Humana shares rise after insurer says medical costs came in lower than expected

Humana shares rose Wednesday after the health insurer said medical costs came in lower than expected during its second-quarter earnings report.

The results ease investor concerns two months after Humana and rival UnitedHealth Group warned that a surge in demand for non-urgent surgeries and outpatient services among seniors was driving up claims. 

Both companies – the two biggest providers of Medicare Advantage plans for people ages 65 and above – have now suggested that the uptick may be abating. 

Humana reported a medical loss ratio, the percentage of premiums it spends on medical care, of 86.3% for the second quarter. Analysts had estimated that ratio would be 86.5%, according to Refinitiv data.

Humana highlighted a “stabilizing Medicare Advantage utilization environment” based on the most recent claims activity, without elaborating.

The company said in June it expected its second-quarter medical loss ratio to be toward the top range of its full-year outlook of 86.3% to 87.3%. Humana reiterated that full-year guidance on Wednesday.

Humana’s stock rose 5% in morning trading Wednesday. Shares are down about 5% for the year after the broader health care sector took a beating in June, putting the company’s market value at around $60 billion.