© Reuters. FILE PHOTO: Signage for Humana Inc. is pictured at a health facility in Queens, New York City, U.S., November 30, 2021. REUTERS/Andrew Kelly
(Reuters) -Humana Inc beat Wall Street estimates for quarterly profit on Wednesday on strength in its government-backed insurance business for older adults.
The company, whose largest business is providing government-supported insurance, saw a decline in its benefit expense ratio, or the percentage of payout on claims compared to its premiums, by 1 percentage point to 87.5% for the fourth quarter.
Health insurers’ costs were expected to decline on lower COVID-19-related hospitalizations, and while there were concerns around a surge in flu and respiratory syncytial virus cases in the last quarter of 2022, the “tripledemic” of respiratory diseases did not have a major impact.
The benefit expense ratio, however, was higher than analysts’ expectations of 87.20%.
Humana (NYSE:) forecast adjusted earnings per share (EPS) of at least $28 for 2023, in line with analysts’ expectations, with Chief Executive Officer Bruce D. Broussard saying the company was confident of achieving its 2025 adjusted EPS commitment of $37.
The health insurer said it expects to add at least 625,000 members to its Medicare Advantage plan this year, 13.7% higher compared with 2022.
Medicare Advantage is the government-supported insurance by private companies for people over 65 years of age and has been growing at a rapid pace, outshining government-provided Medicare plans due to heavy competition among insurers for the same set of customers.
Excluding one-off items, the health insurer reported a profit of $1.62 per share, higher than analysts’ average estimate of $1.46 per share.
