Potential Impact of MA Rate Notice on Humana’s 2025 Earnings, Pricing Decisions, and Membership

Humana, a major player in the Medicare Advantage market, announced during its Q1 earnings report that it has increased its 2024 individual Medicare Advantage annual membership growth projection by 50,000, now expecting an annual growth of approximately 150,000, or 2.8%. However, the company also anticipates that future Medicare Advantage pricing may negatively impact membership numbers due to lower payment and benchmark rates set by the Centers for Medicare and Medicaid Services.

President and COO James Rechtin stated that Humana is currently evaluating plan level pricing decisions and the potential impact on membership. CEO Bruce Broussard highlighted that the finalization of MA bid pricing decisions, industry cost trends, and competitor pricing actions in 2025 will affect the company’s adjusted earnings per share growth outlook for that year.

Despite the challenges posed by the current regulatory environment, Broussard expressed confidence in the industry’s ability to adapt and continue delivering strong growth. He emphasized Humana’s commitment to margin recovery and profitable growth through multiyear pricing actions to create long-term value for shareholders.

In terms of financial performance, Humana reported lower net profits for the first quarter of 2024 compared to the same period in 2023, but still exceeded Wall Street expectations. The company’s net profit of $741 million represented a 40% decrease from Q1 2023, leading to a 4% drop in Humana’s shares in early trading.

Overall, Humana is navigating a dynamic and challenging landscape in the Medicare Advantage market, but remains optimistic about its ability to compete and drive growth in the long term.