Humana Inc stock fell. fell 17% early Thursday, after the managed care company's quarterly loss widened amid rising medical costs and cut its 2024 earnings guidance to roughly half of what analysts had expected.
Humana Home, headquartered in Louisville, Kentucky,
It said it now expects 2024 earnings per share to be about $14.87 and adjusted EPS to be about $16.00, while FactSet expects $29.14. The company expects the higher Medicare Advantage costs that hurt earnings in the fourth quarter to persist throughout the year.
Humana reported a loss of $491 million, or $4.42 per share, in the fourth quarter, a wider loss than the loss of $71 million, or 12 cents per share, recorded in the same period a year earlier.
The company's adjusted loss per share was 11 cents, while FactSet had expected earnings per share of 89 cents.
Revenue rose to $26.462 billion from $22.439 billion, ahead of the FactSet consensus of $25.491 billion.
The loss reflects additional increases in Medicare Advantage cost trends, which rose due to higher-than-expected inpatient utilization, mostly in November and December, along with an increase in non-inpatient trends.
Humana and competitors including UnitedHealth Group Inc. UNH,
They have invested heavily in the government's Medicare Advantage program for seniors.
Earlier in January, Humana warned that its fourth-quarter medical loss ratio, a measure of premiums paid to cover medical expenses, rose to 91.4%, higher than the 89% that analysts had expected.
The company also warned of slower-than-expected growth in Medicare Advantage enrollment. The company said it was unable to offset these expenses through reduced administrative costs and improved productivity “due to the novelty and importance of the latest emerging trends.”
Humana confirmed Thursday that it expects annual growth in Medicare Advantage membership of about 100,000, or 1.8%.
UnitedHealth shares also fell last week after the company reported higher medical costs compared to premium revenue in the fourth quarter.
The stock is down 20% in the past 12 months, while the S&P 500 SPX,
It gained 21%.
