Earnings call transcript Q2 2023

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Operator

Good morning and thank you for standing by. Welcome to the Second Quarter 2023 Humana Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. advised conference be being Please Instructions] that is today’s recorded. [Operator

the now Investor to ahead. like would conference Relations. to go of I President hand over Vice Lisa Please Stoner,

Lisa Stoner

Humana’s In Diamond, Susan Financial XXXX. and Officer, second moment, morning. our Officer; our Chief good discuss XXXX and Chief Executive you Bruce Thank Broussard, quarter President will financial and and for a results outlook

Officer, Ventura, question-and-answer we also Legal Following up a industry open Bruce remarks, joining session. Susan will for will the session these our analysts. and Joe prepared lines the with Q&A Chief be for

We Relations to That is purposes. encourage related of later humana.com, page being remarks the Q&A investing management’s the Investor replay for replay public Humana’s and website, will media to and call recorded today. both be listen with available This analysts. the prepared on

Before and Actual and I our cautionary call Certain to of participants this call a matters involve differ discussion, number are statement. advise uncertainties. conference of discussed results risks in could our the materially. forward-looking we begin need of

Investors factors along they discussed Form discussed press and our quarter as the earnings Commission, filings forward-looking other to and in detailed risks the Exchange with XXXX risk are and our latest our XX-K release our with second filings. read other relate statements advised to in Securities SEC

obligation filings our also site. or Today’s and Relations press results. SEC no update any historical or business our news on forward-looking the address releases available undertake to We or Investor are filings release, publicly regarding statements and our communications future with financial all our

for non-GAAP in measures with or GAAP accordance includes and note these that should not measures release. GAAP. the generally today’s financial in to non-GAAP of accounting participants of today’s measures accepted included discussion principles reconciliations use are press financial All that Management’s explanation are

EPS or conference Finally, common refer share. earnings during share this reference to earnings call to per diluted made per any

the I’ll Bruce call Broussard. over that, to turn With

Bruce Broussard

the results Humana second with adjusted us. expectations. and $X.XX, Thank earnings you for quarter morning of financial our per you, Lisa XXXX thank reported with joining share for Today, and good line of in

quarter include to has than for and line line Advantage business. our by supported all higher other in positive Results impact from which were in is results disclosed, with utilization and tracking slightly the updated the stabilized of expectations, lines Medicare the of anticipated recently

our our which EPS XXXX first reaffirmed an We full adjusted increase of and guidance XX% least year release reflects earnings $X.XX by XXXX. at a with quarter over $XX.XX, increase was

now membership pleased to full members reflecting in by In XXX,XXX rate. guidance raise anticipate adding MA XX% individual impressive an year are addition, members. XXXX, an XX,XXX we growth for approximately We our additional growth

significant earnings by ability quality, making disciplined XXXX, deliver Net including and growth, Our our while investments, in and supported targeted also delivering to on continued focus achieving membership Score. Stars rate productivity Promoter our consistent on growth driving is

while highlighting provide Susan differentiated delivery few expectations, our of a moment, on But leading details dive into the a second to deeper strength and take enable additional first, a integrated platform, quarter including our advancement Humana, trends. that our like In to our performance I'd the capabilities care including will full reinforce of minutes continued year utilization strategy.

XXXX of with $XX. XXXX XXXX start in as creates The achieved significant will growth MA our I we've move we strength EPS target MA industry-leading adjusted of our individual the into momentum advance platform. and towards

supported expectations, The coming as initially from retention and new high-quality growth shared, better-than-expected of our XXXX and a we've in initial competitors by planned. greater growth previously seen represents sales than proportion far exceeds

in our of industry XX% over at the by XX% overall market just growth capturing We XXXX, basis points anticipate XXX share increasing to year-end.

to in of XXXX. be while higher be performance. XX% successful percentage are XXXX in as year-over-year, are anticipated our in we've a growth, full XX% to the sales year a As a to expected significant increase seen contributor agents part higher than substantial sales total sales, Agent representing of sales

The sales new speaks for membership agent their as the first reenrollment base to X% at agents runs retention overall our approximately cycle. compared growth, of quality better to further our as improvement to in X% to

member expansion benefit which agents these such higher only members initially and is expense plan related Further, ratio in over receives risk health larger a align the than run MA resulting average not with for initial the as risk, these status for payments time. demographic-related opportunity XX adjustment on new a a that their margin program structured months, individuals does

Our rate. and at industry or in leading quality growth well membership sustainable strong XXXX, fundamentals achieved to growth the above best-in-class positions as

As to XXXX, fueled valued by proposition will the benefits Medicare, compared incremental at providing approximately MA's value compelling growth, we annually. we original believe ahead MA continue industry $X,XXX look to see strong to

XXXX competitors. we certain and the Throughout for the preparation due headwind of the reductions in environment Stars that's as negative disruption the likely process, expected shopping the occur the were bid to to benefit the in a result MA conscious of rate market, the in industry

of has membership As we believe an of another year for a robust result opportunity Humana this disruption, growth.

increasing premium differentiated offerings and XXXX in XXXX on analytics as and prefer. on benefits strategy focus be Our preserving plan. was Medicare-eligible such extensive will improving regarding selectively research identified zero on the by a most continuing important, what informed provide consumers and broker product our consumer to in-depth number focused We enhancing of products outcomes, with that that health as improvements members

We unique those this are maintaining social also product of population. and and eligible value needs for health Medicaid, care vulnerable the prioritizing given duals, Medicare for

customer analytics our clinical product design population. teams needs our from inform Input choices helped to continue health equity will of that the and diverse support

the XXXX growth we XXXX continued our enter supported compelling Importantly, and our strength, from industry-leading selling by of momentum quality. position a season in will

bolstered well our our diversification which IFG relationships with as was our partners reinforced internal ongoing our to of channel channel, is of as strong by efforts diversify by payer-agnostic includes strength broker last The growth acquisition This the mix. August.

application a more significant IFG, doubling. than channel year-over-year with XX% increasing to process best-in-class selling our leading and quickly sales efficiently to leveraged and agents We and technology growth volume MA integrate by

also excellent member-centric and take News opportunity we pride Forrester approach. the are consistent in All-in, World recognition we organizations experience the & for and such customer ahead. received Report excited as about from We US our

to Healthcare and by our Medicaid, we continues beneficiaries success early recently to to that been anticipated to recommended to Authority Oklahoma Medicaid coverage states, announce in the organic are pleased the of record this deliver track has which Turning to is start in Humana across care mid-XXXX. space health

forward XXXX. by and the states X.X approximately to to in and implementing successfully early XXXX, we nine in Ohio to Medicaid bringing After Indiana beginning XXXX, and footprint look both total approaching in members serve our contracts Louisiana year-end million members Oklahoma

care our to CenterWell delivery moving capabilities. Now,

our towards operating now retaining serving in health centers target patients. $X expand contribution to margin CenterWell Primary to and continue advancing patients XXX,XXX critical platform, Care each improved center. million outcomes our We is driving XXX and Engaging

seen year-over-year, We've as points while least been in in have XXX that June improvement XXXX. to both XX% of XX% once percent basis these in XXXX of seen from patients XXth of with retention the areas, improving at increased

we de M&A. track year annual center high at to the of end XX and of XX build a on remain the combination programmatic growth through to novo Further, end of our previously-communicated

the that capabilities, care in I'm our that making largely And driving model changes actions mitigate we primary advance ultimate three is implementing believe with our next other of will organization our be operational over will risk the clinical phased impact years. pleased efficiency, and progress adjustment to

we accelerate health, our covering MA as expand strategy, MA our XXXX XXX,XXX under beyond of payment continue home in and and by model track our value-based we of value-based Home, In now XX% with XXXX. to members to and infusion approximately a towards members this are model goal services, our covering a value-based of members covering DME expect on

from model Health implemented approximately late hospital model. North XXX admissions rates CenterWell points than Home providers. In XXXX, We Virginia are seeing where solid results the basis lower in this other was Carolina, are

model manages In a Home value insurance spend MA an X.X our DME Humana incremental million payment now members, business delivering our for additional segment. addition, to under also value-based

XXXX, to to remain We on million expect health enterprise $XXX positive creation home XXXX. by the enterprise drive from creation in and annual model target of million value $XXX value value-based

to advance clinical which year-over-year and our measures. and from outcome Stars to seeing XX seen adherence a continue year-over-year, ranging to adherence capabilities in helps basis hyperlipidemia, medications measures. we Pharmacy, in are clinical hypertension, XX CenterWell We've an points increase Within increase diabetes,

members to non-CenterWell compared categories, three see CenterWell continue these we as admits users. to Humana utilize pharmacy who have that Across pharmacy X,XXX fewer per inpatient

In higher on CenterWell outcomes improved Specialty patients adherence levels. demonstrates durations addition our longer Pharmacy by therapy driving

XXX than excellence duration Excellence. basis points Center As a an adherence engaged with the patients example, a and oncology the center patients better times in X.X of have of not longer

our for CenterWell markets, which for our our of local businesses health integration in and individual of the value create customers. our further will service shareholders complement Expansion assets

on update to the have work over I'd Susan, it give turning to we like brief a currently underway. integration Before

and to further and This members we greater clinical ability retention is deliver can experience more is common and for members. belief clinical these outcome member Our seamless satisfaction, while our based patients. for workflows our on patient delivering operational a and integrate

for review we for members and assistance benefits screen As wholly-owned patient an example, our drug estimate centers. programs costs, in planned

our and ER risk of concerns more review original teams prioritizing Health beyond unnecessary admissions. Home patients and that high-risk reducing home orders, addition, the CenterWell health-related greatly complications go a health plan, care In Care comprehensive and avoidable Primary visits on collaborate and

needs with care of to the planned to physician, social plan coordination health health-related the social and isolation. worker benefits advantage needs, like transportation food, housing security, and work home primary address in and The nurse take health social

health leverages advance to experiences continue clinical and more integrated towards that CenterWell outcomes innovate Humana our will We model to our for members. deliver a capabilities improved and and collective

important the by expanding forward. focused to work, encouraged two integration early XX markets forward We look year-end. this results more from more of sharing going our actively in on and to are by We XXXX are our work than

In we fundamentals MA near-term while navigate higher-than-expected continuing confident our are And our to and committed ability XX% target are XXXX reflecting closing, XXXX $XX, we to EPS our Humana's our a strategy. impacts strong, remain CAGR I'd XXXX. that through from to to in adjusted utilization of importantly, advance of reiterate the

XXXX in on MA disciplined scores and deliver CenterWell, of on XXXX, deployment. consistent positioning our earnings this all is quality growth compelling productivity target in Our growth, capital our integration strong continued continued to focus confidence in by growth and ability by supported is and our impressive complemented membership which

over turn that, I'll With to Susan. the call

Susan Diamond

per expectations. Today, share Thank with $X.XX, are you, XXXX earnings of for consistent adjusted month, in estimates. quarter discussed Advantage internal reported tracking higher-than-anticipated Bruce on Results Medicare our the utilization emerging in moment. good the which provide inclusive everyone. of additional we morning quarter has detail trends stabilized a in and and second shared, updated as last is line our will with Bruce business we I

outperformance, prior adjustment investment business. particularly in quarter midyear slightly positive more offset in a development, risk income, the The business higher-than-anticipated favorable as utilization as Medicare well was and year Medicaid better-than-expected our by other favorable payment

Our performance our navigate strength to ability to membership importantly, uncertainty, date the of the includes successfully Medicare near-term better-than-anticipated enterprise, individual highlights growth. reflects and Advantage

add XXXX, in to our approximately compelling continue fueling in XX% expect earnings impressive future. rate, now an reflecting growth to members We growth ability deliver XXX,XXX to the

least our to at for $X.XX increased we $XX. release Further, EPS of full quarter $XX.XX year, putting reflects have our on EPS of increase which path adjusted adjusted first XXXX, earnings was the over and solid a our guidance XXXX reaffirmed target with us XX% a by

full will I with second quarter and on our additional year Insurance provide segment. our outlook, now beginning details performance

our noted our Medicare May, non-inpatient in trends Advantage early business. we emergence filing in beginning of last utilization As X-K in month, higher-than-anticipated highlighted the

historical filed continued on of the year. to from same diverging the trends early made off we June remainder These moderately we information the of for Based trend the seeing the patterns. experience would when we intra-quarter higher-than-anticipated time, XXth, assumption At X-K that we seasonality continue utilization higher-than-expected in this began June. inpatient

April pleased for stabilizing were June in levels claims positive that We utilization the see and first as to reflected outpatient well in data May. restatements received quarter, paid our July as

data claims our yet early support year-to-date While booking is not views complete, levels. July

June with received is to continued, inpatient anticipated activity, our compared our positive weeks the respect as we data in incrementally in view update. assumptions has utilization With higher utilized than in, June utilization update. initially recent the the consistent to All

point year election to agents. end a also membership Insurance which range will benefit segment you continue said, Medicare ratio annual This to individual monitor included XX.X% guidance has continue we the the to post and of contemplates That the Advantage full emerging of growth period, higher-than-expected proportion XX.X%, of guidance our to trends. top

the agents current discussed, higher expense member, ratio on benefit run but larger Bruce margin over impacts which new ratio than expansion these average the benefit opportunity As members a in negatively initially a year time. results

higher-than-expected offset benefit previously noted, reductions, that and factors, previously will As other than favorable administrative in variety expense outperformance. higher higher business including investment be income of XXXX anticipate anticipated originally year than prior we by additional the expected a ratio development,

And the on rate the higher-than-expected this offsets, questions year, XXXX, contemplated our regarding utilization Advantage early related emerging competitive Medicare would market in XXXX while would the in typically in the and that resulting the and growth environment, as reiterate utilization opportunity. landscape resulting pricing comment we from not pricing given trends as I well the

As our us pricing, and combined strength, reasonable of today, XXXX we our the to will remain the trajectory here scale EPS confident allow target deliver growth to sit agility on earnings that us keeps $XX. a of that we XXXX adjusted organization, with

XX% forward our result, EPS adjusted a to range intent is historical XXXX. more XXXX target target XX% We growth sharing on As our year. long-term later look of to within this to in

results, results expectations, with second and tracking quarter, utilization. lower-than-expected with outperform slightly membership to driven the medical initiatives disciplined continues initial began management expectations. our second cost business in are favorable the Medicaid, Redeterminations, combined favorable to to quarter by Turning exceeding which

Ohio Medicaid the In members the from are for gains were implemented expect Louisiana Louisiana as first and Ohio year will increase an At this continue by offset full performing anticipated. the be losses to to addition, in quarter, and membership both membership the redetermination. XXX,XXX resulting which contracts, time, we largely XX,XXX of as in

by our PDP expectations, better-than-anticipated tracking to driven business Membership stand-alone in favorable is retention.

As result, XXX we've year our guidance to approximately down XXX,XXX. full down approximately a XXX, improved from

quarter. performing to turning better in build segment expected to second CenterWell. has the The continued the Now year, a on solid than to start modestly

panel organization de better-than-expected patient our Care mature year-to-date, of compared patient year-to-date. to We in growth XX,XXX report our patients, patients than wholly-owned more XXXX. in XX,XXX continues representing growth XX% XX,XXX estimate patient original X% our year centers XX,XXX patients as nearly and to growth achieved the novo or XX,XXX Primary in XX,XXX now growth centers, full doubling growth to approximately anticipate adding of Our to more

continues in centers centers, that that of Care XXXX, organization XXXX of report In from to contribution improve year-end pleased performance at approximately and addition, the increase increase will operating at end to year-over-year. a we number estimate our Primary we're to our are XXX wholly-owned we XX% XXX positive margin the the

of compelling In end centers addition, from reached expect we to number increase target to $X year-over-year. at the in of increase that XX XXXX, XX have margin contribution the XXXX a XX% million our approximately

our next Bruce believe revision clinical and expect in shared, have do will we While to implementing model model other over margin on advancing contribution risk largely impact phased the of performance risk focused we we changes that that three as adjustment in on capabilities, the an are mitigate the XXXX, impact be center will ultimate efficiencies the our driving actions operational years.

year-over-year our business start the of fee-for-service XXth, new admissions X.X% our care In total health June and home same-store core growth. line were up with of mid-single-digit in as Home, of expectations

Trilogy Health quarter, episodic of acquisition inclusive is of the we year-over-year, in the completed growth addition, in In saw which approximately of XX% admission April.

is utilization we nursing Medicare continues programs pressure payers. to And our management continue to growth X% approximately per admission cost year-over-year start run as with of on visit pressure. recertifications new experience due to expected, labor While Advantage higher continued strong,

to From a XX% a or we ratings increasing in the our from improvement significant percent XX% CenterWell above quality today. branches seen January in XXXX of Health Home star for with last have perspective, rating year, Star X.X the over

expanding of of Further, our certain we're towards also components Medicare value goal seeing markets results XXXX membership continue creation. covering as value-based stand-alone as Advantage tracking by of to positive our we in the Bruce highlighted, our model, expansion home while accelerate XX%

quarter, favorable mix. Pharmacy drug membership growth from benefiting as in Medicare our as the individual higher-than-expected Finally, well Advantage well performed business

As is of prior benefit. anticipated, on order Medicare penetration order than XX lower par our being mail basis pharmacy largely membership year as points a for now result year-to-date retail mail co-pays with

We the a year. penetration of new education order throughout continue members for of provide to block the mail and increased awareness large benefits drive to of

expectations now million outperformed slightly quarter year-over-year, anticipate from investment Investment will increase our and expectation approximately $XXX increase. original $XXX income up of million by income year-over-year in that a we the

open price repurchases in our March relative have in by and our strong integration our the comments CenterWell outlook platform of we perspective, the From a Advantage market our and build-out advantage in deployment $XXX recent business, to-date, of earnings to the and long-term in completed approximately capital dislocation taking repurchases Medicare stock million initiated underpinned the continued assets. of

flows of maintaining We in decreasing now original With our capital activity. expect expectations cash repurchases up our the $X from for share strong repurchase of share while billion normal approximately ratio, $X.X debt-to-cap we've sufficient course accelerated XXXX, M&A and billion.

the to percentage XX%. respect earnings we third be Lastly, to earnings expect approximately of with seasonality, quarter

In be seasonality before current consensus Insurance quarter patterns. segment XX%, third with estimates, consistent historical in consistent increasing the the to expect ratio quarter addition, benefit we expense fourth with

closing, strong, Before ability pleased that while membership to are XX% Humana's to are XX% year-over-year to EPS. adjusted want grow sentiment echo a I XXXX in Bruce's fundamentals and by we robust individual in guiding with MA our

ability enterprise our the our committed remain to near-term XXXX. XXXX in Advantage adjusted confident the of while target navigate And $XX, are Medicare impacts strength of higher-than-expected scale from to advance leverage XXXX utilization CAGR continuing reflecting we to the the of We a to XX% our and importantly, strategy. EPS through to

waiting that, in first the please lines to we will the up one ask that your limit the open In questions. introduce to Operator, With queue, for fairness caller. those question. yourself you we

Operator

[Operator Instructions]

with Wells Fargo. question first Our Stephen comes from Baxter

open. line Your is

Stephen Baxter

a lot digest Hi, to there. thanks. Yes. the all Appreciate color,

you believe at sounds the to MA XXXX reflect my the that your balance for the fully see year, in bids bids was would commentary on that. hearing, you that So persists trend It helpful. higher least very of like, the

we right. point Just making that have sure

you allow talk you these if Thanks. you did year guess Are year? on you EPS expected that still offset? potential largely And think this despite offsets will an you for about then into the to those operating an I some do significant about as June, cost higher MLR. deliver pretty offsets need how we them obviously in next cost opportunity

Susan Diamond

Stephen. Hi, Sure.

in the will assuming that first higher seen So continue we terms to your that of question, XXXX into are XXXX, trend XXXX. we've in

So the higher as fully of say in when change in our the June our we not a that we did in saw we -- at were commentary. make did contemplated we we time said I and commentary, that bid. current would emerging embed trend trends, that our reflective is estimating

that, we trend. continue view If there trend said. adjustment of of And persist, in emerging of in to there's for other offsets, that change incrementally your trend claim terms reasons did be as higher variety would that in the would want there's a revisit risk of whether would to light you XXXX assumptions

for reasons, that we that into So a XXXX. variety embed did clear we not fully were the of

wanted Also to recognizing were growth that believe that make we to it do disproportionate is there opportunity sure take in and advantage of that a occur. XXXX, we positioned to for continue to

we've evaluate relative to today, XXXX our we we confident our and as are evaluate seen June, trends. we've As stabilizing in to to into said going we pricing able continued trends now saw estimates more in that what actions

certainly So positive. that's a

with historical to intra-quarter wanted impact raised available our in a in feel knowing June work do number to levers confident that an And of assumptions. and XXXX based that's how know of on we today, range, assess was done based is consistent that what that that about deliver our in weeks was our to also feel that a the on other we lot we we do commentary. everything affirm progression and and We've last EPS XXXX, on over commentary ability in question our

feel do comfortable with we So, that.

are the this of a we trend of seeing as number we're terms In to higher offsets year. there XXXX, described,

development, and expense Some favorable year reductions. income, certainly prior investment administrative

investment will year. well a those time be of at as carry an what relative Some continued pricing forward certainly expected positive Admin, next income. of to would into as as have things will example, likely we the

right we more will that forward progression as now, historical we as visibility carrying our not Some be we But we on to deliver XXXX, in view earnings and prior range. able next that year necessarily progression period EPS have based development targeted would year. we of comfortable onetime said, the and feel into so consistent this to everything with

Operator

you. Thank

from Credit Our with next Suisse. Rice will come question A.J.

Your line is open.

A.J. Rice

progression comments population. plays these everybody. then profitability hi XXXX couple about retention the a target with see retention hitting to you this members the year factor aging and It next for is Thanks, seems Thanks me, all years, of out. and your the of in you've ultimately normally the the key gotten like the whether

you those Can this population profits on step-up remind historically do how over than what of the of A, year you've on is, us And might this B, reason sort think either be trend time? retention? you And added when the any on there's just normal? different metrics

Bruce Broussard

first Susan part, Good take maybe morning A.J. trajectory. I'll take can the the profit

the area, lot talked as few we improving in areas. I it in calls a of few years, the really number we've On effort of last a over retention a at we've and on think look spent retention the

and is people of focus as is year this demonstration a First benefit on important both just will It's that. the in -- area an design. where

think, area I'm we I we about an forward. we've to we'll on for been we've important think, occasions, our to continue I segments sure, as and a want going to that mentioned where feel continue positioning And is it's able confident benefits that, XXXX. our very pretty retain. grow of But And design number really the for where

as the second and see area Net claims experience, of brokers experience the is And and a we recommending also side. -- third-parties continued customer as our Promoter seen area in in area The as the get management you us from they have our in then, leading of our benefits, from referring us that service back both the the that areas. industry can we recommending result a the have. that and Score both of obviously, all service accolades in we we've result in our confident And our feel where also, those to are but

a less a of to in and on a able of then competitors is some plan. result as confidence Because service few plan not that recommending being occasions our their have that told ultimately, they us

benefit really important efficient that's way. positive a service end from an And the from so And way ability in continue I is our point of that and and then we also experience would customer do to secondarily, that view, saying the just the segment-specific. by to design provide but both more

Susan Diamond

said To in add that what to A.J. commented disenrollment two. one of Bruce particularly on retention, year years we have typically the Hi we historically see the earlier rates higher tenure, do and

we you So, that said, provide should some the longer book, benefit. incremental as retain

So, last -- the some XXXX hopefully, retain in continue start mature, high growth that and if in outer we're you able that we to as see XXXX to block that the see see longer. years, book high growth as we again incremental will of improvement to

the As if tenure subsequently. earlier commented his retain comments that say, do initial because incrementally we get them eligibility would years, I that we their a at they about do Bruce in positive rate agent, higher is, see versus

our that, positive is So to I as well would relative incrementally historical. say,

over reimbursement and there's member aggregate, opportunity larger frame. other cohort so member the said risk in typically is for takes about progression, reach an agent years. to lower, a start we a margin. mature new we Agents years time and three the much obviously, -- of take because there, either But three-year the new profit about what to it consider, adjustment for three dynamics or that the On expansion contribution

risk Medicare block, usually claims convert activity second they before year to the So, months for the of of need full disproportionately retention diagnosis-based XX adjustment. agent they in it's about because

the a then agents see from XXXX, there in for from impact incrementally should XXXX higher we that get and well. as positive we So in

A.J. Rice

a Okay. Thanks lot.

Operator

Okay.

with Our next come question from Justin Wolfe Research. Lake will

Your is line open.

Justin Lake

Thanks. Good morning.

little any industry just, I we terms this be It How there in perfect, any give the, on data it. of commentary not how Thanks. let's do helpful, shaping is XXXX you is to grows to think And and a industry -- outperform going still the your relative First, in to bunch it's a think know year? gotten XXXX more early commentary you've up on next performance into grow the X% Bruce, Can thoughts too. expecting XXXX there. strong going appreciate you color a you maybe year? Stars? know on I but October? your us growth, it say, X% I then Star would of

Bruce Broussard

regards feel the that a industry side. continuing value in maintain Justin, in the And MA and going proposition fee-for-service. we continuing We healthy see I be it's see rate, fairly say growth historical confident to the years. aging difference would just like to the We between still to Medicare demographics

And then segments being the being we other we continue And third, as industry, see to do duals penetrated. a like that see the believe into segments into progress underpenetrated. penetration we higher we'll as highly

our You've are more become seen part of this year in agents results that starting to more that. and

future. confident so see do that the see growth are continuing, we And and foreseeable we'll the we for that

result of about we Obviously, Relative good all to stand -- feel a early and pretty that what would say we is the good we feel about Stars, see preliminarily. seen I how you industry, comparative where stack we it analysis. an it's -- as but the we with we measurements haven't got haven't existing our results, up but our pretty

Justin Lake

Thanks the color. for

Operator

you. Thank

Rich will Our Sachs. Goldman come with Nathan next question from

open. is Your line

Nathan Rich

believe off Thanks lot for increased like the you wanted that ask the market I for morning. of XXXX? What a good questions. will benefits you compare to of XXXX. about Obviously, significantly your overall? to look kind where does Hi, for a benefits you're how year coming

Thank the early, change but and kind utilization, given pieces helpful risk insurance great. would you. it's of your model segment how if for risk of would moving in be the know sense to your XXXX, with I it get be about redeterminations? you're Any of the thinking margins view And -- early

Bruce Broussard

I'll benefit and side. the side, the I'll Susan let discuss take margin

how have we the considering result -- mentioned, I do from we in marketplace latest the the benefits, and the benefits of -- and thoughtful as notice. appropriately we funding On the really as a been around that's rate the reduction adjust

cetera. do really that's the whether military, amount whether particular a to the in do value where et most what are that's significant tried by we've of that's around so research duals, segments, And for agents, priorities they the beneficiaries whether and Medicare

feel can each meet good we proposition come segments, was about made really people felt about the we more. our a the we a are that increase research see and considering in feel going premium that comment you benefit going out And mark is value year a for looking for. are important And commentary, with that as side. plans that coverage to funding that we that those and this to that did of really We

in lifestyle supplemental we continue amount to part to population, an for ample to our important continue of that is benefits, ensure the addition, providing health in support And their duals improve because find of outcomes. that do we are them we

What shouting market. Relative we competitors, experience, scores an our find early our gotten And we're in the different relationships view, want with a view we just on weren't between always compete to most everyone, good with our in year, are our scores, find it. cheapest position. It's distance specifically, we brokers, every positive we last that feel our brand, remind quality to and we've our we various the our I within and when we Star plans. the

every don't we to benefit. the in have lead So, industry

of to stability when of as have take result And we that our market be a a we do amount our the what of share platform that close. significant there. are to able We we see

plans, we've benefits want never but decision the We result ability and are to are a where quality having the just the it's few always competitive a being cheapest. and of be people a on emphasize, service but we range out to members. important, I between ourselves would make So, went pride in the our to

Susan Diamond

the incremental I thing as one add as that about some XXXX, Bruce would And of pressure have competitors mentioned, Stars. think you to do from too

for area and consistently some will Duals where that great of example focus we've have there make a put competitors. their few will some investment what indicated certain is they be a there. so likely is And heard potentially focus

about but What's interesting that the allowed which XXXX, than the in to for non-dual lagged be we is, the better we, in or have overall number us on in industry industry. of outperformed average years, duals, as on a line commented growth

were the particularly that The we excited non-dual is in larger XXXX up about XXXX. ground the ability and make sure much we maintained want and and into population the non-dual to to made outpace so our growth, we market population, in

optimistic hearing heard And changes we've feel positive our also feedback we've the and some and based how which with from as brokers, And previewed we're about XXXX what I seeing, we we're well. think positioned. on of seen very

speaks to for -- all some of that XXXX. optimism that So

type about on On it's third will too margins, our we give more that little bit question your commentary call. Typically, early to really XXXX of give you commentary. quarter a

we would As evaluate think make think commentary confidence from our to that said deliver XXXX. number did overall historical sure have emerging give But we will things that are light though, we of in we it question. perspective an the where against our to as my that to important we experience I year, be in a this and we'll over confidence in was thought of that comments, range wasn't there and about

level Detailed estimates, big a the is of one. growth XXXX membership in certainly

switchers composition as that we've of there we and consideration. an opportunity between so is retention agents, be disproportionate will the think do well important as As said, an growth, potential for

obviously, be well. input continue or important as will an they to evaluate sustain and trends And as these whether further emerging then moderate we

historic forward look growth with our ability sharing but progression confidence in our more, our certainly wanted rate. consistent targeted to reinforce So, to XXXX to deliver in

Operator

Thank you.

next Fidel with comes from Our Scott Stephens. question

Your line is open.

Scott Fidel

an approaching sort and therapies, Would your some coverage give and drugs the if on XXXX? how morning. the expected Alzheimer's preliminary of bids be there emerging into into you Good of XXXX? thanks. may you for costs And interested just for how that be Hi, could us then thoughts update MA on factoring Thanks. you're

Susan Diamond

Sure.

of what for and cover. what CMS will label to when we of sort determinations So and use certainly terms in that coverage we have follow

a into view our of have the XXXX, to have would bids. our for related thinking pricing we some costs continued we did so point went Alzheimer's have that we we do in of As launch treatment,

policy. I Based our trip to would of assessments, trip priced discipline on feel on about for XXXX. would with latest been $X cost team's the of level to estimates, expense drugs have able we've the sort of hit you the comfortable There's PMPM be lot we say, significant to based what about questions that. a whether

And to we across something right but spend, to will that continue watch. get in the now, to industry level certainly we don't think

that's a we pricing, not what XXXX I'd that have so based we're on and material say in feel contemplated far, So comfortable we seeing headwind.

Operator

you. Thank

Our from Barclays. question comes next Steve Valiquette with

Your open. line is

Steve Valiquette

morning. Great. Thanks. Good

prior back there's authorization contain Medicare and the of potential cost any midyear XXXX, the about can trend the elevated for have guess whether just for policies other or I us on coverage moderation half you just the pulled just better half factors? and second back some quarter either regarding major proactively levers Medicare thinking or remind So the then year, of you the elevated of can in just the to cost not

are Or just design, to to benefit XXXX either more XXXX essentially to costs Thanks. serendipitous really at cetera? have adjust just control better the material You make stage? changes this et or pricing any wait until trends

Susan Diamond

we in do Steve. just I of account, say are in and not those trends moderate. but were terms levers what continue thinking Hi, anticipating point, or take. we would in differences workday might at those are seasonality not the actions this There's continue assuming that half that we're mitigated some into trends basis, trends, and certainly Sure. year-over-year take seasonality from we we normalized by a that any second

be on medical that to there's say at broader in lot that, we trend, date, a that could least would not that. response probably mitigate cost to would identify say the we would would that able do I I

factor, about are how controls that are thinking appropriate about thinking at which sure On I we not be a think I'm the dental in to say side, commented few more but make which terms place, things material for we looking the there got would we've coverage is we're trend have that we of the a on, year. in the Humana-specific, would

that would of we're is elevated to The year the of main lever half in relying offset the say on expense trend internally back some I the that more savings. administrative

that opportunities. We largely there we've that's find informed ongoing the some additional to some of have are by productivity work that opportunities, been the highlights organization asked viewing that additional and

year, original we would what those Whereas benefiting year, for half. the things back disproportionately going half of trend considered the that elevated prior to in year. development plan be say the is I like first disproportionately half had of would versus of to back the first benefit the our say benefit the we the And the relative extra half will the year admin savings

Operator

you. Thank

Ha with Michael from Stanley. comes question Morgan next Our

line Your is open.

Michael Ha

and all from Appreciate XXXX. the commentary talking XXXX you. Thank and

mention as quickly, in you XXXX? Just did to first, expect maintain you non-dual XXXX saw growth you the same rate level of in

XXXX, as run if then as from slightly XXXX? on able whatever capture high, on next quickly to costs fair track in say to is then even in bids, XXXX still long is it happens And -- that you're does $XX that for basically in it June's well

market main And more that because growth, I'd one see imagine will ramp? year carrying in line maybe to XXXX even stronger a larger of that if year able capture to two profitability share base you're that you're

Bruce Broussard

thinking mean is I things. Yes, thinking you're with a few on consistent what we're

probably agents, first, percentage, benefits I orient plan, adjusted growth. continue be think we and XXXX, agents where a an level we're seen the as that that and to to anticipating is at that we we've continue look we area of we've our to that, how see zero premium in oriented good so

I and Now, do we into the anticipate non-agents there, that. won't but agents between get percentage

see coming and the to also happening articulated, in continuing XXXX Susan to that's And we in book expansion margin on XXXX XXXX. as

to this areas. those have each ability So, step have a we of do improvement in

this, optimistic before, about anything just that? you as and the you the mentioned growth, of in like then Susan, growth about would the being able growth with to market have of it. very add And think that when on general the to do Justin we're to do you I

Susan Diamond

that would continue question And we I be into say a the on if the we'll others. based a will on non-dual the about focus think competitors the of ground much Yes, as little XXXX. focus growth, for do the positioned hearing of made we some frankly, in XXXX preliminary bit we I and information wasn't from are on that better even duals, maybe some

I think So, do positive. that's

that with pricing always in have non-recurring, you we offset some -- if where should offsets the is pricing the pricing find XXXX, as an action. always But if But and there's we hope for prevent from residual certainly to On XXXX would are would said, able lever our having that be that's and to that we always further durable it. to take trend something would we need plan option. us continue

as then is the In model the obviously, to your we'll evaluate, in though, terms and supporting positive and And three as one to have XXXX. some. over phased minimize goal that of in book impacts, XXXX. is and beneficiary continue certainly to years, our progression, will the although much in point, try would to offset the growth impact can of likely have of higher know rate further and that so thing say to be the the be trajectory I to we to cuts our we there's we'll risk those recalibration

comes say, and would is have evaluate takes we'll to always in I out have one, overall the and that's So, the puts that it then we caveat to as consider that durable rate growth, continued the to a beyond balancing the EPS membership perform strong continue also hit progression pricing $XX and at needed that. delivering and XXXX but to that's then strong

Operator

Gary Thank Cowen. comes from And from Taylor you. next our question

line open. Your is

Gary Taylor

I'll or perhaps the that's I if into Most the talk PYD, you about outpatient details. morning. my the couple dive been just ambulatory inpatient of final could acuity? good One, source stronger questions answered, if a wondered so of of Hi, kind big-picture of just just

And usually I've sweep heard of then mentioned about it don't at XQ much wondered you I talk secondly, materiality if is. I could the before. the think speak Thanks. Susan, just being that? revenue you you higher than ever that to

Susan Diamond

Hi, Sure. Gary.

call half that of so driver year the of one the On about I historically of ultimately not took over course mature. I would as it's the say of unwind item we would don't say claims I talked more is there's first know conservative -- that more that detailed so broad-based. year-end drivers. sort single a proves we certainly we and last a a those would primary that the PYD, do given reserving, year I out, would that as that we've lot -- to that of posture -- And

they in fully we the our I then for claims looked impact trend of would fall. day our and December, of overstated account day differences expectation month of we the of in and experience, have that say, and sort sort the seen the models acknowledged the work in we or particularly the seasonality differences quarter, holiday of just at as week think fourth internally,

was that consistently year. and December somewhat say and that some we XXXX the emerge release at of So, would than we've the we of saw first more conservative I would half have thought through seen year-end,

that second more payment, terms In reason of the have which did booked gave intra-quarter commentary in favorable relative see said been fact mid-year comments, the QX bit the MLR as the of would part in little quarter. revenue, positive to we my the adjustment a was was I we risk some

the an to reflected those from again, trend partly were have offset it basis, overall the provide well. see probably that as puts trend some wouldn't in some And And were that from and on pleased of to year higher that which there some wanted additional is higher the you book takes the to we -- as higher that given some pressure. wouldn't annual previous last too absence midyear material. was payment, probably some transparency we in slightly of degree the this emerging called probably something higher MLR, perspective, consider an commentary think even out, but fact to I be

Operator

Thank you.

question Joshua with have Research. Nephron Raskin from We a

open. line Your is

Joshua Raskin

in line year. a thanks. and this up growth XX% with EPS growing morning. will next little that mature targets. understand I understand Hi, to long-term you're just I'm I trying XX% to Good bit year, your guess XXXX to that XX% build membership the

But are when get expand would the of if changes to rest I'd totally competitors margins the that take benefit assume plus it share and on your hard changes vulnerable, book. the the risk the model pricing to be impact for strategy market of I

are for next drivers EPS year? the positive So what missing? I What to am

Susan Diamond

to get to against XXXX thought Josh, $XX.XX. a deliver intent certainly, needed reasonable deliver been on along, as about Well, progression to that have to trajectory all would we the

intent. been always the that would So have

deliver of how that confidence important this to emerge further still believe that we as claims year, we can thought estimates higher to the -- we've for I think I seen well it continue today, we as will and was convey some we've developing in evaluated next that the year, that as are range.

thought membership So, about opportunity. intent all the as I enterprise and is and along the the performed was book growth would say that we

next view coming Because into and into how you in to lack point EPS relative we the always of headwind going earnings terms well the obviously were were and in still the year, deliver progression. a we advantaged well-positioned XXXX us benefaction of others, of had needed would we take less positioned already for that be and really and to on have XXXX Stars still also

make weeks and position working we're sure last that that to we a and So, that's of The planning. we continue be ability trend time the development felt do is of similar plan, have the number navigate overall we which new that, and really that we've always through been the believe. confident about outpatient good going to our in the spent that to higher into lot a through

Bruce Broussard

Hey few other a things. Josh, maybe

core really Day, going XX% productivity our And broke so. and grow. to capital into our the And at we we in close the If from there. Investor to deployment the you with of then X% or growth productivity the few were down addition, grow core going up where earnings business our was a where areas to remember business, making capital from of and deployment growth growth were

just some initiatives year, there. probably this we side to What a of growing see that scrutinize a some going are not us that that we as showing spending that continuing we is we're and more where year we good next really little -- appropriately feel anticipate the to we're or results, the see productivity result on of

And And rate having question, notice rate that in it incorporate so the as in that to notice. top us as was in you We little articulating as incorporated -- notice. that, mentioned years the reflect more for we third. rate the of past two the to a the result and benefits, look will the as is we mean I they've bit Susan previous about we'll a then in of price at been have have of that the as impact be they not rich there. price, the on we we the

this benefit in same your and showing XXXX, answer anticipate up I -- benefit XXXX. as we result the would growth XXXX XXXX specifically, see that, in that our growth showing of question to say So, year growing up you both and of a

our on other And than good productivity focus Our too. there. capital X% deployment greater results, being showing are and then businesses our gain

Operator

Thank you.

We question have a from Jefferies. with David Windley

line is Your open.

David Windley

axes. higher of of Good kind me morning. trend wanted Hi different the the a seen. to One in. geographic you've is regionality on Does of that Thanks on question have it? breadth ask for thanks. it to squeezing a trend any I couple

you thinking also concentrated growth set secondly, non-dual come population? -- either the about or country? apparent where as of or growth have you in Thanks. in then by the in up you're kind present is the mostly Or And from that of member for is as I'm preferences this duals by it do might type region about XXXX, population? of

Susan Diamond

just dental funding higher Hey that which is product those a plans just where trends, reflective first though, again, dollar can more have we David. Start it the of those not dental and call of your the dental an trend, use pretty where allowance cost offerings, are concentrated, say overall would we thing question the we on there's with towards that's benefits. beneficiaries more think on one The bit broad-based. is the the concentrated, -- medical it I more commented it's Humana-specific,

see medical the I inside real on markets, and an any cost would concentration you element. offering be we one Florida But That haven't that the do of seen tended broader dental trend, to concentrations. say more some so just

generally more non-dual, in would population-based broad-based. dual, I the take On

say performing of seeing non-duals. that. still They're adjustment dynamics relative I revenue in some Although and better general, the but to risk are would offset the the pressure, deals some

performing I'd the say, so And bit non-duals duals. a than worse the are little

is are we is not I to sense -- definition. managing in bit just general, though, broader we've continue versus seeing providers. as of what our better because said consistent which outpatient providers more of by a more The job and risk it, they the much a that minds makes risk cost to pressure would medical concentrated say, before, see, non-risk-based spend do some

on The in DIR disproportionately more because and coverage. of of that seeing we're is it's located, typically offering actually the fees because dental, some cost that are medical we where risk there broader so that non-risk And so the again, do we based, space. get offset

Operator

of Fischbeck you. with And from Kevin question Bank comes Thank our last America.

open. is line Your

Kevin Fischbeck

thanks. Great,

of clarify. mean, it grow Just I I below year so at going membership for XXXX, initial I wanted for really kind number? to were year given And are above-average and guys just provided guess looks need you how to of be track that $XX this -- number strong year. of initial growth puts for don't you're for thinking you XXXX that to next next guess all year kind on year, to average membership going this your $XX when growing grow you to XXXX in at thoughts another your that you're you you membership like

sounds saying, upon report you it what here given you're is like and a and then year. like in there's and lot that It seeing and based guess, anything And what company-specific. to to over seen about higher about reprice whether need you been we've guess industry the about two-thirds sound talk to I mean too, a I growth me think could concern you're trend of for trend of doesn't think

just of to want to I need next the or about reprice That competitive if over think there higher elevated to not need make that Humana-specific about dynamic at sure repricing would might impact years to all? you need the is that a to your you as need, reprice understand I a trend at Thanks. think how positioning couple industry trend.

Susan Diamond

yes. Hi, Kevin,

we membership, outpacing what are the target. we So $XX would on the anticipated underlying certainly have

were industry rate. it than As we anticipating -- get growth back you take said, the in industry two us years to to slightly anticipating than lower growth XXXX, would lower

strong our really is repeat and performance is year in can growth a that So, have certainly this hope positive, that we XXXX.

outperform should be So certainly contemplated. was would membership all growth that that we the positive, and

rate strong Our given strive so goal supporting on will a going sustained trajectory or gas, is continued foot industry to that to durable, importance ourselves better and basis to well. as from lifetime not said, off the as of in a position though, impact we we beneficial our EPS we're a growth perspective to forward, the sustain continue growth take value going

been in question, The as potentially talked XXXX as the maybe cost other about we've what as believe, else some where consistent saying. everyone and watch us adjustments more you that do we emerge. being you to benefit than see Humana-specific the On additional we XXXX and trend trend, medical dental, in which having will some said, with continue has made broader is

XXXX I differences pricing. do think and what there's reflected degree different some thought and in companies to maybe when timing they it

And though, price want that any if so others. put that of we're we take we expect relative residual your is to in XXXX, I feel action in what to position would think, to to seeing us not in ultimately, outlier there we an light point,

because of and priced fairly have, consistent Although for any up. industry advantage seems it's create disadvantage have say it taken already issue, or needs competitive others to across would the and it that matter not more to competitor be it just some than the is may be ultimately, we that But we an a would catching it degree set.

Operator

for to questions. Broussard comments. any closing are And Mr. no you. Bruce turn the there call to I'd like other Thank back

Bruce Broussard

again, thank have. the being support today. everyone I Well, always, want be to being would teammates able our your successful to for us able to we And and as for we XX,XXX participation to are Right. like report -- as earnings thank we and in your

have So, a thank you great day. and

Operator

participating. This concludes today's Thank conference for you call.

may disconnect. You now

Humana (HUM) 2 Aug 232023 Q2 Earnings call transcript