Skip to main content
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Digital Health
    • Transformation
    • ESG
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Blogs
    • AI
    • Deals
    • Layoff Tracker
    • HIMSS 2023
  • Opinion
    • Breaking Bias
    • Commentaries
    • Letters
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • ESG: The Implementation Imperative Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Hospital at Home
    • - Workplace of the Future
    • - AI and Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Sponsored Video Series - One on One
    • Sponsored Video Series - Checking In with Dan Peres
  • Data & Insights
    • Data & Insights Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • Newsletters
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Finance
April 29, 2015 12:00 AM

Insurer stocks tumble after Humana hints at higher hospital claims

Bob Herman
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Getty Images
    Humana and health insurance stocks in general took a particularly hard hit Wednesday as U.S. stocks closed down more than 70 points.

    Humana gave the first indication Wednesday that hospital spending could eventually eat into the earnings of health insurers. The announcement dented the stocks of all health insurers.

    Competitors Aetna, Anthem and UnitedHealth Group reported this month that their medical-loss ratios in the first quarter had decreased, and none said there was an underlying surge in healthcare utilization. That so far has been in direct contrast to economic indicators and guidance from hospital chain HCA that show hospital spending and admissions were on the rise.

    However, Humana began to track higher hospital admissions among its Medicare members toward the end of the quarter.

    “We have seen some of the hospital published data, which suggest higher Medicare usage of inpatient services, and have also witnessed in the last number of weeks an uptick in inpatient authorizations,” Humana Chief Financial Officer Brian Kane said on a call with investors. “During the last weeks of the quarter and into April, we are seeing an elevated level of authorizations for hospital admissions, which, although still declining, are slightly higher than we had anticipated.”

    Humana's stock dropped more than 7% to $168.05 by the close of trading Wednesday. Shares of every other publicly traded insurer were down anywhere from 2% to 7.4%.

    U.S. stocks were down overall, however, on preliminary federal data suggesting the economy slowed to a standstill in the first quarter of 2015 and a signal from the Federal Reserve that an interest-rate hike remains on the table for later this year.

    Higher inpatient admissions suggest Humana's medical-loss ratio, the amount of plan premiums spent toward covering medical care, “could remain at a higher level,” said Jeffrey Loo, an equity analyst at S&P Capital IQ. Humana's medical-loss ratio increased from 82.3% in the first quarter of 2014 to 83.1% in the same period this year. Medical claims increased for Humana's group segment, which includes fully insured and self-insured employer plans, as well as for the Medicare and individual market populations.

    Humana still posted $430 million of profit in the first quarter, a 17% jump from the same period in 2014. But the gains didn't live up to the hype of Humana's peers, who beat expectations and raised their financial guidance for the rest of the year. Adjusted earnings per share were $2.47, which was below financial analysts' expectations of $2.55. When including the tax benefits from the sale of Concentra, Humana's earnings per share reached $2.82.

    Concentra is Humana's occupational medicine and wellness division. Humana agreed to sell Concentra to Select Medical Holdings Corp. and private-equity firm Welsh, Carson, Anderson & Stowe in March for $1.05 billion.

    Most of Humana's business comes from selling Medicare Advantage and Medicare prescription drug plans. The insurer had roughly 3.2 million individual and group Medicare Advantage members as of March 31. Enrollment in stand-alone Medicare drug plans increased 14% year over year to 4.4 million.

    Total revenue climbed 18% to $13.8 billion in the quarter. Medicare represented 71% of that figure.

    Humana CEO Bruce Broussard said the Louisville, Ky.-based company will provide an update on the status of its pharmacy benefits management business in the third quarter of this year. Executives have said on numerous occasions that Humana will not sell the pharmacy segment.

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Copy of finance_arrows_down_WEB_i_i_i.jpg
    Dozens of hospitals, health systems see credit rating downgrades
    Copy of states hospital costs_WEB_i.jpg
    Mark Cuban-backed study finds price discrepancies in hospital services
    Most Popular
    1
    Centene to lay off 2,000 workers
    2
    How health systems are battling price-gouging allegations
    3
    Senate advances bill to temporarily aid hospitals, health centers
    4
    Elevance, Blue Cross Louisiana halt $2.5B proposed deal
    5
    Tower Health to sell urgent care centers, close others
    Sponsored Content
    Daily Finance Newsletter: Sign up to receive daily news and data that has a direct impact on the business and financing of healthcare.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Help Center
    • Advertise with Us
    • Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Digital Health
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • ESG
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Blogs
      • AI
      • Deals
      • Layoff Tracker
      • HIMSS 2023
    • Opinion
      • Breaking Bias
      • Commentaries
      • Letters
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - AI and Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Sponsored Video Series - One on One
      • Sponsored Video Series - Checking In with Dan Peres
    • Data & Insights
      • Data & Insights Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • Newsletters
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Jobs
      • People on the Move
      • Reprints & Licensing