Humana (HUM) is due off halt at 1029 AM ET. The company said it raised its Q3 guidance to approximately $3.07 on a GAAP basis, and approximately $3.15 on an adjusted basis. The CapIQ mean for non-GAAP, or adjusted, EPS is $2.89.
It raised its FY guidance to approximately $8.80 on a GAAP basis, and approximately $9.50 on an adjusted basis. Estimates are for non-GAAP EPS of $9.28.
The company also updated Star quality ratings for the 2018 plan year published by the Centers for Medicare and Medicaid Services (CMS), showing the percentage of the company’s July 31 membership in 4-Star plans or higher declined to approximately 37%, or 1.17 million members, from approximately 78%, or 2.15 million members, in the prior year. The company believes the decline is primarily attributable to the impact of lower scores for certain Stars measures as a result of the company’s recently-closed comprehensive program audit by CMS.
It said it believes its Star ratings for the 2018 bonus year do not accurately reflect the company’s actual performance under the applicable Star measures. Consequently, the company intends to file for reconsideration of certain of those ratings under the appropriate administrative process.
The company expects the impact of CMS’ comprehensive program audit on the company’s Star ratings to be limited to the 2018 bonus year. It expects to evaluate its contract structures for rationalization to mitigate the negative impact on Star bonus revenues for 2018. Star results for the 2018 bonus year are also not expected to materially impact the company’s Medicare membership growth for 2017.
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