Humana's Q4 2024: Unraveling Contradictions in Stars Investments, Margin Goals, and Membership Growth

These are the key contradictions discussed in Humana's latest 2024Q4 earnings call, specifically including: Stars investment focus and the impact on earnings, achieving a 3% margin in MA, 2025 Stars litigation and investments, 2025 Part D margin outlook, Medicare Advantage (MA) membership growth target, and Stars litigation impact on margin recovery:



Financial Performance and Investment:
- Humana reported that 2024 adjusted EPS was in line with initial guidance, including investments made in Stars and growth initiatives.
- The investments are focused on improvingStars performance, clinical excellence, and membership strategies to enhance long-term operating performance.

Medicare Advantage and Market Strategy:
- Humana plans to achieve at least a 3% margin in individual MA by 2025 and maintain focus on operating efficiently and optimizing benefits.
- The company is strategically shifting its membership mix to focus on sustainable, long-term value, despite recent unprofitable plan losses in D-SNP space.

Medicare Advantage Rates and MLR Guidance:
- Humana anticipates a decrease in its MLR ratio due to plan exits and benefit adjustments, despite increases driven by business mix changes and incremental investments.
- The company expects to benefit from a favorable calendar effect in 2025, with a full year of runway to improve Stars performance.

Member Retention and Growth Strategy:
- The company experienced higher-than-expected dual eligible member losses but noted continued growth in core membership and strong performance in key markets.
- Humana is focusing on repricing D-SNP products and leveraging Medicaid integration to strengthen its footprint and member value proposition.