Humana, Inc. and Cigna Corporation both reported strong third quarter 2022 profits due to lower than expected payments to medical providers.
Humana reported third quarter 2022 profits of $1.2 billion, beating analysts’ expectations. Humana also reported strong third quarter 2022 revenues of $22.8 billion, up by 10.2% from the third quarter of 2021. In announcing its results, Humana cited lower than expected medical costs as driving its strong profits. Specifically, Humana Chief Financial Officer Susan Diamond stated:
Results in the quarter came in above initial expectations driven primarily by lower-than-anticipated medical costs trends in our individual Medicare Advantage and Medicaid businesses….Total medical costs in our individual Medicare Advantage business were lower than initial expectations for the quarter with the favorable inpatient trends seen throughout the year continuing with some moderation.
Humana’s quarterly medical cost ratio, which represents the insurer’s spending on medical claims compared with its earnings from premiums, was 85.6%. Humana’s lower than expected medical cost ratio means that Humana is paying less than it anticipated to medical providers.
Humana also reported that it expects to see an increase of 7% in its membership for its Medicare Advantage plans.
Cigna reported third quarter 2022 profits of $2.8 billion, likewise exceeded analysts’ expectations, with total revenues of $45.3 billion. Shareholders’ net income for the third quarter 2022 was $2.8 billion, or $8.97 per share compared with $1.6 billion, or $4.80 per share in the third quarter of 2021.
In announcing its strong third quarter results, Cigna also cited lower medical costs, stating: “The Cigna Healthcare MCR [medical cost ratio] of 80.8% for third quarter 2022 compares to 83.5% for third quarter 2021, reflecting lower medical costs….”
Cigna reported that its membership grew 5.6% year over year to nearly 18 million members.