Humana’s inventory tumbles as Medicare Advantage progress disappoints

The news dragged down shares of different main gamers within the Medicare Advantage market early Thursday, as shares of UnitedHealth Group Inc.
UNH,
-3.22%,
Cigna Group
CI,
-1.99%,
Elevance Health Inc.
ELV,
-3.04%
and CVS Health Corp.
CVS,
-4.62%
dropped 1% to 4%.

UnitedHealth shares additionally tumbled final week after the corporate reported rising medical prices relative to premium income within the fourth quarter.

Humana stated in a regulatory submitting Thursday that increased inpatient care prices, together with outpatient surgical procedures, supplemental advantages and different elements are driving up Medicare Advantage medical prices. The firm stated it hasn’t been in a position to offset these bills with administrative value cuts and productiveness enhancements “due to the recency and significance of the latest emerging trends.”

For 2024, Humana stated it now expects Medicare Advantage progress of about 100,000 members, representing a 1.8% enhance over its 5.4 million members at year-end 2023. The firm stated its “balanced approach to pricing” resulted in a decrease share of general trade progress.

“The company continues to believe it took a prudent approach to 2024 pricing considering the current regulatory changes and evolving utilization environment,” Humana stated in its submitting.

Humana will now be onerous pressed to hit its 2024 adjusted earnings per share goal, Mizuho Securities analyst Ann Hynes wrote in a report Thursday.

On the flip aspect, Hynes wrote, the news of upper healthcare utilization seems to be constructive for hospital shares like HCA Healthcare Inc.
HCA,
+2.08%,
Tenet Healthcare Corp.
THC,
+1.93%,
and Universal Health Services Inc.
UHS,
+0.51%.
Those shares have been up 0.5% to 2% Thursday morning.

Humana shares early Thursday have been headed for his or her lowest closing stage in practically two years. The inventory is down 2.2% within the yr so far, whereas the S&P 500
SPX
is down 0.6%.