MA Growth Drives Earnings Outlook Amid COVID Uncertainty

Insurers’ responses to the COVID-19 outbreak dominated recent first-quarter 2020 earnings calls, as did expected declines in utilization this quarter followed by a likely ramp-up of services later in the year, and waning commercial enrollment offset by increases in Medicaid and exchange membership. This anticipated volatility led some insurers to revise their full year earnings guidance, while some — including the two leading Medicare Advantage insurers — maintained their 2020 forecasts.

For the quarter ending March 31, Humana Inc. reported better-than-expected adjusted earnings per share (EPS) of $5.40 and an improved medical loss ratio (MLR) of 85.1%. This was largely due to the reinstatement of the Affordable Care Act health insurer fee in 2020 and the continued shift in Medicare member mix as its standalone Part D membership (which carries higher MLRs in the first quarter) dropped while MA membership rose, summed up securities analyst A.J. Rice in an April 29 note from Credit Suisse.

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• Radar on Medicare Advantage