Humana's Revenue Soars to $1.2 Billion in 2024, With the Health Insurance Giant Leaving Loss-Generating Medicare Segments
Rewritten Article:
Humana reported a shocking $1.2 billion profit in 2024, but it came with a $693 million fourth-quarter loss as the health insurer bids farewell to unprofitable Medicare Advantage markets come 2025.
Medicare Advantage plans, a substantial portion of Humana's business, involve partnerships with the federal government to offer seniors extra benefits and services beyond the basic plan, such as disease management and nurse help hotlines. Additional perks may include vision, dental care, and wellness programs.
Unfortunately, Humana and its Medicare Advantage plan competitors endured a tough 2024, largely due to senior patients postponing medical care during the COVID-19 pandemic and resuming treatments since. Hospitalizations, in particular, have seen a steady rise, a concern many in the industry have echoed throughout last year.
Humana's benefit expenses swelled to nearly $25.4 billion in 2024 from $22.8 billion in 2023, resulting in a higher "adjusted benefit ratio" that reached 91.9%. This ratio refers to the percentage of premium revenue allocated to medical costs, with a 20-basis-point increase caused by increased investments in Star Ratings.
To improve its performance, Humana intends to encounter an estimated 550,000 individual Medicare Advantage annual membership decline, approximately 10%, from 2024. This drop will be due to the company exiting unprofitable plans and counties, as well as a push to expand its management of state Medicaid benefits for the needy and placing more emphasis on its CenterWell healthcare provider business.
In the end, Humana's 2024 net income reached $1.2 billion, or $9.98 per share, representing about half of its 2023 annual net income of $2.4 billion, or $20.09 per share. Humana recorded a $693 million loss in the fourth quarter, up from the $541 million loss in the same period in 2023.
Humana's 2024 total revenue amounted to $117 billion, a jump from $106.4 billion in 2023. Its fourth-quarter total revenue increased to $29.2 billion, compared to $26.4 billion the year prior.
Humana's Medicare Advantage membership stood at 5.2 million in January 2025, falling by 444,800 members, or 8%, since December 31, 2024. This decline stemmed from net membership losses during the 2025 Annual Election (AEP) period and Humana's decision to depart from certain unprofitable plans and counties.
When unveiling the earnings report, Humana's leadership team, including CEO Jim Rechtin, stressed the importance of Medicaid progress for their long-term strategy. They also highlighted expectations for solid growth in CenterWell's primary care business, with the addition of 20-30 clinics and 30,000 to 50,000 new patients.
In Rechtin's statement accompanying the 2024 annual and fourth-quarter earnings report, he expressed satisfaction with Humana's finish to 2024 while remaining optimistic about their long-term strategy for 2025. He expressed confidence in their tactic, sunning "2025 will be a critical step in returning to compelling, normalized margins."
Insights:
Medicare Advantage plan operators like Humana have faced rising medical costs during the past year. A significant driver of these increases has been higher hospitalization rates and pandemic backlogs leading to increased healthcare utilization. Consequently, the benefit ratio—the percentage of each premium dollar spent on medical care—has grown steadily, with Humana's ratio rising from 86.3% in 2022 to 90.3% in 2024. Regulatory changes and competitive pressures have further impacted the industry.
Source: Enrichment Data
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Humana decided to withdraw from unprofitable Medicare Advantage markets starting from 2025, which contributed to its $693 million fourth-quarter loss in 2024. Despite this, Humana's Medicare Advantage plans, a crucial part of its business, offer additional benefits and services beyond the basic plan through partnerships with the federal government, and Humana is a provider of Medicare Advantage plans offered by Humana.
