Health insurer Humana Inc HUM.N said on Tuesday it sees a boost to its 2021 profit from strong growth in its Medicare Advantage health plans.
Committing to a growth rate for next year above the levels discussed by peers, reflects Humana’s leverage to the Medicare Advantage business, Stephens analyst Scott Fidel said.
Shares of Humana were up 4.09% at $425.80.
Humana said enrollment in individual Medicare Advantage health plans for people older than 65 or with disabilities, would grow by about 9% to 10% in 2021.
It also said the business will benefit from permanently repealing industry-wide health insurer fee (HIF), put in place to help implement former President Barack Obama’s Affordable Care Act, next year.
Humana expects the midpoint of its 2021 adjusted profit per share range to be at least 15% above its initial 2020 forecast of $18.50.
It also tightened its adjusted profit outlook for 2020 to $18.50 and $18.75 per share, compared with its previous estimate of $18.25 to $18.75, as it benefited from a slower recovery in demand for healthcare services, delayed during the height of the pandemic.
The company, which beat third-quarter profit estimates on deferred medical care, said it expected to post adjusted loss per share of $2.40 in the fourth quarter due to normalizing demand for discretionary healthcare services and COVID-19 testing and treatment costs.
Humana said it saw an increase in the use of COVID-19 related healthcare services in the third quarter and expected costs related to testing and treatment for the respiratory illness to touch $1 billion in 2020.
Reporting by Manojna Maddipatla and Vishwadha Chander in Bengaluru; Editing by Shinjini Ganguli
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