Humana beats profit estimates on lower-than-expected medical costs

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Insurers have reported better-than-expected medical loss ratios (MLR) – the percentage of its spend on claims over the premiums it collects – for the second quarter despite a warning that costs, especially those with Medicare plans, would surge this year after older adults resumed making appointments for elective procedures they had delayed during the pandemic.

Humana reported an MLR of 86.3% for the quarter, up from 85.8% a year earlier but lower than the average of analysts’ estimates of 86.50%, according to Refinitiv data.

The company had said in June it expected the business’ second-quarter MLR to be “biased towards the top half” of its full-year range of 86.3% to 87.3%.

The health insurer is now seeing stabilization in the utilization of healthcare services among Medicare Advantage beneficiaries based on recent claims activity in its plans, Humana said.

Humana also raised its 2023 individual Medicare Advantage membership growth by 50,000 to about 825,000 new members.

Excluding one-off items, the health insurer earned a profit of $8.94 per share in the quarter ended June 30, higher than analysts’ average estimate of $8.82 per share, according to Refinitiv data.