Humana Q2 2022 Earnings Report
Key Takeaways
Humana reported a strong second quarter with adjusted EPS of $8.67, representing 26% growth over the prior year. The company raised its full-year adjusted EPS guidance to approximately $24.75, reflecting a compelling 20% growth. The outperformance was driven by better-than-anticipated medical cost trends and lower-than-anticipated administrative costs.
Reports 2Q22 earnings per diluted common share of $5.48 on a GAAP basis, Adjusted EPS of $8.67.
Updates FY 2022 EPS guidance to 'approximately $20.30' on a GAAP basis; raises to 'approximately $24.75' on an Adjusted basis, representing growth of 20 percent over FY 2021 Adjusted EPS.
Reaffirms FY 2022 expected individual Medicare Advantage membership growth range of approximately 150,000 to 200,000.
2Q22 Adjusted EPS of $8.67 represents 26 percent growth over 2Q21 and is approximately $1.00 higher than the company’s previous expectations.
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Humana Revenue by Segment
Forward Guidance
The company raised its FY 2022 Adjusted EPS guide by $0.25 to ‘approximately $24.75’, while still maintaining a $0.50 EPS COVID-19 headwind for the back half of the year. In addition, the revised guide contemplates the company making approximately $0.75 EPS of additional marketing and distribution investments in the back half of the year to further support its improved 2023 Medicare Advantage value proposition. Finally, the revised guide anticipates covering $0.65 EPS dilution related to the pending divestiture of the company's 60 percent ownership of Kindred at Home's Hospice and Personal Care divisions, which is expected to close in the third quarter.
Positive Outlook
- Lower utilization trends and lack of COVID-19 headwind seen to date allow the company to raise its FY 2022 Adjusted EPS guide by $0.25 to ‘approximately $24.75’.
- Maintaining a $0.50 EPS COVID-19 headwind for the back half of the year.
- The revised guide contemplates the company making approximately $0.75 EPS of additional marketing and distribution investments in the back half of the year to further support its improved 2023 Medicare Advantage value proposition.
- Revised guide anticipates covering $0.65 EPS dilution related to the pending divestiture of the company's 60 percent ownership of Kindred at Home's Hospice and Personal Care divisions, which is expected to close in the third quarter.
- The company’s updated full year guidance reflects a compelling 20 percent growth in adjusted earnings for FY 2022 while funding additional investments to support its long-term growth.
Challenges Ahead
- Maintaining a $0.50 EPS COVID-19 headwind for the back half of the year.
- Revised guide anticipates covering $0.65 EPS dilution related to the pending divestiture of the company's 60 percent ownership of Kindred at Home's Hospice and Personal Care divisions, which is expected to close in the third quarter.
- The securities and credit markets may experience volatility and disruption, which may adversely affect Humana’s business.
- Humana's business activities are subject to substantial government regulation.
- Humana faces significant competition in attracting and retaining talented employees.
Revenue & Expenses
Visualization of income flow from segment revenue to net income