Humana CEO Tries to Reassure Wall Street as Stock Drops on 2Q Results

Despite Humana Inc. beating second-quarter earnings and revenue expectations, Wall Street did not react kindly to the insurer’s latest financial results. Humana shares closed at $361.61 on July 31, the day the results were released, a 10.6% decline from the previous day. Wells Fargo analyst Stephen Baxter primarily attributed the negative sentiment to higher-than-expected inpatient admissions and the company not raising its full-year guidance as many had expected it would do. 

Humana had adjusted earnings per share (EPS) of $6.96 in the second quarter, well above the Wall Street consensus estimate of $5.92. Still, Humana reaffirmed its full-year EPS of about $16, which CEO James Rechtin said “prudently assumes that the higher inpatient costs will continue even as we work to mitigate that pressure.” Humana in January surprised investors by lowering its EPS guidance to about $16 for the year, down from its previous estimate of about $25, which it attributed to elevated care utilization.