LOUISVILLE, Ky. (WDRB) – Louisville-based Humana Inc.’s pre-tax profit jumped 68%, to $3.4 billion, in 2019 as the Medicare-focused insurer added 523,000 seniors to its bread-and-butter business, Medicare Advantage.
The 17% growth in individual Medicare Advantage customers – Humana now has 3.5 million in all – was the highest increase in a decade, Humana CEO Bruce Broussard said on the company’s quarterly earnings call Wednesday.
Humana forecasts adding another 270,000 to 330,000 seniors to its Medicare plans in 2020, which Broussard said would “at a minimum” match the general growth rate of the industry.
More people age into Medicare each year and, of those, a growing proportion (34%) opt to get their Medicare benefits through private insurers such as Humana and United Healthcare.
The company’s pre-tax income was the highest since 2017, when Humana got a nearly $1 billion bump from the break-up fee paid by rival Aetna following their failed merger.
Humana’s profit growth came even as the company took a $47 million charge last year to cut about 800 jobs from its nationwide workforce of about 40,000.
Executives said Wednesday that the company’s remaining employees shared in 2019’s solid performance through higher incentive pay, without elaborating.
Humana exceeded expectations for its fourth-quarter 2019 earnings per share, sending the stock price up 6% on Wednesday.
Wall Street analysts peppered Humana executives Wednesday with questions about the company’s announcement Monday that it will join with private equity firm Welsh, Carson, Anderson & Stowe to spend $600 million establishing hundreds of primary care clinics around the U.S. focused on caring for the seniors Humana covers.
Humana already has 47 “Partners in Primary Care” clinics in Kansas, Missouri, North Carolina, South Carolina, Texas, and Florida.
“The organization is ready to scale this,” Broussard said.
Broussard said the “political conversation on healthcare” over the next year may cause “volatility” in Humana’s share price.
Democratic presidential contenders are eying a public health insurance expansion and some calling for a single-payer, government-run system.
Broussard said Medicare Advantage enjoys “significant bipartisan support” and represents an “opportunity to be part of the solution to both addressing the rising cost of healthcare and the need for quality outcomes.”
While its Medicare business hums along, Humana forecasts continued declines this year in commercial insurance and in its prescription drug plans that are co-branded with Walmart.
