Humana Experiences Significant Losses, Forecasting Hit to 2025 Profits

Jan. 29, 2024
Humana announces fourth-quarter losses due to rising medical costs, expecting financial trouble to continue into the following year

The Louisville, Ky.-based health insurer Humana reported steep losses for the fourth quarter and signaled financial trouble to continue into the following year due to medical costs exceeding expectations. Shares of Humana fell 13 percent on Jan. 25. Health plans have been warning their investors for some time now that they are experiencing rising medical costs. UnitedHealthcare and Humana announced that medical costs had soared by 16 percent in the fourth quarter of 2023.

Reporting on Jan. 25, Reuters’ Leroy Leo and Sriparna Roy wrote, “The company is the first insurer to warn of a profit hit in 2024 and 2025 from high medical costs….The company pointed to a rise in inpatient procedures during November and December and a further increase in outpatient surgeries and medical care physicians.” They continued to mention, "The company's benefit ratio - the percentage of premiums spent on medical care - rose to 90.7 percent in the fourth quarter of 2023, higher than analysts' estimates of 89.7 percent.”

Meanwhile, Anna Wilde Mathews of the Wall Street Journal reported that “The announcement will likely hit the entire health-insurance sector, because the company suggested the issues extend through the Medicare business that has been a core driver of growth….Humana, which focuses on Medicare plans, warned last week that seniors enrolled in its plans were using more healthcare than it had expected, but the final result—a loss of $591 million in the fourth quarter, compared with a loss of $71 million a year ago—is worse than Wall Street expected,” Wilde Mathews wrote.

Humana said in a statement, “The sector is navigating significant regulatory changes while also absorbing unprecedented increases in medical cost trends.” The company expressed that it would work towards a balanced approach to prevent losing members.

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