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Will Lower CenterWell Profit Hurt Humana's (HUM) Q3 Earnings?
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Humana Inc. (HUM - Free Report) is set to report its third-quarter 2023 results on Nov 1, before the opening bell.
What Do the Estimates Say?
The Zacks Consensus Estimate for third-quarter earnings per share of $7.14 suggests a 3.8% increase from the prior-year figure of $6.88. The consensus mark remained stable over the past week. The consensus estimate for third-quarter revenues of $25.3 billion indicates an 11.2% increase from the year-ago reported figure.
Humana beat the consensus estimate for earnings in all the trailing four quarters, with the average surprise being 5.8%. This is depicted in the graph below:
Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at HUM’ previous-quarter performance first.
Q2 Earnings Rewind
In the last reported quarter, the healthcare plan provider reported adjusted earnings per share of $8.94, beating the Zacks Consensus Estimate by 0.7%, on the back of a solid individual Medicare Advantage business and expanding membership through state-based contracts. Improved per-member individual Medicare Advantage premiums also contributed to the upside, which was partly offset by an elevated operating expense level.
Now, let’s see how things have shaped up before the third-quarter earnings announcement.
Q3 Factors to Note
During the third quarter, Humana is anticipated to have experienced a boost in revenues attributed to enhanced premiums generated by its strategically designed Medicare Advantage plans, as well as increased investment income. The company's revenue growth is further bolstered by several new contract wins and the growing provider services business, both of which have likely played a role in driving up premium income.
The Zacks Consensus Estimate for HUM’s third-quarter premiums indicates a 13.5% improvement from the prior-year quarter’s reported figure, whereas our model predicts a more than 15% increase. We expect total Medicare to have witnessed nearly 19% growth in the quarter under review. Furthermore, our model suggests that HUM’s investment income will see a nearly 74% jump from the year-ago level.
The Insurance segment is expected to have drawn an impetus from a growing membership in Medicare Advantage and state-based contracts. However, declining memberships in Stand-Alone PDPs and total Specialty Medical is likely to have partially offset the upside. Our estimate for the segment’s pretax income indicates a more than 7% decrease from the prior-year quarter’s reported figure.
The CenterWell segment’s revenues are expected to have gained from a strong provider services business. However, declining Home Solutions and Pharmacy Solutions revenues are expected to have played spoilsport in the third quarter. Also, rising operating expenses are expected to have hurt the segment’s profits, making an earnings beat uncertain. Our estimate for the segment’s pretax income suggests a 43% decrease from the prior-year quarter’s reported figure.
Continued investments in marketing and distribution and higher benefits are likely to have escalated costs for Humana, which, in turn, are likely to have squeezed its margins in the third quarter. Our estimate for total operating expenses indicates a more than 14% year-over-year increase.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Humana this time around. 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. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of -0.94%. This is because the Most Accurate Estimate currently stands at $7.07 per share, lower than the Zacks Consensus Estimate of $7.14.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Humana currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for Humana, here are some companies from the broader Medical space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
The Zacks Consensus Estimate for Apellis’ earnings per share for the to-be-reported quarter indicates a 49.7% year-over-year improvement. APLS beat earnings estimates twice in the past four quarters and missed on two occasions, the average surprise being 1.4%.
AstraZeneca PLC (AZN - Free Report) has an Earnings ESP of +5.13% and a Zacks Rank #3.
The Zacks Consensus Estimate for AstraZeneca’s bottom line for the to-be-reported quarter is pegged at 82 cents per share, which improved 1.2% in the past 30 days. AZN beat earnings estimates in each of the past four quarters, the average surprise being 8.4%.
Jazz Pharmaceuticals plc (JAZZ - Free Report) has an Earnings ESP of +1.31% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Jazz Pharmaceuticals’ bottom line for the to-be-reported quarter of $4.85 per share has remained stable over the past week. The consensus mark for JAZZ’s revenues is pegged at $970.5 million, signaling 3.2% year-over-year growth.
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Will Lower CenterWell Profit Hurt Humana's (HUM) Q3 Earnings?
Humana Inc. (HUM - Free Report) is set to report its third-quarter 2023 results on Nov 1, before the opening bell.
What Do the Estimates Say?
The Zacks Consensus Estimate for third-quarter earnings per share of $7.14 suggests a 3.8% increase from the prior-year figure of $6.88. The consensus mark remained stable over the past week. The consensus estimate for third-quarter revenues of $25.3 billion indicates an 11.2% increase from the year-ago reported figure.
Humana beat the consensus estimate for earnings in all the trailing four quarters, with the average surprise being 5.8%. This is depicted in the graph below:
Humana Inc. Price and EPS Surprise
Humana Inc. price-eps-surprise | Humana Inc. Quote
Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at HUM’ previous-quarter performance first.
Q2 Earnings Rewind
In the last reported quarter, the healthcare plan provider reported adjusted earnings per share of $8.94, beating the Zacks Consensus Estimate by 0.7%, on the back of a solid individual Medicare Advantage business and expanding membership through state-based contracts. Improved per-member individual Medicare Advantage premiums also contributed to the upside, which was partly offset by an elevated operating expense level.
Now, let’s see how things have shaped up before the third-quarter earnings announcement.
Q3 Factors to Note
During the third quarter, Humana is anticipated to have experienced a boost in revenues attributed to enhanced premiums generated by its strategically designed Medicare Advantage plans, as well as increased investment income. The company's revenue growth is further bolstered by several new contract wins and the growing provider services business, both of which have likely played a role in driving up premium income.
The Zacks Consensus Estimate for HUM’s third-quarter premiums indicates a 13.5% improvement from the prior-year quarter’s reported figure, whereas our model predicts a more than 15% increase. We expect total Medicare to have witnessed nearly 19% growth in the quarter under review. Furthermore, our model suggests that HUM’s investment income will see a nearly 74% jump from the year-ago level.
The Insurance segment is expected to have drawn an impetus from a growing membership in Medicare Advantage and state-based contracts. However, declining memberships in Stand-Alone PDPs and total Specialty Medical is likely to have partially offset the upside. Our estimate for the segment’s pretax income indicates a more than 7% decrease from the prior-year quarter’s reported figure.
The CenterWell segment’s revenues are expected to have gained from a strong provider services business. However, declining Home Solutions and Pharmacy Solutions revenues are expected to have played spoilsport in the third quarter. Also, rising operating expenses are expected to have hurt the segment’s profits, making an earnings beat uncertain. Our estimate for the segment’s pretax income suggests a 43% decrease from the prior-year quarter’s reported figure.
Continued investments in marketing and distribution and higher benefits are likely to have escalated costs for Humana, which, in turn, are likely to have squeezed its margins in the third quarter. Our estimate for total operating expenses indicates a more than 14% year-over-year increase.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Humana this time around. 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. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of -0.94%. This is because the Most Accurate Estimate currently stands at $7.07 per share, lower than the Zacks Consensus Estimate of $7.14.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Humana currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for Humana, here are some companies from the broader Medical space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Apellis Pharmaceuticals, Inc. (APLS - Free Report) has an Earnings ESP of +5.86% and is a Zacks #1 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Apellis’ earnings per share for the to-be-reported quarter indicates a 49.7% year-over-year improvement. APLS beat earnings estimates twice in the past four quarters and missed on two occasions, the average surprise being 1.4%.
AstraZeneca PLC (AZN - Free Report) has an Earnings ESP of +5.13% and a Zacks Rank #3.
The Zacks Consensus Estimate for AstraZeneca’s bottom line for the to-be-reported quarter is pegged at 82 cents per share, which improved 1.2% in the past 30 days. AZN beat earnings estimates in each of the past four quarters, the average surprise being 8.4%.
Jazz Pharmaceuticals plc (JAZZ - Free Report) has an Earnings ESP of +1.31% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Jazz Pharmaceuticals’ bottom line for the to-be-reported quarter of $4.85 per share has remained stable over the past week. The consensus mark for JAZZ’s revenues is pegged at $970.5 million, signaling 3.2% year-over-year growth.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.