(Bloomberg) -- Humana Inc. raised its outlook for the year as first-quarter profit beat Wall Street's highest estimate, a sign of continued strength for health insurers during the pandemic.
Adjusted earnings for 2022 will be approximately $24.50 a share, up from a previous forecast of at least $24, Humana said Wednesday. Adjusted earnings for the first quarter of $8.04 a share surpassed the rosiest analyst forecast of $7.20.
Health insurers are posting strong profits through the latest phase of Covid-19, even as hospital companies have seen higher labor costs weigh on earnings. Humana's results followed rivals UnitedHealth Group Inc., Anthem Inc. and Centene Corp., all of which raised their profit outlooks after beating first-quarter expectations.
Lower administrative expenses and strong results in its pharmacy business boosted performance in the quarter, the company said in a statement. The shares gained 0.7% as of 9:42 a.m. in New York.
Humana's updated forecast still includes a $1-per-share headwind from Covid-19, suggesting the potential for greater profits if the pandemic's effects are less severe this year than company expectations.
Its medical-loss ratio, a key gauge of how much premium revenue goes to caring for patients, was 86.4%, narrowly beating estimates. Overall revenue was $24 billion, also ahead of Wall Street's average view.
Humana, a Medicare-focused insurer, also affirmed its recent forecast for individual Medicare Advantage membership growth of 150,000 to 200,000. The company is coming off a disappointing annual enrollment season. At the start of the year it lowered its outlook for Medicare membership, sending shares plunging.
The company is “making strong progress” on plans to boost Medicare membership growth next year and retain existing members, Chief Executive Officer Bruce Broussard said in the statement.
Management is likely to face questions on the conference call about the planned $2.8 billion sale of a majority interest in the Kindred at Home hospice business to Clayton Dubilier & Rice. Humana will retain a minority stake in the business, which it acquired last year in a broader deal for the home-care provider. Like rivals, Humana is expanding its care-delivery operation.
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