Humana Inc., the healthcare company that specializes in Medicare insurance, has reported Q1 net income of $1.614 billion, or $9.87 per share, which is an increase from $1.220 billion, or $7.29 per share, during the same period last year. Meanwhile, adjusted per-share earnings reached $9.38, ahead of the $9.27 FactSet consensus. The company’s revenue rose to $26.742 billion from $23.970 billion, which also exceeded the $26.428 billion FactSet consensus. Humana has adjusted the year-earlier numbers to account for the exit of the employer group commercial medical products business, which they announced on February 23.
Humana has credited the significant earnings beat primarily due to improved medical benefits from delayed treatments from the pandemic. “Covid-19 continued to have a meaningful impact on our financial results in the first quarter, owing principally to lower utilization of care,” said CEO Bruce Broussard. “Our results demonstrate the resilience of our business model and give us increased confidence in our full-year expectations.”
To date, Humana has announced its Covid-19 initiatives, including making it easier for patients to get access to care, have reached approximately $6 billion. This includes more than $1 billion in Covid-19 relief costs and about $5 billion in reduced member costs. According to the company, the pandemic response is driven by the company’s mission to help members achieve better health sooner.
“We’ve had a strong start to the year by delivering on our commitment to serve as a partner in health to our members and the communities in which they live,” said Broussard in a statement. “Our 1Q results reflect the resiliency of our business model as well as secular tailwinds from Covid-19, which accelerated care delivery modernization, including via telehealth, enabled access to care due to regulatory flexibility and spurred innovation in the home health space.”
To put the usage of telehealth into perspective, the company reported that its telemedicine usage surged from 2.7% of its primary care visits pre-pandemic to 46% in December. During Q1, telehealth comprised 17% of the company’s visits, and the company is confident that telehealth will continue to comprise a large portion of future healthcare demands.
“Telehealth is – I believe – here and becoming more embedded, and so we think that’s going to stay,” said CFO Brian Kane. “I think it makes us more optimistic that these trends will continue.”
In response to the growing regulatory flexibility in telehealth, Humana is focusing heavily on the home health space, especially as more patients realize the ongoing convenience of telehealth. The company recently joined forces with Dispatch Health, a provider of in-home medical care, and invested $100 million as part of the company’s series D funding round. The new collaboration aims to provide in-home medical care to seniors, particularly for those with chronic conditions.
Furthermore, Humana is also investing heavily in innovative startups focusing on virtual and in-home care, such as Village MD and Oak Street Health. Additionally, as the White House unveiled its strategy to provide additional funding to Medicare to help ensure seniors have access to adequate healthcare services, Humana is expected to invest in more groundbreaking partnerships.
As a result of Humana’s strong earnings, the company raised its full-year guidance to $23.53 per share from its previous estimate of $23.42 per share. Thanks to the improved first-quarter results and a new six-year financing agreement with Bank of America, Merrill Lynch, the company has also decided to expand its corporate credit line to $11 billion, which includes a $9 billion 364-day facility and $2 billion in five-year term loans.
Currently, Humana operates in all 50 states and serves more than 20 million customers. The company specializes in Medicare, which is the primary health insurance program for people ages 65 and older within the United States.
