Humana's financial growth driven by senior-focused Medicare Advantage and CenterWell
Medicaid contracts also grew earnings for the business, which no longer includes employer group commercial medical.
Photo: Raymond Gehman/Getty Images
Humana has posted strong financial results for the first quarter, driven by its Medicare Advantage and managed Medicaid business, its senior-focused value-based primary care platform CenterWell and the award of the TRICARE military contract.
This week posted Humana Q1 earnings per share of $9.87, has increased EPS guidance for the year to at least $27.88 and is on a pathway towards its midterm adjusted EPS target of $37 in 2025, according to the earnings call.
Individual Medicare Advantage membership grew by 17%, at least 775,000 members, in 2023. In highly-penetrated value-based markets in Texas, Georgia, Florida and Illinois, MA membership has grown nearly 13% year-to-date, according to Humana president and CEO Bruce Broussard.
"In addition, we continue to see a higher percent of our new sales reflecting members switching from competitors than originally anticipated," Broussard said during the earnings call. "We previously shared that 50% of our new sales in AEP (annual enrollment period) reflected members switching from competitor plans. We've been pleased to see this trend continue in OEP (open enrollment period)."
WHY THIS MATTERS
Humana is focusing on the growing senior market in Medicare Advantage and through its primary care and home health business, CenterWell.
Humana has exited the employer group commercial medical business.
"Finally, as recently announced, following a strategic review, we determined that our employer group commercial medical business was no longer positioned to sustainably meet the needs of our commercial members over the long term or support the company's long-term strategic plans," Broussard said. "Our decision to exit this business augments Humana's ability to focus resources on our greatest opportunity for growth and where we can deliver industry-leading value for our members, customers and shareholders. It is in line with our strategy to focus our health plan offerings on public private partnerships and specialty businesses, while advancing our leadership position in integrated value-based care, including expanding our CenterWell healthcare service capabilities."
CenterWell, comprising primary care, home and pharmacy, operates 249 centers, representing 16% growth. The number of patients served has grown 11% year-over-year.
Home solutions covers over 815,000 Medicare Advantage members and includes home health, durable medical equipment and infusion.
"This represents an increase of greater than 200% year-over-year, driven by expansion in Virginia and North Carolina in the fourth quarter of last year," Broussard said.
In North Carolina and Virginia, CenterWell Home Health emergency room and hospital readmission rates are approximately 60 basis points, and more than 150 basis points lower than other providers, respectively, according to the earnings call.
Humana is also focused on Medicaid. Medicaid contacts in Louisiana and Ohio in the first quarter added 215,000 members as of March 31, a number that is expected to grow to greater than 1.3 million across seven states.
"Looking forward to 2024, our Medicaid business will add another state to our national portfolio," Broussard said. "In March, Indiana announced its intent to award Humana's statewide contract for its new pathways for aging Medicaid program, which is now expected to go live July 2024."
Humana's largest Medicaid contract in Florida is up for bid, he said.
Humana was awarded the next managed care support contract for the TRICARE East Region by the Defense Health Agency of the U.S. Department of Defense, the sixth TRICARE contract Humana Military has secured since 1996.
THE LARGER TREND
Since 2006, enrollment in Medicare Advantage plans has steadily grown.
In 2022, more than 28 million people were enrolled in a Medicare Advantage plan, accounting for nearly half or 48% of the eligible Medicare population, and $427 billion (or 55%) of total federal Medicare spending, according to the Kaiser Family Foundation.
Twitter: @SusanJMorse
Email the writer: SMorse@himss.org
