Dive Brief:
- Humana’s medical membership grew by about 2.6 million to a total of 7.5 million in the first quarter of 2018, driven primarily by a new TRICARE East Region contract, and an uptick in Medicare Advantage enrollment.
- The new contract, which went into effect Jan. 1, covers 32 states, and includes military service members, retirees and their families.
- The insurer, which has been rumored to be in merger talks with Walmart, posted a lower profit of $491 million in Q1 2018, down from about $1.1 billion during the same period last year.
Dive Insight:
Humana CEO Bruce Broussard said on an earnings call that the recent $1.4 billion acquisition of Curo Health Services and $4.1 billion deal for Kindred Healthcare will be merged into one entity. The combination would create one of the largest hospice players in the market.
Humana is already heavily investing in the senior population as the second-largest provider of Medicare Advantage plans. In Q1, it gained 157,700 individual MA members, a 5.5% jump, and 51,300 group MA members, an 11.6% bump compared to the fourth quarter of 2017.
The company said that the CMS final payment notice would result in a 3% boost for its individual Medicare Advantage business, lower than CMS' 3.5% industry-wide estimate. The insurer attributed the difference to the location of its members compared to the national average.
The payer also praised the agency for proposing that MA insurers could offer new health-related supplemental benefits. As part of the proposed changes, CMS has said it is redefining health-related supplemental benefits to include coverage for "non-skilled in-home supports, portable wheelchair ramps and other assistive devices and modifications when patients need them."
The insurer posted a medical loss ratio of 84.5% in Q1, equivalent to the same period last year. Humana pointed to the re-instatement of the Affordable Care Act's health insurance fee and an increase in the number of high deductible plan offerings as positive factors, offset by the severe flu season.
Humana raised its 2018 guidance Wednesday to $13.70-$14.10 in adjusted EPS from its previous range of $13.50-$14.00.
“We experienced strong Medicare Advantage enrollment growth and solid performance across all segments in the first quarter, with early positive indicators of medical utilization allowing us to raise guidance for the year,” Humana CFO Brian Kane said in a statement.
The earnings announcement comes days after ManhattanLife Assurance Company announced that it signed a definitive agreement to acquire Humana subsidiary Kanawha Insurance Company’s workplace voluntary benefits and financial protection plans lines of business.