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Can Humana's (HUM) Q4 Earnings Beat on Healthcare Services?
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Humana Inc. (HUM - Free Report) is set to continue its earnings beat streak in the fourth quarter of 2022, the results of which are expected to be released on Feb 1, before the opening bell.
In the last reported quarter, the company reported adjusted earnings per share of $6.88, beating the Zacks Consensus Estimate by 10.1%, due to strong contribution from HUM’s Retail and Healthcare Services segments. Improved per-member individual Medicare Advantage premiums also contributed to growth. However, its margins were partly hurt by escalating operating costs.
Now, let us see how things have shaped up prior to the fourth-quarter earnings announcement.
The Trend in Estimate Revision
The Zacks Consensus Estimate for fourth-quarter earnings per share of $1.46 has witnessed no movement in the past week. The estimated figure suggests an increase of 17.7% from the prior-year reported number. Our estimate for fourth-quarter earnings of $1.42 per share suggests a 14.3% year-over-year increase. Humana beat the consensus estimate in all the prior four quarters, with the average being 10.4%. This is depicted in the graph below:
The Zacks Consensus Estimate for fourth-quarter revenues of $22.5 billion indicates a 6.7% increase from the year-ago reported figure while our estimate suggests a 4.4% rise.
What the Quantitative Model Suggests
Our proven model predicts a likely earnings beat for Humana this time around as well. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: Earnings ESP for the company is currently +0.04%. The Most Accurate Estimate is pegged at $1.47 per share, higher than the Zacks Consensus Estimate of $1.46. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Humana currently holds a Zacks Rank #3.
Factors Driving Better-Than-Expected Earnings
In the fourth quarter, Humana’s revenues are expected to have benefited from improved premiums resulting from its well-devised Medicare Advantage and Medicaid plans. Numerous contract wins and an expanding customer base are likely to have contributed to growing premiums.
The Zacks Consensus Estimate for HUM’s fourth-quarter premiums indicates a 6.8% improvement from the prior-year quarter’s reported figure. Our estimate suggests a 4.3% year-over-year increase in the metric. The consensus mark for its Medicaid and other premiums predicts a 15.3% rise from the prior-year quarter’s reported figure while our estimate indicates a 14.4% increase.
The Healthcare Services segment is likely to have been driven by a growing membership. The Zacks Consensus Estimate for the segment’s pretax income is pegged at $490 million, indicating a 30.7% increase from the prior-year quarter’s reported figure. This is expected to have positioned the company for a year-over-year increase and an earnings beat in the fourth quarter.
The Healthcare Services segment is expected to have gained on a strong pharmacy business and a better mail-order pharmacy penetration for individual Medicare Advantage members in the fourth quarter.
However, continued investments in marketing and distribution are likely to have escalated costs for Humana, which in turn, are likely to have squeezed its margins in the fourth quarter. Our estimate for total operating expenses indicates a 3.3% year-over-year increase.
Nevertheless, the downside is likely to have been partly offset by lower utilization trends and subsiding COVID-linked headwinds. The consensus estimate for the consolidated benefit expense ratio is pegged at 87%, indicating an improvement from the year-ago level of 88%.
Other Stocks That Warrant a Look
Here are some other companies from the broader medical space that you may also want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time around:
The Zacks Consensus Estimate for Haemonetics’s bottom line for the to-be-reported quarter is pegged at 79 cents per share. It has witnessed one upward estimate revision in the past 30 days against none in the opposite direction. HAE beat earnings estimates in each of the past four quarters, the average surprise being 12.1%.
Ardelyx, Inc. (ARDX - Free Report) has an Earnings ESP of +140.00% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Ardelyx’s earnings per share for the to-be-reported quarter indicates a 103.2% year-over-year improvement. ARDX witnessed one upward estimate revision in the past 30 days against none in the opposite direction.
ImmunoGen, Inc. has an Earnings ESP of +11.36% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for ImmunoGen’s bottom line for the to-be-reported quarter remained stable over the past week. IMGN beat earnings estimates in two of the past four quarters and missed on the other occasions, the average surprise being 7.4%.
Image: Bigstock
Can Humana's (HUM) Q4 Earnings Beat on Healthcare Services?
Humana Inc. (HUM - Free Report) is set to continue its earnings beat streak in the fourth quarter of 2022, the results of which are expected to be released on Feb 1, before the opening bell.
In the last reported quarter, the company reported adjusted earnings per share of $6.88, beating the Zacks Consensus Estimate by 10.1%, due to strong contribution from HUM’s Retail and Healthcare Services segments. Improved per-member individual Medicare Advantage premiums also contributed to growth. However, its margins were partly hurt by escalating operating costs.
Now, let us see how things have shaped up prior to the fourth-quarter earnings announcement.
The Trend in Estimate Revision
The Zacks Consensus Estimate for fourth-quarter earnings per share of $1.46 has witnessed no movement in the past week. The estimated figure suggests an increase of 17.7% from the prior-year reported number. Our estimate for fourth-quarter earnings of $1.42 per share suggests a 14.3% year-over-year increase. Humana beat the consensus estimate in all the prior four quarters, with the average being 10.4%. This is depicted in the graph below:
Humana Inc. Price and EPS Surprise
Humana Inc. price-eps-surprise | Humana Inc. Quote
The Zacks Consensus Estimate for fourth-quarter revenues of $22.5 billion indicates a 6.7% increase from the year-ago reported figure while our estimate suggests a 4.4% rise.
What the Quantitative Model Suggests
Our proven model predicts a likely earnings beat for Humana this time around as well. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: Earnings ESP for the company is currently +0.04%. The Most Accurate Estimate is pegged at $1.47 per share, higher than the Zacks Consensus Estimate of $1.46. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Humana currently holds a Zacks Rank #3.
Factors Driving Better-Than-Expected Earnings
In the fourth quarter, Humana’s revenues are expected to have benefited from improved premiums resulting from its well-devised Medicare Advantage and Medicaid plans. Numerous contract wins and an expanding customer base are likely to have contributed to growing premiums.
The Zacks Consensus Estimate for HUM’s fourth-quarter premiums indicates a 6.8% improvement from the prior-year quarter’s reported figure. Our estimate suggests a 4.3% year-over-year increase in the metric. The consensus mark for its Medicaid and other premiums predicts a 15.3% rise from the prior-year quarter’s reported figure while our estimate indicates a 14.4% increase.
The Healthcare Services segment is likely to have been driven by a growing membership. The Zacks Consensus Estimate for the segment’s pretax income is pegged at $490 million, indicating a 30.7% increase from the prior-year quarter’s reported figure. This is expected to have positioned the company for a year-over-year increase and an earnings beat in the fourth quarter.
The Healthcare Services segment is expected to have gained on a strong pharmacy business and a better mail-order pharmacy penetration for individual Medicare Advantage members in the fourth quarter.
However, continued investments in marketing and distribution are likely to have escalated costs for Humana, which in turn, are likely to have squeezed its margins in the fourth quarter. Our estimate for total operating expenses indicates a 3.3% year-over-year increase.
Nevertheless, the downside is likely to have been partly offset by lower utilization trends and subsiding COVID-linked headwinds. The consensus estimate for the consolidated benefit expense ratio is pegged at 87%, indicating an improvement from the year-ago level of 88%.
Other Stocks That Warrant a Look
Here are some other companies from the broader medical space that you may also want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time around:
Haemonetics Corporation (HAE - Free Report) has an Earnings ESP of +2.53% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Haemonetics’s bottom line for the to-be-reported quarter is pegged at 79 cents per share. It has witnessed one upward estimate revision in the past 30 days against none in the opposite direction. HAE beat earnings estimates in each of the past four quarters, the average surprise being 12.1%.
Ardelyx, Inc. (ARDX - Free Report) has an Earnings ESP of +140.00% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Ardelyx’s earnings per share for the to-be-reported quarter indicates a 103.2% year-over-year improvement. ARDX witnessed one upward estimate revision in the past 30 days against none in the opposite direction.
ImmunoGen, Inc. has an Earnings ESP of +11.36% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for ImmunoGen’s bottom line for the to-be-reported quarter remained stable over the past week. IMGN beat earnings estimates in two of the past four quarters and missed on the other occasions, the average surprise being 7.4%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.