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Sep 30, 2020
Humana Q3 2020 Earnings Report
Humana reported third quarter 2020 financial results, emphasizing actions to facilitate access to quality care during the pandemic.
Key Takeaways
Humana's Q3 2020 earnings were impacted by increasing utilization, COVID-19 testing and treatment costs, and crisis relief efforts. The company reported GAAP EPS of $10.05 and Adjusted EPS of $3.08. Humana anticipates fourth quarter losses to reflect continued support for its constituents, along with the impact of increasing utilization, and COVID-19 testing and treatment costs.
Continued emphasis on actions to alleviate financial burdens and other hardships for its members, providers, employees, and communities during the COVID-19 pandemic.
Achieved 92 percent, or 4.1 million of the company's Medicare Advantage members currently enrolled in 4-Star and above contracts for 2021, including 960,000 members in 4.5 Star contracts and a 5-Star rated contract in Florida.
Reported 3Q20 earnings per diluted common share (EPS) of $10.05 on a GAAP basis, $3.08 on an Adjusted basis; reports YTD 2020 EPS of $27.37 on a GAAP basis, $21.04 on an Adjusted basis
Increased full year expected individual Medicare Advantage membership growth to approximately 375,000 members from the previous range of 330,000 to 360,000 members, representing expected year-over-year growth of approximately 10 percent
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CapyFin.com Forward Guidance
Humana adjusted its GAAP and Adjusted EPS guidance ranges for the year ended December 31, 2020 (FY20).
Positive Outlook
- The company now expects its FY20 GAAP EPS to be in the range of $24.70 to $24.95, compared to the previous range of $23.74 to $24.24
- Adjusted EPS is expected to be in a range of $18.50 to $18.75 versus the previous range of $18.25 to $18.75.
- The company is revising its individual Medicare Advantage net membership growth estimate to now anticipate growth of approximately 375,000 members for FY 2020 compared to the previous guidance growth range of 330,000 to 360,000 members.
- This anticipated increase in 2020 represents year-over-year growth of approximately 10 percent.
- The company is reiterating its expectations for group Medicare Advantage net membership gains for FY 2020, projecting an increase of approximately 90,000 members year over year.
Challenges Ahead
- Humana anticipates fourth quarter losses to reflect continued support for its constituents
- Losses due to the impact of increasing utilization
- Losses due to COVID-19 testing and treatment costs
- Given the likelihood of significant variability of results by financial statement line item (and related ratios), Humana previously withdrew its additional FY 2020 detailed guidance points that were initially provided as part of the company's fourth quarter 2019 earnings release dated February 5, 2020.
- Humana now expects a net membership decline of approximately 500,000 members for FY 2020, compared to the previous estimate of 550,000 members in stand-alone PDP business.