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Mar 31, 2022
Humana Q1 2022 Earnings Report
Humana's Q1 2022 financial results were reported, and the full year 2022 adjusted EPS financial guidance was raised.
Key Takeaways
Humana reported a strong start to the year with all business lines performing well. The company raised its full year Adjusted EPS guidance to approximately $24.50, representing 19 percent growth over the actual 2021 results. Humana is also making progress in improving Medicare Advantage membership growth in 2023.
Reported 1Q22 earnings per diluted common share of $7.29 on a GAAP basis and Adjusted EPS of $8.04.
Updated FY 2022 EPS guidance to approximately $22.98 on a GAAP basis and raised to approximately $24.50 on an Adjusted basis, which contemplates a COVID-19 related headwind of $1.00 per share.
Reaffirmed FY 2022 expected individual Medicare Advantage membership growth range of approximately 150,000 to 200,000.
The outperformance in 1Q22 is primarily driven by lower than expected administrative expenses and strong results in the company's pharmacy business.
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Humana
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CapyFin.com Forward Guidance
The company raised its Adjusted EPS guidance for the year ending December 31, 2022 (FY22) by $0.50 per share to ‘approximately $24.50’, representing 19 percent growth over the FY 2021 Adjusted EPS.
Positive Outlook
- Lower than expected administrative expenses.
- Strong results in the company's pharmacy business fueled by membership favorability.
- Higher than expected mail-order utilization.
- Lower unit cost due to favorable underlying drug mix.
- All other lines of business are performing as expected or slightly positive, further contributing to the company's strong quarter.
Challenges Ahead
- Updated guidance continues to include a $1.00 embedded COVID headwind.
- Estimated dilutive impact related to the pending divestiture of the company's 60 percent ownership of Kindred at Home's Hospice and Personal Care divisions.
- The company expects the favorability to persist throughout the year, although with some moderation, as previous estimates contemplated increasing mail-order penetration rates over the course of the year.
- Potential inadequacy of government determined payment rates.
- Potential restrictions on profitability; including by comparison of profitability of the company’s Medicare Advantage business to non-Medicare Advantage business.