Humana (HUM) Q2 2024 earnings summary

Executive summary

• Second quarter 2024 net income was $679 million ($5.62 per diluted share), down from $959 million in Q2 2023, with Adjusted EPS at $6.96; year-to-date GAAP EPS was $11.74, Adjusted EPS $14.19.

• Results exceeded expectations in Medicare member growth and business outperformance, but were impacted by elevated Medicare Advantage medical cost trends, value creation initiative charges, and put/call valuation adjustments.

• Full-year 2024 Adjusted EPS and benefit ratio guidance were reaffirmed, assuming continued inpatient cost pressure, with mitigation efforts underway.

• The company is phasing out its Employer Group Commercial Medical Products business over 18–24 months, with significant declines in related membership.

• Strategic focus remains on operating discipline, multi-year planning, and leveraging automation and technology to drive cost efficiencies.

Financial highlights

• Q2 2024 total revenues were $29.54 billion, up 10.4% year-over-year; first half revenues were $59.2 billion, up 10.6%.

• Premiums revenue rose 10.4% to $28.1 billion in Q2 2024, driven by higher Medicare premiums and membership growth.

• Benefits expense increased 13.8% to $25.0 billion in Q2 2024, with the benefit ratio rising to 89.0% from 86.3% a year ago.

• Pharmacy volumes are in line with plan, with cost-to-fill improvements, especially in specialty pharmacy.

• Home business saw high single-digit admission growth, with ongoing cost structure improvements.

Outlook and guidance

• Full-year 2024 Adjusted EPS guidance remains at approximately $16.00, while GAAP EPS guidance was revised to approximately $12.81.

• Individual Medicare Advantage annual membership growth forecast was raised by 75,000 to 225,000, or 4.2%.

• 2025 outlook expects Adjusted EPS growth as the first step toward multi-year margin normalization, with a target to return to a 3% normalized margin in Medicare Advantage by 2027.

• Management remains confident in 2025 bid assumptions, despite recent inpatient cost pressures not being explicitly included in bids.

• The company expects continued charges related to value creation initiatives through the end of 2024.