Humana Inc.

Humana had a healthy start to the year and managed an all-around beat in Q1. The adjusted earnings per share for the quarter of $9.38 were higher than the company’s early forecasts, with the outperformance being driven by robust membership growth and favorable inpatient utilization trends in its individual Medicare Advantage business. Humana’s steadfast dedication to the advancement of its strategy and core business growth is shown in its Medicare Advantage growth, continuous organic performance in Medicaid, recent Tricare contract win, and continued expansion of its CenterWell assets. Total medical expenses in their Medicare Advantage business for the first quarter came in a little bit better than expected. Furthermore, the CenterWell portfolio, which consists of primary care, home care, and pharmacy, continues to experience strong growth. The deployment of their value-based care model inside Home Solutions is also proceeding as the company expected, with over 815,000 Medicare Advantage members covered by the full value-based model, which includes coordinating care and optimizing spend across home health, DME, and infusion. We give Humana a ‘Hold’ rating with a revised target price.