing fourth-quarter numbers and a dire outlook.
Fourth quarter sales were $26.4 billion, an increase of 17.9% from the same period last year. However, the EPS of -$0.11 was a surprise compared to the Street's estimate of $0.76. In comparison, the company's EPS for the same period last year was $1.97. Humana's fourth quarter results were characterized by increased Medicare Advantage medical expense trends as inpatient utilization remained higher than expected.
Furthermore, the benefit expense ratio, calculated by dividing insurance benefit expenses by premium income, increased from 87.3% in the same period of the previous year to 90.7%. Meanwhile, the number of claims days paid decreased from 45.9 days to 41.4 days. The company's Centerwell division generated his $387 million in operating income. In comparison, the Insurance segment's operating loss was $426 million, compared with operating profit of $46 million in the same period last year.
Humana expects adjusted EPS of $16 for fiscal 2024. In 2023, this number was $26.09. The company expects rising Medicare Advantage medical costs to continue into his 2024.
Is HUM a good stock to buy?
Overall, the Street has a consensus rating of “Strong Buy” on Humana, with an average price target of $539.61. In contrast, as of this writing, the stock is trading at $343.3.
Read the full disclosure
