UPDATED: 1:39 p.m. on Jan. 25
Humana's top brass told investors Thursday morning that its 2024 outlook reflects "greater inherent uncertainty" given a spike in utilization that dragged down its finances in the fourth quarter of 2023.
The company said it was projecting $16 in earnings per share for 2024, as well as $113 billion in consolidated revenue. In prepared remarks provided prior to its earnings call, the company said that should the situation improve over the course of the year, it will amend its guidance in tandem.
"We believe it is important to note if some of these trends prove transitory, our estimates would improve accordingly," the company wrote (PDF). "We will provide updates on our 2024 outlook and underlying assumptions as additional clarity is available throughout the year."
On the earnings call, Chief Financial Officer Susan Diamond said that in addition to collecting and processing claims data to get a full picture of utilization trends going into the early part of the year, Humana is also setting this guidance without knowing what the feds will do in the annual Medicare Advantage rate notice.
She said the company expects the rate notice to following a similar path as the 2024 notice, which payers decried as a signifcant cut to MA payouts.
When the rate notice is released and the Humana team has a better idea of whether utilization trends will shift heading into 2024, the insurer will also track how competitors are pricing plans and adjust if needed.
"We will continue to watch the signals they send," Diamond said.
CEO Bruce Broussard said they expect similar pricing adjustments from other payers, as the spike in utilization along with ongoing regulatory changes will have major impacts in 2025 and potentially beyond.
"I think the whole industry will possibly reprice," he said. "I don't how the industry will take this kind of increase in utilization along with regulatory changes that will persist in 2025 and 2026."
Humana's shares were down by about 11% at 2 p.m. ET.
Humana primed the pump last week for a disappointing fourth-quarter call, and its stock again dropped Thursday morning as the company posted a $541 million loss.
While Wall Street analysts had anticipated a loss in Q4, this fell short of their projections, according to analysts at Zacks Investment Research. Humana did beat on revenue, however, reporting $26.5 billion for the quarter.
By comparison, the company reported $22.4 billion in revenue and a $15 million loss in the prior-year quarter, according to its earnings report.
For the full year 2023, Humana brought in $106.4 billion in revenue and $2.5 billion in profit. While revenue grew compared to 2022, when it reported $92.9 billion, profits declined slightly year-over-year from $2.8 billion.
Humana's stock was down by 16% before the market opened following the report's release.
The insurer issued a filing with the Securities and Exchange Commission last week, saying that it saw a significant spike in utilization during the fourth quarter that dragged its finances. That reveal sent its stock price, as well as that of major competitors, into a downward slide.
UnitedHealth Group, which often serves as an industry bellwether, also saw a rise in utilization in Q4 that dragged its finances, though not to the same degree. Elevance Health, however, reported yesterday that rates were generally within its projections.
The bulk of Humana's insurance business is in Medicare Advantage, which has seen a rise in care use over the course of this year that has been flagged by multiple payers. Humana said in the filing that it saw an increase in outpatient services, such as orthopedic surgeries, as well as a swell in November and December in inpatient care, likely driven by seasonal respiratory diseases.
The company set its 2024 guidance at $16 in earnings per share in anticipation of a continued trend in elevated utilization. It also affirmed a 1.8% growth rate in Medicare Advantage membership for 2024, adding about 100,000 new lives.
Alongside its earnings, Humana announced that it has named David Dintenfass to the newly-created role of president of enterprise growth. In this position, he will lead the company's growth strategy, putting a particular focus on retaining consumers and improving their experience.
“David has a 30-year track record of delivering outstanding financial and organizational results across a range of businesses," CEO Bruce Broussard said in a press release. "He knows how to leverage digital capabilities to enhance the customer and broker experience and drive growth."
He joins the company after serving as Fidelity's executive vice president and head of products and emerging growth markets. He'll report to Chief Operating Officer Jim Rechtin and will take the role on Feb. 5.
Dintenfass will initially focus on growth for Humana's insurance business, according to the announcement.