HUM - Earnings call transcript Q2 2024

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Operator

Good day, and thank you for standing by. Welcome to the Humana Second Quarter 2024 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

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

Lisa Stoner

morning. good and you, Thank our I hope release letter review press available chance the had prepared remarks a on are and which the all to as CEO, our of everyone website. well from as

We Q&A Rechtin, Executive President Jim remarks Humana's Officer. Jim with this and will by Humana's and a . Chief morning Financial begin followed brief from with Officer; session Chief Susan Diamond,

discussed our Certain detailed filings uncertainties. discussed in of earnings press second XX-K, advise Before read conference factors to our in we release call to of our begin the as risk Investors they with latest cautionary our risks could need forward-looking statements, matters our are risks and other Securities other materially. participants relate along statement. this with Form filings. and number call quarter advised and Actual discussion, of the the forward-looking a in to are differ XXXX I involve discussed results Commission SEC our Exchange and

undertake also business or should future SEC in includes available our Investor the Call generally our accepted participants regarding with accordance are with news measures that obligation site. GAAP. and or note communications Relations any press or filings forward-looking statements discussion our today's not and releases We publicly that results. on our update financial are historical accounting to filings release, financial Today's or address no principles

this Any and to conference these during diluted of in measures use reconciliations GAAP or release. the non-GAAP are share. per for common to share refer EPS earnings financial references explanation included earnings to of Management's today's call press per made non-GAAP measures

of on Relations recorded replay purposes. being That later will replay page be humana.com, the available Finally, website, today. this call is Investor Humana's for

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

James Rechtin

morning, everyone. joining good us. Thanks, for you Thank and Lisa,

for the the to just been I also I by actually Humana saying want his Humana's to of months say them really, to it's year. Chief able serve and work And look it's to . And Officer. forward Let thanks opportunity. a want to X mentorship Directors me for last privilege next the be providing great. me over I start Executive that as this really to Board and Bruce of thanks to to just continue with say partnership, President

So our a our this the to Bruce exciting release. company the a encourage themes. ahead of I of everyone not that and along be it. letter. industry to website pretty morning. what opportunity the and letter, letter to I do the repeat a Investor part XX,XXX thoughts Relations some teammates build quarter couple and great to to shared I moment Humana but is the posted hit goes on in with it's to and a and I on want I'm the remarks prepared in earnings take read second going our here, that

in realized, as that even value What regulatory and constant taxpayers my that. value So be it's let our and me it's is state our government collaboration we well of extension, and business. good do government, and opinion. just adjustment. And I our business, need I a requires federal to the for those remind CMS basic for for that patients. allows constantly think environment about documented truth what that are good It's think also we by good members, customers. customers creates We ourselves is to start a This and well. the by reinforcing fully need

have not is experiencing that They're Medicare got And of for program. now, you differentiated has think you. fundamentals a and that proactive full know long-term volatility Medicaid a CMS we you changed. know be is all have we've in that understand This to also need we not achieving frustration with and that need meaningfully to still been partner make We sure guys with that process to we investors been this the I stable good We do for the want are sector environment The that our that potential. acknowledge there we external certainly difficult. to attractive right also in compete I capabilities space. still we've to that

To clinical be our control, to incredibly and that at degree it's admin and can, things context. driving focused good the be against costs message We're focused it's execute capabilities. to in we the see reminding on that day day keep We pricing, otherwise to discipline. out discipline, and is, operating it we but it's we need what product, on things need within That's ourselves our want the be need need the external that business. to changes. context. However, it's our to well I do growing it's control it environment that is home we we for environment shape the to of we the our external operating that need that to we as

can We shifted. consistency We do performance to how in environment time. planning know also and do over multi-year to control, even when We've the It's around simply things us this. better we on with maintaining order got deliver focus that about job a has the great teams.

and some a quarter outlook. that to with back give let I'm headline. examples Now on support going I'm going second turn to going quick our performance. to give headline, then some to to come implications I'm me

quarter. exceeded We is quarter we today cost headline we our that experience but where second at midyear, good expectations. in medical are results about some did feel The pressure the

of a little Medicare that we me which of expectations comes our the let outperforming the beginning had good at the year. the So that bit. is business, news from Much on expand

expected. means X% Our member should year. We than for raised members, over better we forecast grow by is growth that the we our at just XX,XXX that

the Our we lower quarter for anticipated. benefit than ratio was

the earlier. development the of offset admissions That second More was referenced than in inpatient claims continued and I were back July. into That higher inpatient pressure also half higher-than-expected specifically, that quarter. and driven by higher the was revenue, has that expected we by costs

But the believe several also this pressure. now, that we to feel we continued good ultimately measures that mitigate taken approach. guidance pressure be within For planning We've that can our for mitigated. right pressure is

we're clinical light rule. to appropriateness admissions, the example, in X ensure for midnight So continuing of of especially

audits, We are are for RFPs. enhancing achieve contract and And provider continued Medicaid, and negotiating to growth. we're our continue growth about member with contractual claims wait In additional we we and wins alignment. partners clinical through both to excited better

have claims We we in do but to year expect results. it Medicaid, modest not full impact our pressure some

business. delivering phases pharmacy in. on as and clinic continue we in volumes line mitigate it Overall, drive continued in B-XX our CenterWell, growth, strong space. The business lower high structure, rate cost single-digit with mature to to admission that care specialty improve home patient less in we're are growth, the to pharmacy is has and generated our and pressure cost team anticipating continues that and we're fill, particularly their In primary track plan, confident to

make managing we're progress for on We plan are costs, admin of these. focused we continue ahead and automation. Broadly, our to

pharmacy auto experience doing. an really just This reduces our We've costs. seeing is service provider lowers reduce our in specialty also about and claim good optimized in costs it our in improved does by the across processing enrollment also does are a costs. basis type and digital average times adjudication the work, Medicare rate our our actually, reducing claims lowering I'll our way of segment. it's increased of cost to XX within logistics also in delivery few transit We're This that work examples facility teams improve a give and pharmacy points. experience. insurance that fill member business, We've

to conversion lowering it's leading rates. again, is our distribution costs. higher And This

good to in accelerate AI pilot improve make accelerate for turn, Finally, we're Google. in when primary into the help progress That health experience will, experience. we excited consumer initiatives. a a help clinic. with on a Advantage. We with we recently recent should agreement the reduce making cost better help partnership will This Walmart Medicare care that shopping that pilot consumer entered our efforts. purchasing made just We're multiyear AI And lease investment help about our announced and uses

look higher that to costs continue reaffirming adjusted even as full XXXX that benefit mitigate work This we ratio as implication our guidance. we is inpatient The EPS and pressure. will prudently the that forward we are year assumes

to normalized margin. a expand first in a to on at EPS path continue multiyear we step ahead growth to adjusted a XXXX, what Looking will be

We I'm feel AEP. bid our good and continue excited about to momentum and into our the product about assumptions ahead. portfolio head we of the opportunity all as

to that lines posted of that, we remind remarks that prepared so for Investor on the spend we And up will questions. most we so now Relations and our Q&A open today, could our website you time I'll the your with just

the introduce please first Operator, caller.

Operator

from with Our line the Hynes comes of Mizuho. Ann first question

Ann Hynes

there inpatient you're rule it the seeing X you're pressure areas other to that of trends, Or pressure? going So maybe the only are really midnight is seeing?

Susan Diamond

Yes, happy to that. take

impact our as some rates in in and you meaningful our and quarter have quarter, some both we . we human the it patterns. change the our was then requirements, seen we in second in as So inpatient and described assumptions then avoidance remember, previous the historical month-to-month the how that implemented role also for if yes, [indiscernible] variation around which, made a and make commentary, to -- results accomplishes first

have the in in avoidance end were to did expectations particular. the the lower, our but was we quarter would quarter, of continue in however, higher rates be line those then more line our seen what the variation initially we level, has remained stable some the and come As first have expected. quarter, back half and by ultimately first of described absolute inpatient with in The second with in

this that observation we we including acuity on as at these based mentioned, that as to well are further lower belief relatively has results point continue of is likely We side. costs to due say average is continued impacts implementation. to lower in we've fact continue per Jim that be levels. seen the the terms all July seeing, from As their see reductions hospital volume does the from what non-inpatient in and that it corresponding fact [indiscernible] similar into everything largely consistent systems would and patient. reported with to that with a revenue the also and it

believe is we consistent. respect all it With it's So do to consistent. relatively July,

as that. but otherwise consistent. We amount slight top COVID of on of are seeing well just a

higher seem than but So is everything visibility as we entering had have quarter. as the now, to does stabilized, have it far anticipated it second to we right

Operator

line Our Fitzgerald. Sarah next question from James the Cantor with of comes

Sarah James

seasonality XQ half on Can MLR. much you patient The the a July in in is way a break the And of of that how there to speak the out guidance in step-up to implies increase the MLR. is good versus trend? assumed continuation second impact of July

Susan Diamond

yes. Sarah,

those then it MLR, offset will said, and in by inpatient anticipate So the the lower that are quarter average continue days which as and second the half observation partially does terms third into year. of of higher we unit lower the half back volumes costs the

Workday that accounted progression your quarterly the impacts is well. for. fully So is To seasonality there some as that point,

specifically, For third it the the is contributing third quarter basis about the quarter MLR. for points XX expectation to

fourth as the to see expect So last that that is relative The quarter, for workday in is where [indiscernible] seasonality to we accounted year. offset well. favorable to

think would activity that wouldn't I in quarter impacted higher your quarter it third second July the results, question asked our second be whether considered results. which obviously

Sarah James

Right.

Sorry, quantify on July MLR? way is it impact to the

Susan Diamond

No.

its to persist core we performance. So would which, due based us wouldn't amount is with for the again, There line COVID I to on balance not . given say quarter second higher I'd again, concerning COVID, admission full anticipated it the slightly volumes expect and had in say, of related, a we to the that's is the clearly overly what year.

Operator

of Barclays. comes with question Mok from the next Our line Andrew

Kevin Fischbeck

this a give progression little year. more on color can bit you the Hoping MLR

about insurance like would than MLR but just basis up I think higher based normal XQ MLR relatively be that would sounds flat, that Because XXX leaving points seasonality. guiding you're You're is MLR on it right? XQ even assumption XQ sequentially,

want Just points. those understand to X

Susan Diamond

anticipate includes relatively When workday we mentioned. again of that think you higher quarter year, consistent, half just relative for year, last Yes. I impact the MLRs third the about back which to do the

in year. of terms utilization quarter, our . Obviously, we that fourth in quarter you've year. that obviously high for jumped of saw this fourth the off last expectations very For

top you mentioned, I incremental because fourth higher will So going jumping offset pressure some on off workday point. the that. just last the But expectation quarter seasonality of trend see is that year's slightly favorable because to just of of it positively which of some that impact MLR, normal of a

Operator

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

Justin Lake

it, flat the typically inpatient I let's pretty points. X some higher to cost, if to -- to inpatient seasonality the on MLR, First, the first typical just second simple XX half. -- slightly, run up call math, half your basis

up it like to So closer looks you're XXX.

inpatient to pressure on basis right you can about is in this about being XXXX XXX am this terms it us quantify you If bids. of points in for to expected embedded So putting second relative that previously? is talked not, in MLR in somehow what in specifically you what's the prepared general. remarks of then I MLR. And And that pressure the comfortable level thinking then with your the half

half being type You absorb said May, get the your see didn't bids it this wood this would the the do of -- beginning X those that to so pressure June. are were you in second quarter, able of that How until bids fact of bids back given submitted. the came are with you that's in investors comfortable right of half be

Susan Diamond

Yes.

Justin.

increasing impacts year-over-year because last year. we see in the some to MLR just So of continue are there pressure seasonality, terms

the respect benefit half the is the to year. year, you saw sort half first it and there first see offset of So we that when beneficially With the impacting in impacted that costs about second of some last half, favorability progression did some higher of the this year think ratio. we

are are run won't nature they onetime those where of rate. some And which in

of into final also nature, in the more our Some run on-year prior of We've is think we expectations. payment, you've the that quarter the saw positive, our year. to back has to development, in are like favorability claims acknowledged which but or typically, won't versus mentioned which half 'XX need rate half things the unique still first onetime first the favorable been of year MRA

are disproportionate So some things those of

[Audio Gap]

our half years. some prior to first this impacting MLR relative year

expecting And can so we're back second and obviously, half, the in half create you don't repeat in first which what half. some differences

that So the higher second plus assumed the absolute our experienced. volumes within said, level cost as unit assumptions days have offsetting and of half we've inpatient that we've naturally we observation

said, continue Those in workday this are year. different And all then are seasonality well. bit some to we've assumed of embedded are balance also the that of They the impacts as as little the for back half are there year. a that

far As pressure. submitted its development some the 'XX we point, these prior while, bids, to of to of as inpatient bids your

some cost some the contemplated not well and things in final in the say the lower inpatient So positive the risk that and explicitly But news, offsetting bid. MRA is we higher as would the scores of from unit year contemplated other were as bids cost some below management also our coming audit and favorable more observation and the not prior phase of development like claim durable. payment

continue told contemplated. And we the so and about to the good bid margin expansion all the those considering that the in had to earnings deliver feel and of assumptions we always ability and all factors, aggregate

Operator

with comes Windley Our from of next Jefferies. question David the line

David Windley

then XX rule clarification I I wanted to basis points drive have you company a is multiple broader The And number I that. said clarification wondered XX endeavored could take the a the Susan, efficiency think on question to then ask had the broader out. give plan cost of and has value in question. over creation years previously X updated the midnight activity to an worth if you being, MLR. and about was us I

which the I'm hampered essentially, depth to wondering you've that much quickly you've react you're been you've to by if activity and kind costs? cost so ability elevated mechanisms if and has on muscle, cut the of act cost anticipatory cut cut

Susan Diamond

[indiscernible] take to and your Jim David, then on question. hand the Yes. first second the for off I'll question X-minute it

midnight is, what the had higher you the what it [indiscernible], we to to role. year inpatient seen referenced seem again, we've costs Obviously, anticipated are into we a [indiscernible] yes, relative which, have obviously impact in So I would think that have was than as that going the would generally that the the impact suggest higher expected. fact to we then information attributable is

able total, prior year the it. we you significant respects all in All cost told, as not that a and of were of mitigate to claims and but when you that, stage. the consider the take the of unit it all portion observation development When

is the continue we and we offset the feel And continue, this again, is expect $XX for why good which $XX favorable to from that remaining to which so year coming intra-year, but for MRA, that the I'd have to impact do I for have we it and information this be on next prepared sized don't incremental that sitting here year, [indiscernible], call. today the that about

James Rechtin

cost on Yes. jump question. the in I management can

First of all, it's a good question.

got that we I of One when I questions evidence months -- see that's a and lot in technology transformation any out process things I anything we've The upfront Anytime important earlier, here into a that harder tied you've this, the is have low-hanging the done muscle et was today. answer through and redesign, don't And asking about like of talked do we thing. that most cost is first that staring short automation, to work to go that fruit has think cut using came you X cetera. some then ago. the I you

more jump years time, ago. and hits, can quick what takes company get And years. multiyear to to job planting business The is It's opportunity multiple more that management. to that that not over just real done cost When planning think you for multiple years. still of rest be to over phased we take a of out about is nature opportunity be it X quickly the has going in there's seeds of over technology investment do. saw the this the and The cost nice big you year, do the going there X.X

Operator

with question comes next from Rice UBS. A.J. Our

Albert Rice

should The year. you your market margin we've about Maybe for in company some competitive with multiyear the the discussions the just stepping back, I of thinking opportunities had in of to basis was, terms know margin given maybe the recovery talked and Jim, on for year earlier [indiscernible], and the then some next tweaking of think margin of the recovery, benefits XXX it restrictions given years. points in MLR that we few of environment each XXX

fast see updated be I that target. margin wonder reiterated long recovery? I term, X% think you you have how any in on could can if it we you thoughts know

the on that's Can give investment income. any thoughts the X you how progression think next updated before years? X I over us or looks

Scott Fidel

Yes.

hit things couple me in there. a Let of

So to X separate I first concepts. all, of want

change recovery that environment, commentary about X talked the TBC, previously. can really you on multiyear do any in that what to don't the have year really with by margin driven And have regulatory made cetera. any we the et We is we have that

over that you think planning. to The referenced we're about it's have coming multiyear to I'm actually just whether we're capital given any And I whether operating plan, more really way the going If we years, in a multi-year back that is the have that when it's the how second place in and I made. the in on evaluating going that expense there's a to go expenses, disciplined it's thing year. comment be return measuring . to or

So discipline making driving we've investment performance over optimize X getting years. in shareholder years period X. processes a over I we're think that and then and X-year where place that over that grounded to year in multiple of time, X, in benefit That's that year is that consistent the really over year just back sure how value you more the with there's opportunity. of but made over to place we're And do accountability of X kind X, year not those the optimizing just is we're that got you more year operating that the decisions in go that

letter we're that's we in or the thing a our a the on margin pricing. that into need commenting our make am different So and that to concept building sure that Sam? I recovery benefits from different

Operator

Kevin comes Fischbeck next Bank the with Our from America. of of question line

Kevin Fischbeck

you say with this a there? up last continue little side that something questions. to shortfall is do a quick can planning the wrap relative you're you to two inpatient pressures the on just guess, this is is you're this shortfall you comment of Would was multiyear to . Maybe that you maybe you I seeing to point, about the that for Maybe just a would relative change saying that Jim. bit same have always historical? that to bringing business, business? Are going and more to Or out Humana this on And the Or it. just that there? are provider spike to second, there do, trends MLR else a anything then you

James Rechtin

is and this this a over Yes. I'll I'll Medicare can the is the we business. so to about nature much Advantage, it to it's on more then get annual better business, particular, and second. at. The comment first that that get in cycle that hit can something an we one, It's it's Susan disciplined hand not of change as

rate it about And how in AEP year. challenging be it any capital investments that can You X-year about about guys annual repricing, think notice, X, be annual that's the all just that. growth. and you given know investments. time, disciplined talk We annual not X, operating you're And to environment, really member again, that making in that's investments,

can so something the get And that company about. at. it that company something is better It's thinks the also

Susan Diamond

of talked early inpatient Ken, say weren't where we risk business, And provider about at would I that's with similar in plan, to the inpatient level not much consistent, your second think, activity side, some the the it we've what pressure claims emerge. pressure results on our say we quite seen. the book. on with health seeing year started we from in I the And would Yes. to when although -- as much that as highest I as question

of also, inpatient on and well health the demonstrated platform. impact within it appropriate acknowledge level average they we in center payment, They've which to requests because those results in agnostic needing with an before, oftentimes a I've then authorization an systems again, but on their determining care, seen as plan. also have what some the just MRA and better consistently final work said than 'XX do stay, better not hospital favorable They've we see also the

information. as get the same real-time level don't do. we They of

harder bit we through little as performance. are running a change impact the that's It's of still a think taking estimate to the about cautious And of system. their so approach we

So health level. not with at not I would generally, say, quite the but plan, inconsistent the same

Operator

of comes with Joshua next Nephron Raskin the line Our Research. question from

Joshua Raskin

Maybe And about this then saw in membership then based for and just on any we take benchmark you the for that participation maybe from maybe data project. including PDP that week, should the Can and industry And what on XXXX, profit lastly, shifting gears. expectations your we speak expectations commentary segment expectations away margin. demonstration that or in bids?

Susan Diamond

Josh, and lot before, yes, So on, how XXXX, and hard we everyone which bit their different approach said the -- we that we obviously, 'XX. the mitigating exposure in going the space. liability all focused approached selection the might have there say caused broadly, really a underlying Part bid may we strategy, of for I a way Part the particularly bids program understand have us in product so it differently. said, membership increased in is is important, on risk of terms what D really D be of side, as each that particularly a is the will as . I would for little have some industry have to the your to stand-alone in think was constructed

to than more what on that going it does higher the know is to information to released is with all be is of been costs this saying have those as expected. had we've going the the industry suggest to that impossible the deal benchmark, that we've what what anticipated, nice in was each subsidy direct say seen, certainly of company analysts It's week maybe some With XXXX. reflective might that to have higher but is it

from how far the that. lot awaiting that all demo work As guidance CMS there's as we're of a about demo, on questions will still honestly, additional the

say early that. to light again, in And changes the people of is going as always are not. to will specifically, so whether open we're going still able to and bids as on making the direct comment or benchmarks, the of that from participate case. recognizing be subsidies the direct to And I'm too be impact far

talk the as we'll time get past So line. certainly, submission more we bid

But for right specifically. we reasons, won't now, commenting just be we competitive --

Operator

the Our with line of next question from RBC Capital Hendrix Markets. Ben comes

Benjamin Hendrix

Medicaid. headwinds might Switching been in seems little lot bit of noticing like what saw terms newer but a in favorability Could some specifically in some acuity those of It of have seeing like peers a your it Florida, books, in utilization there. of over to better then and seems you you forecasted some market. talk and what you're Medicaid in And maybe markets utilization. you key kind your about that you're noted

Susan Diamond

look like we like Yes, as think always pointed And out, Medicaid reported. about acuity members that were to true. only we retain you of bit others would little do assuming we saw of PH a more think proven of we thought that gained to because XX% the I are that historical the acuity is some Ben, largely that probably the through is the ultimately, said who so I be to the members impact access to retained all lower performance say than through and we tried assumption versus different redetermination, have made take the approach would we've those conservative how results would that our a the

out from we and best our membership would So and impacted because is Florida of be the representation obviously redeterminations. better the it's -- specifically performing largest than called slightly expectations. We're And most that. significantly Florida

on risk as Kentucky, I related, in is which well. newer pressure. which the there that exposure place as in think is mitigate corridors seeing little example, good. our everybody remarks, is positive. understand called out call I an that again, are It's seeing one. that in behavioral it's Oklahoma out that, is others different have in we did states bit So each discrete pharmacy-related. are in We a our

working is the adjust that that and they're ultimately, rates across will the state discussions working reflective hard of do And to good we -- that our team ultimately opportunities with they each our has those states of We partners feel and be on. those about trends. then mitigation

mentioned. So all basis, relative things I to a the all then our performance good being considered, just also still and in about feel the given on expectations go-forward Medicaid we 'XX items

Operator

comes next Wells Baxter question of Fargo. from Our Stephen with the line

Stephen Baxter

and said feel think year response, Just in about clarification you good XXXX. actual of earlier the an then a first an about and quick I Susan, feel you this EPS good question. then $XX

to has if thousand of the members on confirm we it's comment for expectation. any actual if just Just bids my some XXXX sense it's Can then specific heard as offering through MLRs everything about question think you something year? be else to in is, Or profitability next you to I few an of incrementally give is any comment on just on hundred you're have planning is XXXX? and actually you offering County you the year-on-year? the with exits, and an trying the trying And kind this EPS wonder manage value can as and could context first, -- achieve a margins on incremental EPS think us you were something that? you're that driver

Susan Diamond

Yes.

So yes, want clarify, I definitely what's here's interesting. to

good suggest an Obviously, about $XX. XXXX we've I So EPS yes, yes, for sharing XXXX. not the And target good mean did we feel been to assumptions. we're feel clear. we that about our

on guidance forward line. for our would normal any to time given expect XX%, haven't We do that

we're the everything what on for know, feel good So I XXXX point 'XX. we based and planning making we about for, was just to continue the results

given room margin the by a the be of of much having leave aggregate. as changes to exit specifically, not would IRA benefit been and could in we've we're that the so and incremental you saying, for limitations fully and recovery the in lot far that As offset that as in price 'XX sort make V-XX trend TBC

of claims exits, loss. do percent margin because actually a running are we planned at opportunity get The earnings to expansion in absolute have provide an terms do that though and

we and at if a before, solution not very in said performance performing we a reasonable And least closely. each studied performance exit consider did at better as our there. they so plans of time. And have as path a the getting were an reasonable market a of breakeven loss to we did period in to

be we'll that, where cases progression. do incrementally our positive are there So earnings that to will and

a In wider is But range we've membership environment, growth ultimately, earnings of the very for dependent ultimate there's outcomes. absolute potential on of said, next level year. we change acknowledged this our as

certainly on And comment before so to we need we'll for year. can next growth member then expectations further the see EPS and landscape

Operator

next comes of the Our Fidel Scott from line Stephens. question with

Scott Fidel

walk you saw sort maybe I updates the really close raised the guidance. or different the isolation, us of revenue can to of amount those sort through anything the and you $X $X billion. MA PDP membership Obviously, to billion changes. weren't inputs to hoping catalog just into in to the was But

drivers now would whether or walk it well, there's there, helpful, other Susan, those probably just different So Medicaid you center if through us it's pieces. be some just

Susan Diamond

Scott. Yes.

the to change the driver the magnitude revenue -- revenue consider membership membership is guidance the both the in you revenue drive by far and for will largest the yes, the -- plans year, the that is when expected So increase of right?

contribution, in And as can of where new higher think having first that of the average for [indiscernible] members little year. half particularly costs you run added on year membership the the back commission

year outperformance related. MRA would did our So on the our main by 'XX membership said, far as some intra-year estimates final is on driver positivity well majority is risk And but we revenue some or and that's the say membership. included, I as favorable see we

Operator

Our comes question with from Wilkes next line Lance the of Bernstein.

Lance Wilkes

the of And a your you could then that, process as of trying the management expenses describe are the there? bit Jim, strategic top related morphing margin. you're priorities your of you're for company? both out, how organ maybe part talent taking part of changes And making of any Yes. recover then obviously, any And timing of what operating sort just of member reductions? light a little in to as to review. And sort

James Rechtin

Okay.

there's So in there. lot a

Let review, cost management strategic I anything get in... Did process, miss I management? see if me

Lance Wilkes

recovery. Margin

James Rechtin

Yes.

actually the we're of think process succinctly earlier. management around to biggest discipline the the take up next our against looking given over the thing any doing I of investments and we're trying and is years, multiple here. multiple those we're So performance measuring Management to to years each the I that the I'll is process, things hit level, how in what It to year. try referred out doing expenses

use a I to multiple I I'm the little then largely described. think deeper in single change. we're is mean that obviously strategic normal new just how We're review. that. processes that driving that because would we dovetails accountability into going really we over do those midst to team. We're year, the trying implement in than the that And to a process years. make of And sure we're management biggest then those I That

that the middle we're in process. of So

we things more have will there. We to manage mid are exact management. to outcomes do in say exact about next cost the how There the timing sometime costs. and One is variable the X of that year. different early

the has that. processes team around so actually And good

membership taking are is the but cost them this honing, Of given with drive able process into we tightening with redesign deeper Google things digital in automation we to membership. to drive you're course, that up, could and that deeper distribution diving standard how by back of we're with simply more I'd outcomes year process pretty even the what that a then out point we've And got about technology. efficient have AI, range partnership you we're actually do like around being costs distribution. real thinking variable

about management, hits driving hit improved of then and I And are fixed things variable long-term All those time. everything? over cost which did -- both

Susan Diamond

Margin recovery.

James Rechtin

et period is I'm go is going least recovery. to to is expect in I margin, Oh, we've be that . We we That based basic to And to environment, that margin feel that's to been what take the and place assumptions, about some trend in Advantage driven back that time. in at a on to of margin on pretty years given. take recovery. that think we've going and the reasonable to it's regulatory deep XXXX how kind we'll our get rate business. -- normal to going to the be normalized multiple assumptions good into direction the the Medicare communicated past, numbers. team develop those and has going back cetera, about by X% there. TBC, It's over same back largely been of

Operator

the from Ha comes line of Michael question with next Baird. Our

Unknown Analyst

I of your some XQ. you release nature. mentioned that OpEx wasn't quick mentioned press question. real in But and timing were first considered Just clarification know also a on my in your lower-than-planned expenses admin

utilization timing have those missed third in like to of coming expected So to part I bids. And are not and quarter? back answer, inpatient embedded question quarter flip my Apologies, but was the back may sounds the 'XX on Justin's question real into then items bids. this fourth elevated

So if through fit XX? it were to to

is dynamic, be it next theory expected an [indiscernible] if MA competitive presumably, I year. positioning then your this margin then industry-wide imagine for would But unchanged. also And would I imagine own recovery impact your relative

you were all, this incrementally could how wondering your it it, if push impact versus your MA discuss prior to So in next could if progression all margin year expectations?

Susan Diamond

the on difference that's Yes, but mention then a quarter second, timing OpEx, in And in the both cost is seen administrative first when we did yes, some Michael, would we projected so favorability have and just we we've of in the in certain nature. spend.

it's now incurred. expected to And when be

progression be the to where see it marketing the be also OEP of natural predict in versus IT of next products the areas you opportunity difficult completed. can they ROI one exact into Some going say is and AEP is year. will it's just the and and that timing the might versus when then

it's so where, third the a flip in that fourth quarter, the be the favorable to still then full there and we year, for So expect in we'll or out would going are things while spent quarter. of it's number

want On those anticipate is deadlines we when to filing the higher come to it in our the develops relative bids. to did bids, try not this given we utilization what bids for

pressure our medical in cost the relative So assumptions that will to discrete be bids. incremental

the have And did offset to cost, not collective durable higher first assumptions the risk our good expected bid. incorporate in the $XX scores that largely lower nor million, feel we the into about unit we MLR either. observation we've considered, However, seen have lower of within those stays also half be still year and also develop in the because those the XXXX all expectations we that the

for are, big much assuming looked duration we ]. position half a of year. in through that assumptions. at like And should this we So will the it again, point, we've back we the continues we're continue 'XX, 'XX the with within 'XX if offsets, that planned at our as respects be of to our it [ MLR those had bps similar back other to

Operator

comes from the Our Jessica next of Tassan with question Sandler. line Piper

Unknown Analyst

that. wouldn't up that the to effectively And the prepared And scores specific on view So 'XX XXXX? or remarks and headwinds your I in referred risk of reason wanted double kind compound in the the of favorability efforts like related How V-XX is impacting it 'XX. are to any any year-over-year follow higher-than-anticipated why Is? you to in

Susan Diamond

don't what the claims to where, saw specifically file the risk favorability the the know data, that's have just is Yes. we their claim. their order XXXX. 'XX of related benefit we primarily year subsequent history full on members to in just don't Jessica, new we And score will based because the have in be in

LPO largely the So in typically, that we those so if is of growth that's and within what largely the do plans. favorability It's was see it, concentrated membership source seen. we've

in terms literal where So the on say the MRI on V-XX of I in 'XX a -- of largely outperformance have is final sort seen It membership, have but higher thinking. our would it. not impact terms would unchanged impact I that's we've our would V-XX now say, thinking. the doesn't It's of

more accounted will that. But be it for proportionately, just members, because we within have

be XXXX maintain with to would see, related not we that utilization did outperformance, was bids into in like new we have, where said, see throughout the didn't the to was 'XX. to because it that the we we 'XX of and the full have visibility terms In it now also inpatient contemplated if expect recur mitigant offset members our I happens visibility higher another and to

Operator

from Our line next Ransom the with comes of James. question John Raymond

John Ransom

industry in is looks It questions. high-level like super me the to of Washington. losing argument kind the Two

You've on Medicare seen suggest spending taxpayers than fee-for-service. Medicare XX-or-so-percent be are a straight of Advantage that on couple more would things it

of efforts the if a sufficient. advocacy are a wonder a question. [indiscernible] seems pitch is you like think she elevator your what to as the asks when apples-to-apples or senator taxpayers is kind there's for deal because split So good I it And he

low you The AI how you just the kind the everything all second high-level is, think your long-term say, over, is question and on of look could floor incorporating you opportunity, G&A X tools drive have at what today, G&A you if next of years? the

David Kirkpatrick

pitch DC and do we elevator make then efficacy, policy comment So on G&A. how the

G&A just one's the easier. bit me a quick. real hit one little Let That

to review now that doing, year. next among the et are through We early we're more next strategic others that right say that working through year, have to about mid We'll question, cetera.

And that so moment. for defer I'm the going question on to

On the our number is, the better they patients. and DC policy, very one, is for would I conversation what That well receive cost lowering giving security the by of and better to back get And to so about members we internally. more documented. know health deliver deliver access them we've that our members that outcomes. benefits. going had We care to a keep value we We that to lot

that a entire at today We be better does cost taxpayers, also and it's back things doesn't? taxpayers. we explaining to X lower value the X on proposition know, tightly, does. the industry a then and benefits and can for case building for documented Those things mean like-for-like what job what part What a is Medicare value than and pretty of that there's understanding what for well deliver do that members we focused accrue think second original what of better more to I of even those the needs of and

sure sector. make harmful of value that allows [indiscernible]. of And should that to MA or be that that how [indiscernible] regulatory None to CMS do we value the with to some collaborate actually to a the environment

In good taxpayers. good got creates real to for sector, good good better tighter time. on for the getting proposition MA for Medicaid on create taxpayers shapes would SPX stability it's we've the the to MA over everybody. program that fact, impact And and for taxpayers, it's do sector helps for I the to back getting understanding for argue long-term That's can that's in Medicare that, what and It's regulatory we that value a what environment it how are the member, the to. focus

Operator

Our of with next from the line question Hill George comes Bank. Deutsche

George Hill

on beneficiaries or much I of all, guess margin? a way as did a a think you members provide to question at have I strategy. way side, just level, like I want in the a guys it relates And the there many offered XXXX I plans plan to you higher guess, characterize pursue exit to for as approach are MA how preserve to even to guess, quantify want benefits. many XXXX? restructure the And plan the how are guys of you plan ask to individual like, I you first guys not to looking the that question willing other degree, that plan how bid is is what like remove -- or the for margin to to now will kind

David Kirkpatrick

Yes.

Let me one. jump in on this

to is question So of things past. some said well, be this the repeat we've going that a -- in of the

got a profitable. are we've set that path So of to plans that see them a not making profitable don't we

exited have those. We

Humana vast members in another to members the a number will majority in cases, cases, access have most our those That of plan. impacts of

So were very few exited. there's actual geographies fully

have they we those perform attractive, approached of how quite That to today. and give we of members are either and plans. but we're those a see not we prepared numbers a that reasons, are each competitive protecting benefits of how for of actually are specific is plans then through reducing another plants. into marginally we set the have plans pricing. is And profitability marginally we We that have Today, this. categories. to working that those changing that path or profitable And set recovering unprofitable, of our on fall

Susan Diamond

primarily We've you of to a to said. the thousand plan what I few numbers we'll think, given just exit. Jim related And expectation Yes. overall to add reduce hundred that George, membership

plan right, can assume, there almost because, as option beneficiary. retain obviously, is is number within will where some phone of we our we're it's virtually Jim said, of an there assumption plan having to a you not those that changes, in that, all counties the members another So available

an assumption. is there So inherent

details As right to process. still there changes being submissions because, are Jim normal we again, said, give made bid the to don't through now want

opportunity another into forum provide bids can detail. the be later are we there some filed, in may public an As once we where get quarter,

Operator

Stanley. question with Morgan Erin next Our comes from the Wright of line

Erin Wilson Wright

capital with strategic that In care light book the review, approach from whether the assets? and delivery tools? disciplined is of ability the service on Medicaid talking to it's you ongoing thinking about now are the you're in how more alignment prioritizing deployment here, about it the Or

thinking generally And opportunities, what point? of is even guess, organic level focus on this the at or speaking, your I

David Kirkpatrick

Yes.

So is again, start the company with done above characterizing what's consistent we me over opportunity by where has the past. book. largely And let this in the in and is believe Medicare growth what

cost opportunity the synergy We because your CenterWell there the And Medicaid believe to quality that there's duals book and of growth believe interrelated of there's the total Medicare and or kind to care. ability CenterWell. benefits point, We because of quality growth of between significant Medicaid. is growth and Medicare impact and opportunities book the between in

So we we lean and continue combination actually that it. into works to think

in When with think about align array that an Those attractive what we're at staring drives we when kind And the deployment, on capital. capital return we're over same and/or of past. are we're total return does look driving rubric simple at best spaces cost invest it is the does looking offer it the looking at What the been that the lower you time, looking in strategically, and over of to time. opportunities at care quality of right? that at value it we've the shareholder that things drives

Operator

Ryan will question from come Langston line TD last of Our with Cowen. the

Ryan Langston

appropriate this maybe medical claims vantage prepared you alignment. road remarks, I amount said Can of think revisions the closer those or and of normal for on down in said you is the claims means? just mitigation to adjudicated a then that I mass levels for necessity and providers on activity, these with you they there negotiating you larger a elaborate like? kind potential that exactly inpatient as And than Or higher the to potential for be the were at largely guess look maybe what of are? activities. On checks performing

Susan Diamond

to and Ryan, yes, it I'll take second. the hand a first part then Jim the of that for

call I as process. do the a On management within think programs have utilization are, review front-end inpatient, a what guys you we we our

time they [indiscernible] as reviewing necessity service effectively. we medical under as those I changes things site like did would programs for -- said, impact in have expectations those And and are our how authorizations real in rule. some come we and of those So

that do after also There make on opportunities operating which again, is more as appropriate. sure we largely that just are as the call results review, specificity expected. a in, postpay we incremental is intended said, claim to the activity to the So where there comes some claim it's review and that we we having

having, And and the we I of that. programs from get expectations programs. value good our result both change some say long-standing relative would as happen a and have But sides to impact to of tracking current a not of I would expect material we those really those information of are

David Kirkpatrick

aligning a then to works on the a And contracting, about the essentially think and on high way there's set where have contracting opportunity utilization. align of the level, Yes. utilization those on or aligning to contracts incentives that appropriate rate how incentives if And you're at you're we an initiatives you that around alignment have well, appropriate contracts we care. very manage improve and and around

are to move network that we contracts figure so more begin in trying And really to the that and we're at you looking best, of out the direction. how perform

feel are of year. the midyear. that's going last our where come to we've I quick a we am pressure. the inpatient of good do that being question, that and feel relative good going beginning seeing that seen with We me to the let performance at So to reinforce about say about just things. at to we're back I'm where we couple

second We margin of our we expansion, a heading we're And obviously, to XXXX. into guidance. have and the half going bit good feel growth a reaffirming EPS July. in approach seen that taking in now 'XX into particular We're continue in cautious that the to back little have quarter.

so just And is where we're do teams. that at. want to thank I feel good. our We

where getting our on this midyear, here at lot Humana. working phone all a teams I to forward with of us look into at put They and and call of continue here we're you to at work

thank So you.

Operator

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

may Goodbye. disconnect. You now

Humana (HUM) 31 Jul 242024 Q2 Earnings call transcript