Humana Inc. (HUM Quick QuoteHUM - Free Report) is slated to release third-quarter 2024 results on Oct. 30, before the opening bell. The Zacks Consensus Estimate for earnings per share is pegged at $3.48, which indicates a 55.3% plunge from the prior-year quarter’s number. 

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The third-quarter earnings estimate has witnessed two downward revisions over the past month. During this time, the estimate declined 1.7%. Meanwhile, the Zacks Consensus Estimate for revenues is pegged at $28.7 billion, indicating 12.3% growth from the year-ago quarter’s figure.

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Humana’s Earnings Surprise History

Humana’s bottom line beat estimates in three of the trailing four quarters and missed the mark once, the average negative surprise being 2.52%. This is depicted in the chart below:

What Our Quantitative Model Predicts for HUM

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 odds of an earnings beat. However, that’s not the case here, as you see below.

Earnings ESP: Humana has an Earnings ESP of -3.86%. This is because the Most Accurate Estimate is currently pegged at $3.35 per share, lower than the Zacks Consensus Estimate of $3.48. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: HUM currently carries a Zacks Rank of 3.

Factors to Note Ahead of HUM’s Results

Humana's third-quarter revenue is anticipated to have been bolstered by an increase in membership within its individual Medicare Advantage business, leading to higher premiums for the health insurer. We expect individual Medicare Advantage membership to increase 4% year over year. The Zacks Consensus Estimate for HUM’s premiums from the Medicare business is pegged at $24.1 billion, implying a 10.5% rise from the prior-year quarter’s figure.

Additionally, the customer base for Humana’s Group Medicare Advantage and prescription drug plans is likely to have witnessed increases. The consensus estimate for premiums from the two business lines indicates year-over-year improvements of 12.1% and 26%, respectively, from the prior-year quarter’s figures. 

Humana's Medicaid business is likely to have been driven by contract wins, which in turn, are expected to have supported premium growth. However, a decline in commercial fully-insured premiums is expected to have partly offset the quarterly results. We expect the metric to decline 54.7% year over year. 

These factors, combined with higher per-member-per-month rates in most business lines, are expected to have contributed to the Insurance segment’s results. The Zacks Consensus Estimate for the unit’s revenues is pegged at $27.5 billion, which indicates a 7.9% improvement from the prior-year quarter’s  figure. We expect the Insurance segment’s revenues to improve 7.4% year over year. 

Results of HUM’s CenterWell segment are likely to have gained from an expanding value-based home care model and increase in revenues derived from its Primary Care business. The consensus mark for the unit’s revenues is pinned at $4.8 billion, indicating 3.8% growth from the year-ago quarter’s figure. 

Humana’s benefits expense ratio is likely to have remained elevated due to the ongoing impact of increased Medicare Advantage medical cost trends. The Zacks Consensus Estimate for the consolidated benefits expense ratio is pegged at 90%, indicating a 344-basis point increase year over year.

Additionally, investments aimed at improving digital efficiencies and elevated operating costs are expected to have dampened Humana’s margins. We project total operating expenses to be $27.6 billion, which indicates a 9.5% year-over-year increase.

HUM Stock’s Price Performance

Humana’s shares have lost 43% year to date against the industry’s 1.6% growth. Meanwhile, the Zacks Medical sector and the S&P 500 index rose 3.6% and 21.9%, respectively, in the said time frame.

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Stocks to Consider

Here are some companies from the Medical space, which according to our model, have the right combination of elements to beat on earnings this time around:

Collegium Pharmaceutical, Inc. (COLL Quick QuoteCOLL - Free Report) has an Earnings ESP of +1.23% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for COLL’s third-quarter earnings is pegged at $1.63 per share, which implies a 21.6% rise from the year-ago quarter’s figure.

Collegium Pharmaceutical’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 7.01%. 

Masimo Corporation (MASI Quick QuoteMASI - Free Report) currently has an Earnings ESP of +0.40% and a Zacks Rank of 2. The Zacks Consensus Estimate for MASI’s third-quarter earnings is pegged at 84 cents per share, which implies a 33.3% rise from the year-ago quarter’s figure.  

Masimo’s earnings beat estimates in each of the trailing four quarters, the average surprise being 14.63%.

Novo Nordisk A/S (NVO Quick QuoteNVO - Free Report) has an Earnings ESP of +1.02% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for NVO’s third-quarter earnings is pegged at 90 cents per share, which implies a 23.3% rise from the year-ago quarter’s figure.  

Novo Nordisk’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 3.18%.