Humana Reports $930 Million Profit As CEO Plan To Reboot Medicare Business ‘Makes Progress’

Humana profits hit $930 million in the first quarter, reporting better-than-expected results in a competitive environment for its Medicare Advantage business.

The health insurer Wednesday said net income rose 12% to $930 million compared to $828 million in the first quarter of 2021 that ended March 31. Revenues, meanwhile, were up 16% to nearly $24 billion compared to $20.7 billion in the year-ago period.

Humana attributed the first quarter results to a solid performance in its pharmacy business and lower administrative costs. That figured in the company’s decision to raise its adjusted earnings-per-share guidance by 50 cents to “approximately $24.50” from “at least $24.00.”

Humana still expects 2022 membership growth from individual Medicare Advantage plans of 150,000 to 200,000 members, but company chief executive Bruce Broussard said the company is “making strong progress” to improve Medicare Advantage membership growth in 2023. That, he said, includes “work underway with our distribution partners, and steps we’re taking to improve retention.”

Humana’s total Medicare Advantage enrollment rose 5.2% to 5.1 million by the end of the first quarter. That membership includes 4.5 million enrolled in individual Medicare Advantage plans.

Humana is a big player in Medicare Advantage plans contract with the federal government to provide extra benefits and services to seniors, such as disease management and nurse help hotlines with some also offering vision, dental care and wellness programs.

But Humana surprised investors earlier this year with a disclosure that it would add fewer individual Medicare Advantage members than an original forecast, prompting a decision to invest $1 billion in the company’s Medicare offerings to improve enrollment in 2023.

“The $1 billion value creation initiative we introduced last quarter is developing as expected, creating capacity to further enhance our Medicare offerings and expand our healthcare services capabilities,” Broussard said Wednesday.

Humana’s investments in Medicare Advantage come during perhaps the most competitive time in the history of the program due to new plans entering the business offering seniors an unprecedented number of choices. Established rivals like UnitedHealth Group, CVS Health’s Aetna health insurance unit are expanding into new markets while a flurry of startups and smaller health insurers have entered the business, seeing a market of more than 10,000 Americans a day turning 65 years old and becoming eligible for Medicare and Medicare Advantage in particular.