(Reuters) -Humana reported third-quarter profit that beat Wall Street estimates on Wednesday, helped by higher premiums and medical costs which were in line with the health insurer’s expectations.
The company is one of the largest providers of Medicare Advantage plans, under which the U.S. government pays private insurers a set rate to manage healthcare for people 65 and older, as well as those with disabilities.
The health insurance industry has been battling stubbornly high costs for the last two years due to the increased use of healthcare services across government-backed plans.
Humana has been making efforts to contain costs by repricing its plans and adjusting benefits to help boost profits.
It now expects a decline of about 425,000 members in its individual Medicare Advantage plans, an improvement from the loss of up to 500,000 members expected previously. This was driven by stronger member retention and better-than-expected sales.
“We view membership growth as positive supported by our 2026 MA pricing and the plan and benefit repositioning we drove in the prior two years,” the company said in prepared remarks ahead of a call with analysts.
Humana expects most of its new members to be on higher-rated plans for 2026.
Its quarterly medical cost ratio – the percentage of premiums spent on medical care – came in at 91.1%. Humana said the medical cost ratio was in line with its expectations of “just above 91%”. Analysts had expected a ratio of 90.90%, according to data compiled by LSEG.
It also reaffirmed its annual adjusted profit forecast of about $17 per share.
The company posted adjusted quarterly profit of $3.24 per share, surpassing estimates of $2.82 per share.
(Reporting by Sriparna Roy and Sneha S K in Bengaluru; Editing by Pooja Desai)
Comments