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Humana surprised Wall Street again on Thursday with a lower-than-expected earnings forecast as insurers that sell Medicare Advantage plans continue to struggle with rising care costs.
Shares of several health insurers plunged in early trading after Humana said a spike in care use that hit late last year likely will persist throughout 2024. Humana also debuted an earnings forecast for the new year that fell more than $13 short of average expectations.
Health insurance stocks tumbled last week after Humana also scaled back its 2023 profit expectations due to those rising costs.
Humana said then that its Medicare Advantage patients used more inpatient care than it expected in November and December. The health insurer also saw more growth in care that doesn’t involve a hospital stay, like doctor visits and outpatient surgeries.
Humana is one of the nation’s largest providers of Medicare Advantage plans, which are privately run versions of the federal government’s Medicare program mostly for people age 65 and older. Medicare Advantage plans are one of Humana’s biggest forms of coverage outside insurance it provides for military families and retirees.
Rival UnitedHealth Group Inc., the only insurer with a bigger Medicare Advantage enrollment, also has struggled with cost hikes.
Humana Inc. said Thursday that it expects adjusted earnings of about $16 per share for the new year. Analysts had been projecting per-share earns of $29.14, according to the data firm FactSet.
Shares of Humana, based in Louisville, Kentucky, plunged 15% in early morning trading to $342.03.
UnitedHealth also dropped 4%. The Blue Cross-Blue Shield insurer Elevance Health also was down even though it reported on Wednesday a medical cost trend that was better than analysts expected.