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Humana (HUM) Ties Up to Enhance Medicare Advantage Business

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·4-min read
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  • HUM
  • CI
  • CNC
  • UNH

Humana Inc. HUM recently inked a deal with leading multi-specialty group practices Loudoun Medical Group, P.C. or LMG, with which Humana Medicare Advantage members will be able to access LMG’s medical and surgical locations. LMG is one of the leading physician-owned, multi-specialty group practices in Virginia.

Individuals with Medicare will have access to LMG from Jan 1, 2022 if they select a Humana Medicare Advantage plan during the Medicare Annual Election Period (AEP).

Rationale Behind the Deal

With this deal, the existing Humana Medicare Advantage HMO, PPO and PFFS members will be able to access LMG’s providers who offer healthcare services at 150 medical and surgical specialties locations.

The MA market seems attractive for Humana considering the surge in enrollment figures and a growing U.S. aging population.

Efforts to Enhance Medicare Business

Last month, HUM extended the value-based agreement with Kansas-based physician specialty group Hutchinson Clinic for benefiting the Humana Medicare Advantage members. The health insurance provider also extended a value-based deal with Minnesota-based Allina Health to offer enhanced health outcomes to the Humana Medicare Advantage members across the state. HUM leaves no stone unturned to enhance this line of business.

Its Medicare business has a wide presence across the United States where it has been offering a minimum of one Medicare plan across 50 states for a while. HUM has been providing private health plans under the Medicare program for more than 30 years. The COVID-19 outbreak coupled with an aging population in the United States further spurred demand for MA plans, which remains the preferred choice for consumers owing to several bundled benefits, improved care coordination and affordable nature.

Humana continues to pursue collaborations with physicians and well-established health care professionals to deliver enhanced care to patients. These initiatives enabled HUM to bolster its nationwide footprint and delve into the underserved areas.

The MA business of HUM continues to witness increased membership, which already fetched higher premiums. Multiple contract wins and renewals similar to the latest one are steadily driving the Medicare business.

HUM’s Medicare products contribute significantly to consistent top-line growth and the nine months of 2021 were no exception to this trend. In the said time frame, Medicare products accounted for around 83% of the total premiums and services revenues reaped by the currently Zacks Rank #4 (Sell) player.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Similar to HUM, other medical stocks, such as Cigna Corporation CI, Centene Corporation CNC and UnitedHealth Group Incorporated UNH cater to the healthcare needs of people through their MA plans.

Cigna’s MA business performed well, courtesy of its constant product expansions, growing membership and new collaborations or contract extensions with renowned healthcare systems. The same is also bolstering CI’s partner networks and strengthening its U.S. footprint. CI remains on track to achieve MA customer growth in the targeted range of 10-15% this year.

Centene caters to more than 1.1 million MA members across 33 states. Several contract wins and renewals led to membership growth for the MA business. For 2022, with enhanced MA offerings, Centene has plans to foray into 327 new counties and three new states, namely Massachusetts, Nebraska and Oklahoma. This will bring the count of MA states to 36.

UnitedHealth Group remains well-poised to benefit from a strong MA business. The business performed well on the back of numerous business wins and a robust membership rise in individual MA business amid the annual enrollment period. The 2021 Medicare enrollment season marked the largest MA footprint expansion of UNH in five years. UNH expects to add nearly 900,000 people to its Medicare plans in 2021.

Shares of HUM have grown 3% in the past year, underperforming its industry’s growth of 23.3%. While the stocks of Centene and UnitedHealth Group have gained 9.9% and 27.9%, respectively, Cigna has lost 8.2% in a year's time.

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UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report

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