- Humana beat analyst expectations for first quarter earnings Wednesday, posting $16.1 billion in revenue compared to $14.2 billion a year earlier. First quarter net income also rose from $491 million in 2018 to $566 million in 2019. The insurer beat earnings estimates by 4%.
- The Medicare Advantage market continued to be a boon for the insurer in the first quarter of the year. Humana is ahead of its MA membership expectations and has subsequently increased its outlook for MA membership in 2019. The company is now anticipating as many as 440,000 new members compared to its former high-end estimate of 400,000.
- CEO Bruce Broussard also became the latest payer chief to warn investors of the risks of "Medicare for All," calling it a threat to MA, which is central to the company's growth.
Humana has been leaning heavily into the MA market as the second-biggest provider of MA plans behind UnitedHealthcare. Together, the two insurers account for 43% of that market —and it's been a rewarding investment for each so far. Both reported higher-than-expected MA membership growth in the first quarter of 2019.
Both CEOs were also vocal about Medicare for All with shareholders. Broussard told Humana shareholders Wednesday morning that the idea, touted by many Democratic 2020 hopefuls, poses a threat not only to private insurers, but specifically to the MA market.
Broussard said MA as a payment model incentivizes insurers to engage with members, offering a "holistic view" of beneficiaries that has resulted in "lower cost and higher satisfaction."
The increasing number of Medicare beneficiaries participating in programs like MA, coupled with investments and advancements in technology, only serve to strengthen Humana's business, Broussard said.
Humana's MA membership grew by 14% year over year, representing an increase of 414,800 members. Higher MA premiums helped revenue growth, which rose 13% year over year.
Utilization was higher than expected for both individual MA and retail, but Humana's success with those segments did not carry over to its healthcare services and group and specialty plans.
Jefferies noted the insurer's retail success, riding on higher utilization and an improved medical loss ratio, was stifled by lower earnings from group and specialty. Group and specialty, analysts noted Wednesday, "tends to underperform when retail outperforms."
Between earnings releases and Medicare for All talk, the payer market has had a particularly volatile few weeks. Insurers, however, have shown they have so far had a largely positive first quarter in 2019.