Last year's annual enrollment window was a major disappointment for Humana, and the insurer was forced to significantly slash its enrollment growth projections.
However, the company has spent the past year significantly investing in its core Medicare Advantage product, and it's expecting that value creation effort to pay off. Executives told investors Wednesday's on its earnings call that Humana is expecting to add between 325,000 and 400,000 new members during this open enrollment period, which would make for between 7.1% and 8.7% growth.
"As we've spoken about previously, we've made substantial investment in our Medicare Advantage product offering and are confident in our competitive position to better meet our membes' needs," CEO Bruce Broussard said on the call.
That growth rate would be at or above projected growth across the industry, leapfrogging Humana back to its position as a market leader, Broussard said.
While Humana put a focus on investing in its Medicare Advantage products, it also focused on rethinking its approach to sales and marketing to boost retention and improve the member experience during open enrollment. Broussard said Humana is seeing improved analytics and experience for both agents and potential customers in the first few weeks of the annual enrollment window.
In addition, most (96%) of Humana's MA members are enrolled in plans with at least four stars from the Centers for Medicare & Medicaid Services, the company said, the highest rate among its national competitors for the fifth straight year.
Humana brought in $1.2 billion in profit for the third quarter, beating the Street, and reaffirmed its recently boosted yearly guidance.
While its profit for the quarter surpassed Wall Street analysts' expectations, according to Zacks Investment Research, it did decline year over year by 21.9%, according to the company's earnings release posted Wednesday. Humana reported $1.5 billion in profit for the third quarter of 2021.
Revenues were up by 10.2% year over year, however, with Humana reporting $22.8 billion in the third quarter of 2022. This was on par with analysts' predictions, Zacks said. The insurer reported $20.7 billion in revenue in the prior year's quarter.
In the release, Broussard touted the insurer's positioning for the ongoing Medicare annual enrollment period.
“Humana is well positioned for the 2023 Medicare Advantage Annual Election Period, with plans designed to meet customers' affordability and healthcare needs, especially important given the current economic conditions and knowing many seniors are on fixed incomes," Broussard said. "Taken together, our plan designs and operating performance reinforce our confidence in achieving our new 2025 Adjusted EPS target of $37."
As of the third quarter, Humana boasted nearly 5.1 million members in Medicare Advantage and 17.1 members total across all of our product offerings.
The company also said revenues in its healthcare services segment continue to grow as its provider businesses expand and its mail-order pharmacy offerings reach more potential users.
Humana expects $25 in earnings per share for the full year and between $91.6 billion and $93.2 billion in revenue.