Humana rises after medical costs came in lower than expected

A Humana office in Louisville, Kentucky, July 31, 2023.

Jon Cherry | Bloomberg | Getty Images

Humana shares rose Wednesday after the health insurer said medical costs came in lower than expected during its second-quarter earnings report.

The results ease investor concerns two months after Humana and rival UnitedHealth Group warned that a surge in demand for nonurgent surgeries and outpatient services among seniors was driving up claims. 

Both companies — the two biggest providers of Medicare Advantage plans for people ages 65 and above — have now suggested the uptick may be abating. 

Humana reported a medical loss ratio, the percentage of premiums it spends on medical care, of 86.3% for the second quarter. Analysts had estimated that ratio would be 86.5%, according to Refinitiv data.

Humana highlighted a “stabilizing Medicare Advantage utilization environment” based on the most recent claims activity, without elaborating.

The company said in June it expected its second-quarter medical loss ratio to be toward the top range of its full-year outlook of 86.3% to 87.3%. Humana reiterated that full-year guidance Wednesday.

Humana’s stock rose 5% in morning trading Wednesday. Shares are down about 5% for the year after the broader health-care sector took a beating in June, putting the company’s market value at around $60 billion.

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