Humana Proves Vertically Integrated Healthcare Works

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Humana collects 90% of its revenue from federal and state government health programs Humana makes huge profits serving the at-risk and poorest populations (seniors and Medicaid) The company has revised its full year 2022 guidance and full year 2025 guidance. Indicated 14% CAG.

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Health insurance and wellness provider Humana (NYSE: HUM) stock is outperforming the benchmark index, year-on-year versus (-31%) for the Nasdaq (NYSEARCA: QQQ) and (-16%) for the S&P 500 (NYSEARCA). is trading up 4.6% for . : Detective). Healthcare is considered a recession-proof business that continues to increase costs at an annual rate of 5.8%, accounting for about 20% of US GDP. Humana is an integrated managed care insurer and healthcare provider like UnitedHealth Group (NYSE: UNH), Cigna (NYSE: CI) and Aetna (NYSE: CVS). It benefits from the secular trend of a growing elderly population to join Medicare Advantage HMO plans. For senior patients, this makes solid economic sense. Patients on traditional Medicare coverage are responsible for paying the remaining 20% ​​of medical bills after Medicare has paid the 80% portion according to its fee schedule. This can be nerve-wracking and can be costly especially on a fixed income. However, a Medicare Advantage plan covers virtually everything, leaving the patient only responsible for co-pay amounts ranging from $10 to $40. Humana collects more than 90% of its revenue from Medicare and Medicaid programs. Ironically, these are the two most at-risk populations for coverage under the fee-for-service model. However, Humana is proving it very attractive under its value-based vertically integrated managed care model.

- Advertisement - – Development of MarketBeat HMOs

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There was a time when health insurance companies were just payers and doctors were medical providers. They were two separate teams. Doctors will treat patients and bill health insurance companies for their services. Insurance companies find creative ways to deny claim payments (referrals, authorizations, statute of limitations for claims, etc.) in an effort to maintain profitability. It used to be a cat and mouse game. In short, doctors will charge more, and insurers will pay less for the service under the fee model. You were either the provider or the payer. Managed Care, also known as Health Maintenance Organizations (HMOs), disrupted the reimbursement model by introducing capitation payments. These monthly payments were fixed regardless of the number of visits paid to doctors based on the number of patients signed up in the network as their primary care physician. Doctors will receive their monthly capitation payment and collect a co-payment per visit. This helped HMOs to profit wildly, while doctors often got pay cuts. Appointments in doctors’ offices will be flooded, forcing patients to wait longer to visit or visit their doctors.

vertically integrated healthcare

Eventually, insurers also became providers by building (or acquiring) their own medical care centers with in-house doctors and specialists. Doctors worked on salary and HMOs became vertically integrated to provide all health care and collect all premiums and payments. The best example of this would be Kaiser Permanente. This integrated health care system provides a complete ecosystem for its members within each facility consisting of laboratories, radiology, primary care doctors and specialists. Humana has also grown into a vertically integrated healthcare and wellness company as it develops its primary care clinics under the Centerwell and Conviva Care Solutions brands. An important difference is that Kaiser Permanente has neither hospitals nor humana. It sold its hospitals to HCA Healthcare (NYSE:HCA) in 1993. Obviously, hospitals do not function well in a vertically integrated health care model, only clinics, urgent care facilities and medical centers.

earning continues

On January 27, 2022, Humana reported its fiscal Q2 2022 earnings report for the quarter ended June 2022. The company reported earnings-per-share (EPS) profit of $8.67 excluding non-recurring items versus consensus analyst estimates for a profit of $7.68. , a $0.99 green. Revenue rose 14.6% year-over-year (YoY) to $23.66 billion, beating analyst estimates of $23.44 billion. Humana CEO Bruce Broussard commented, “We are pleased with our significant progress in growing the business with the initial rollout of our value-based home care, including our organic expansion of our primary care clinics and Medicaid membership. In addition, our Strong 2022 EPS growth of 20 percent, and the investments of our $1 billion worth of initiatives allowed us to build on our 2023 Medicare Advantage product offerings, demonstrate our commitment to balancing our long-term membership and income growth goals .

14% CAG rate by 2025

On September 15, 2022, Humana increased its full-year fiscal 2022 EPS to $25.00 versus $24.75 versus the $21.85 consensus analyst estimates. It also provided a medium-term adjusted EPS target of $37.00 for fiscal year 2025, representing a 14% compound annual growth rate (CAG).

A simple structure focused on superiors

Starting in 2023, Humana will structure itself into two units under Insurance Services and Centerwell. Insurance services will have specialty segments handling retail and group and claims processing. Centerwell will house the healthcare services segment. Centerwell Senior Primary Care is the nation’s largest primary care provider focused on senior citizens with 222 clinics serving 180,000 Medicare Advantage patients. It plans to open 250 clinics by the end of 2022 and an additional 30 to 50 clinics with acquisitions of about half annually by 2025. It expects to earn $100 to $200 million in EBITDA by operating 400 to 450 centers wholly owned or through joint ventures by 2025. Humana expects its primary care business to contribute $1 billion to EBITDA by 2032.

Humana Proves Vertically Integrated Healthcare Works

attractive pullback level

Using Rifle charts on the weekly and daily time frames enables an accurate view of the price playing field for HUM. The weekly Rifle chart reached near the 514.71 Fibonacci (Fib) level. Weekly Rifle Chart Puppy breakout is pausing as the 5-period moving average (MA) support begins to slope down at $487.26 and tightens the channel with its 15-period MA at $481.54. The weekly 50-period MA support is rising at $449.72. The weekly stochastic is forming a mini reversal puppy as it falls through the 80-band. Weekly market structure lower (MSL) on a breakout through the $444.57 level. The weekly upper Bollinger Band (BB) is sitting at $530.19 and the lower BB is rising near the $414.02 Fib level. The daily Rifle chart uptrend is losing steam with the 5-period MA falling at $495.08 and overlapping the daily 15-period MA at $486.41 and the daily 50-period MA at $4878.72. The daily 200-period MA sits at $450.07. The daily stochastic has fallen through the 80-band setting up a potential oscillation and an MA breakdown. Daily low BB sits at $459.41. Attractive pullback levels sit at $475.84 Fib, $449.82 Fib/Weekly 50-period MA, $444.57 Weekly MSL Trigger, $422.89 Fib, $384.14 Fib and $355.88 Fib.

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