Humana Inc (NYSE:HUM) stock fell 2.15% (As on November 2, 11:52:11 AM UTC-4, Source: Google Finance) after the company reported a better-than-expected performance in its government-backed insurance plan but kept its forecast unchanged. Total premiums of Humana amounted to $25.1 billion, which improved 16.9% year over year in the third quarter and outpaced the Zacks Consensus Estimate by 3%. Services revenues declined 12.3% year over year to $1 billion but beat our estimate of 3.5%. Investment income of $308 million increased 79.1% year over year in the quarter under review and beat the model estimate of $298.7 million. The benefits expense ratio came in at 86.6%, which deteriorated 100 basis points (bps) year over year due to investments related to the benefit design of HUM’s products, as well as increased utilization trends in the Medicare Advantage business. The operating cost ratio improved 100 bps year over year to 12.5%, thanks to the divestiture of the 60% ownership interest of Humana in the Gentiva Hospice business, improving scale and cost efficiencies. Humana reported income from operations of $1.2 billion in the third quarter, which climbed 2.9% year over year.

Moreover, Insurance segment’s adjusted revenues rose 19.5% year over year to $24.6 billion in the quarter under review. As of Sep 30, 2023, the total medical membership of the segment came in at 16.96 million. The figure dipped 0.8% year over year. CenterWell segment recorded revenues of $4.7 billion in the third quarter, which inched up from $4.3 billion. Improved Pharmacy Solutions revenues, growth in the Primary Care business and a solid Home Solutions business provided an impetus to the segment’s quarterly performance.

HUM in the third quarter of FY 23 has reported the adjusted earnings per share of $7.78, beating the analysts’ estimates for the adjusted earnings per share by 8.8%, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 18.2 percent to $25.5 billion in the third quarter of FY 23, beating the analysts’ estimates for revenue by 0.6%. Humana exited the third quarter with cash and cash equivalents of $15.1 billion, which surged from the $5.1 billion figure at 2022 end. Total assets of $55.9 billion climbed from the 2022-end level of $43.1 billion. Long-term debt amounted to $9.5 billion, which increased from the $9 billion figure as of Dec 31, 2022.