Humana's stock is up 4.6% for the year compared to the benchmark index's decline of -311%) and the S&P500's decline of -16. The healthcare industry is considered to be a recession proof business as costs continue to rise at a 5.8% annual rate. Humana is an integrated managed care insurer. The secular trend of older people joining Medicare Advantage HMO plans benefits it. This makes sense for seniors. After Medicare pays its 80% portion of a medical bill, patients on traditional Medicare have the responsibility of paying the remaining 20% of the bill. On a fixed income, this can be costly. A Medicare Advantage plan only requires the patient to pay a co-pay of 10 to 40 percent. Humana gets most of its revenue from Medicare and Medicaid. These are the two riskiest populations for coverage. Humana is making a lot of money under its managed care model.
MarketBeat.com - MarketBeat When health insurance companies were just payors, doctors were the medical providers They were not part of one party. The doctors would bill the insurance companies for their services. Insurance companies try to maintain profitability by denying claim payments. It used to be a game of mice and cats. Doctors would over charge and insurers would underpay. You either provided or paid. The reimbursement model was disrupted by the introduction of capitation payments. Fixed monthly payments were made to the doctors regardless of the number of patients they cared for in the month. Doctors would get a monthly capitation payment and have to pay co-pays. This helped HMOs make a lot of money, while doctors were often paid less. Patients would have to wait a long time to see their doctor due to the doctor's offices being swamped.
The insurers became providers when they built their own medical care centers. Doctors worked on a salary and the HMOs collected all the premiums and payments. Kaiser Permanente is a good example of this. The integrated healthcare system has a complete eco-system for its members inside each facility. As it grows its primary care clinics under the CenterWell and Conviva Care Solutions brands, Humana has become a vertically integrated healthcare and wellbeing company. Kaiser Permanente and Humana don't own hospitals. HCA healthcare sold off its hospitals in 1993 Hospitals don't work well in a vertically integrated healthcare model.
Humana reported its earnings for the second quarter of fiscal year 2022. Excluding non-recurring items, the Company reported an earnings-per-share profit of $8.67, beating analysts' estimates by a dime. Revenues grew 14.6% year-over-year, beating analyst estimates. Bruce Broussard said, "We are pleased with our significant progress in growing the business, including our primary care clinics and our organic expansion of Medicaid membership, combined with the initial roll out of our value-based home care." Our commitment to balancing our long-term membership and earnings growth targets is demonstrated by the investments we made in our Medicare Advantage product offerings.
Humana raised its full-year fiscal 2022 earnings to $25.00 per share from $24.75 per share. A mid-term adjusted earnings per share target of $37.00 was provided for fiscal full-year 2025.
The Insurance Services and CenterWell units are going to be Humana's units. The Specialty and Retail segments will handle claims processing. The healthcare services segment will be housed at Center Well. CenterWell Senior Primary Care is the largest provider of primary care for seniors in the country. The company plans to open 250 clinics by the end of the year of 2022. It expects to make at least $100 to $200 million in earnings by the year 2025. The primary care business is expected to contribute $1 billion to Humana's earnings by 2032.
There are attractive pullback levels.
The rifle charts give a precise view of the price playing field for HUM. The rifle chart peaked at thefib level. The weekly rifle chart pup is stalling as the 5-period MA support starts to slope down and the 15-period MA tightens the channel. The 50-period MA is rising. The mini inverse pup is forming as it falls through the 80 band. The weekly market structure low is on the breakthrough. The upper and lower bollinger Bands are rising and falling at the same time. The daily rifle chart is losing steam with a falling 5-period MA and an overlap of daily 15- and 50-period MAs. The daily 200 periodMA is $450.07. There is a chance of an MA breakdown due to the daily stochastic falling through the 80 band. The lowerBBs are currently sitting at $450.41. The $475.84 fib, $449.82 fib,weekly 50-period MA, $422.89 fib, $384.14 fib, and the $355.88 fib are attractive levels to look at.
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