Why Humana Stock Lagged the Market Today

What happened

Top health insurance company Humana (HUM 0.31%) wasn’t necessarily tops with investors on Wednesday. After reporting its latest set of quarterly figures, the company’s share price bumped slightly higher, by 0.3%, which wasn’t high enough to beat the S&P 500 index’s more than 1% increase.

So what

It’s not that Humana’s results for the fourth quarter 2022 were bad or uninspiring; it’s just that they didn’t excel.

For the period, the insurer’s total revenue was $22.44 billion, up nearly 7% on a year-over-year basis. That filtered down to a non-GAAP (adjusted) net profit of $263 million, or $1.62 per share. This result significantly bettered (by 58%) the $166 million adjusted net profit Humana recorded in the fourth quarter of 2021.

Those headline results shake out into a mixed quarter for the company. While that profitability was well higher than the collective analyst estimate of $1.46 for adjusted net income, the top line fell a bit short of those prognosticators’ $22.48 billion projection.

Humana benefited slightly from an uptick in total membership, to nearly 17.08 million from the year-ago quarter’s less than 17.07 million. It did increase its individual Medicare Advantage member rolls, to just under 4.57 million; the fourth-quarter 2021 figure was 4.41 million.

Now what

Humana quoted its CEO Bruce Broussard as promising that Medicare Advantage growth would continue, with expected new member inflows of at least 625,000 this year.

The company’s earnings guidance reflects this optimism. It is forecasting per-share, adjusted net income of $28 at a minimum for the full year, which if realized would compare very favorably to the $25.24 of 2022.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.