Humana’s Stock Surges as Medical Costs Fall Below Expectations

Humana shares experienced an upward surge on Wednesday as the health insurer revealed that its second-quarter earnings report showed lower-than-anticipated medical costs.

This announcement alleviates investor concerns, particularly after Humana and its rival UnitedHealth Group cautioned about an increase in claims due to a rise in demand for nonurgent surgeries and outpatient services among seniors.

Both Humana and UnitedHealth Group, as the top providers of Medicare Advantage plans for individuals aged 65 and above, now suggest that the surge may be subsiding.

According to Refinitiv data, Humana’s medical loss ratio, which measures the percentage of premiums allocated to medical care, stood at 86.3% for the second quarter, slightly lower than the estimated ratio of 86.5%.

Humana noted a “stabilizing Medicare Advantage utilization environment” based on recent claims activity, though further details were not provided.

In June, the company projected its second-quarter medical loss ratio to be at the higher end of its full-year outlook range of 86.3% to 87.3%. Humana reaffirmed this guidance on Wednesday.

During morning trading, Humana’s stock rose by 5%. However, the shares have experienced a decline of approximately 5% for the year thus far, likely due to the downturn faced by the broader health-care sector in June. This places the company’s market value at around $60 billion.