Table of Contents :
• Stock Rating & Target Price
• Investment Thesis
• Fundamental Models Used
• Company Description
• Corporate Timeline
• Key Metrics (KPI ) and Recently Reported Earnings Review
• Business Highlights, Strategic Announcements & Outlook
• Quarter-over-Quarter (Q-o-Q) and Year-over-Year (Y-o-Y) Growth Analysis
• Key Catalysts Driving Growth
• Historical Financial Statement Analysis & CAGR Trends
• Quarterly Key Financial Ratios and Performance Metrics
• Annual Financial Performance Analysis: Horizontal and Vertical Financial Analysis, Trends
• Financial Forecasts
• Annual Forecasts: Income Statement
• Annual Forecasts: Cash Flow Statements
• Net Debt Levels
• A Closer Look at DCF: Our Assumptions and Methodology
• Terminal Value Calculation
• Target Price Analysis
• Valuation Multiples
• Supplementary Valuation Analysis: Multiples Approach
• Scenario/Sensitivity Analysis – Base Case , Bull Case ,Bear Case
• Holistic Peer Review & Trading Comps: Financial Data, Operational Metrics, and Valuation Multiples
• Implied Price Per Share
• Ownership Activity/ Insider Trades
• Ownership Summary
• An analysis of ESG Risk Rating
• Key Professionals
• Key Board Members
• Key Risks Considerations
• Analyst Ratings
• Analyst Industry Views
• Disclosures
Humana: Navigating Profit Risks Under New US Spending Bill— What’s Next for Growth in a Shifting Regulatory Landscape?
Humana delivered strong Q3 2024 results, with revenue of $29.4B (+5.6% YoY) and adjusted EPS of $4.16, surpassing estimates through disciplined execution and cost management. Individual Medicare Advantage (MA) membership grew 5% YoY, reflecting effective pricing strategies and marketing investments, while operational efficiencies, such as a 30 bps reduction in the adjusted operating cost ratio, underscore resilience. CenterWell continues to expand its senior-focused primary care footprint with ~40 new clinics, reinforcing Humana’s value-based care differentiation. However, headwinds loom, including IRA-driven specialty drug cost pressures, Stars ratings underperformance affecting bonus payments through 2026, and regulatory shifts under the new US federal spending bill, which eliminates PBM rebate benefits. While these challenges introduce near-term profit risks, Humana’s investments in AI-enabled efficiencies and provider incentives signal proactive management to sustain margin stability and address Stars-related hurdles. The company’s reaffirmed 2024 EPS guidance and commitment to margin expansion through 2027 reflect confidence in its growth strategy. With regulatory overhangs and enrollment pressures in 2025, clarity on Stars recovery, operational efficiencies, and value-based care momentum will be pivotal. How can Humana effectively balance reinvestments, operational improvements, and regulatory challenges to sustain growth and rebuild investor confidence in a dynamic healthcare landscape?
