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Why is Humana Inc. (HUM) Stock down?

We've noticed a 13.41% decline in Humana Inc. (HUM) stock during the 2024-04-02 trading session. While this could be attributed to normal volatility or various internal and external factors, please be aware that we are actively monitoring the situation, and we'll provide timely updates as soon as possible!
25 Jan, 2024:

Humana Inc. (HUM) stock fell by 11.69% due to the health insurer's disappointing full-year earnings forecast. The company cited soaring medical costs, which have become a burden on the broader insurance sector. Here are the key details:

  • Rising Medical Expenses Impact Earnings: Escalating medical expenses have become a significant concern, with more elderly individuals returning to hospitals for postponed procedures, such as joint and hip replacements, which were delayed during the pandemic. Humana primarily offers government-backed insurance through the Medicare Advantage program and has provided a grim outlook for 2024, with adjusted earnings expected to be approximately $16 per share. This projection falls far short of the $29.10 per share anticipated by analysts, according to LSEG.
  • Industry-Wide Worries: Humana's guidance compounds existing worries on Wall Street about shrinking profits across the health insurance industry due to surging medical costs. UnitedHealth also reported an uptick in medical expenses, although less severe than Humana's situation, underscoring a widespread challenge.
  • Confirmation of Concerns: Humana had previously signaled concerns about rising medical costs in the fourth quarter, setting the stage for subdued expectations for its 2024 earnings guidance. These apprehensions were validated with Humana's report of a medical benefit ratio of 90.7% for the fourth quarter, exceeding analysts' estimates of 89.7%, according to LSEG. The higher medical costs were attributed to an uptick in outpatient services, particularly orthopedic surgeries, and inpatient care among patients enrolled in Medicare Advantage plans. These plans, privately managed versions of the government's Medicare program, are a significant component of Humana's coverage portfolio. While Humana surpassed revenue expectations in the fourth quarter with $26.46 billion, it reported a loss of $591 million, or $4.42 per share. This marked a notable contrast to a loss of $71 million, or 12 cents per share, during the same period in the previous year. Excluding specific items, Humana reported a loss of 11 cents, falling short of analysts' expected earnings of 15 cents per share, according to LSEG.
18 Jan, 2024:

Humana Inc. (HUM) stock dropped by 7.99% due to he company's decision to lower its 2023 earnings guidance. The primary reason behind this downward revision was the escalating costs associated with Medicare Advantage programs.

  • Medicare Advantage Costs Drive Stock Plunge: The unexpected increase in Medicare Advantage costs, driven by higher inpatient utilization in November and December, led to a sharp decline in Humana's stock, with shares falling by as much as 12.8%.
  • Financial Implications of Guidance Cut: Humana disclosed the details of its revised guidance, indicating a fourth-quarter adjusted insurance segment benefit ratio of around 91.4%, exceeding the previous guidance of 89.5%. This change is expected to result in lower earnings per share compared to initial projections.
  • Immediate Actions and Future Outlook: To address these challenges, Humana moved up its quarterly call to January 25, 2024, to provide investors with a more timely update on its performance and 2024 outlook. While specific guidance for 2024 was not provided, the company acknowledged the industry-wide impact of emerging trends.
  • Investor Reaction: Given the lowered earnings expectations, it is not surprising to see a negative market response with Humana's stock value declining. Investors are closely monitoring how the company navigates these challenges in the evolving healthcare landscape.
29 Nov, 2023:

Shares of Humana (HUM) dropped by 5.49% from $510.45 to $482.41 in the trading on Wednesday, November 29, 2023. The reason why HUM is down today is due to ongoing talks of a merger between Cigna and Humana, which would create a $140 billion US health insurance giant. The merger discussions have drawn attention from antitrust authorities, as advisors from both companies have been exploring a cash and stock deal for over a month, aiming to finalize it by year-end. The potential merger is seen as a strategic move to compete with industry giants like UnitedHealth Group and Elevance Health. However, the antitrust environment presents challenges, as both Cigna and Humana have faced previous deal blockages. To address potential regulatory concerns, Cigna is considering divesting certain assets.

01 Nov, 2023:

Humana Inc. Stock (HUM) dropped by 6.56% from $523.69 to $489.36 in the trading on Wednesday November 1, 2023. The reason why HUM stock down today include:

  • Forecast for 2024 profit: Humana said the initial outlook for 2024 profit growth would be at the low end of its forecast. Adjusted earnings per share will increase at the lower end of the company’s 11% to 15% long-term target next year.
  • Rise in medical expense: The company expects elevated medical expenses to persist through the rest of the year. More patients are seeking care for both Covid, which exceeded the company’s expectations in the third quarter, and non-Covid conditions.
  • Facing new challenges: Humana’s business is focused on Medicare Advantage, a fast-growing segment of the industry for years that’s now facing new challenges. The government is tweaking its formula for paying insurers in an effort to crack down on perceived abuses, meaning insurers may have to trim some benefits or take a hit to profits.
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