Humana Q1 2020 Earnings Report
Key Takeaways
Humana reported a strong first quarter with GAAP EPS of $3.56 and Adjusted EPS of $5.40. The company reaffirmed its FY 2020 Adjusted EPS guidance range of $18.25 to $18.75 and increased its full year expected individual Medicare Advantage membership growth.
Committed to ongoing COVID-19 relief efforts, providing resources and assistance to all constituencies.
Proactive outreach to vulnerable members to address clinical and social determinants of health needs to minimize the short-term impact amid the pandemic.
Reported 1Q20 earnings per diluted common share (EPS) of $3.56 on a GAAP basis, and $5.40 on an Adjusted basis.
Increased full year expected individual Medicare Advantage membership growth to 300,000 to 350,000 members from previous range of 270,000 to 330,000 members, while reaffirming group Medicare Advantage and stand-alone PDP membership estimates for 2020.
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Forward Guidance
Humana is revising its GAAP EPS guidance range for the year ending December 31, 2020 (FY 2020) to $16.04 to $16.54 from the previous range of $17.76 to $18.26, reflecting the 1Q20 impact of the company's non-consolidating minority interest put/call valuation adjustments. While acknowledging the inherent uncertainty surrounding the ongoing crisis, Humana is maintaining its FY 2020 Adjusted EPS range of $18.25 to $18.75.
Positive Outlook
- Maintaining FY 2020 Adjusted EPS range of $18.25 to $18.75.
- Increased full year expected individual Medicare Advantage membership growth to 300,000 to 350,000 members.
- Reaffirming group Medicare Advantage and stand-alone PDP membership estimates for 2020.
- Expects Final Rate Notice to result in a 1.20 percent rate increase for non end stage renal disease (ESRD) Medicare Advantage business.
- Expects the Final Rate Notice to result in a 3.7 percent rate increase in 2021 for ESRD beneficiaries.
Challenges Ahead
- Likelihood of significant variability of results by financial statement line item and related ratios.
- The spread of COVID-19, or actions taken to mitigate this spread, could have material and adverse effects on Humana’s ability to operate effectively.
- Disruptions in public and private infrastructure, including communications, financial services and supply chains, could materially and adversely disrupt the company’s normal business operations.
- Increased risk of phishing and other cybersecurity attacks, and increased risk of unauthorized dissemination of sensitive personal information or proprietary or confidential information about the company or its members or other third-parties.
- Volatility and negative pressure in the financial markets.
Revenue & Expenses
Visualization of income flow from segment revenue to net income