Benzinga | Nov 3, 2021 09:15AM EDT

Humana Cuts FY21 Earnings Outlook Reflecting Net COVID Headwind

* Humana Inc (NYSE:HUM) posts Q3 sales of $20.87 billion, missing the consensus of $20.91 billion. 3Q21 and YTD 2021 results reflect the continued impact of the COVID-19 pandemic.

* The benefits expense ratio increased from 85.3% to 87.1%, while the operating cost ratio declined from 13.2% to 12.2%. The Operating cash flow reached $2.83 billion.

* Humana posted an adjusted EPS of $4.83, beating the consensus of $4.66.

* As a result of the surge in COVID cases due to the Delta variant, Humana expects non-COVID Medicare Advantage utilization of 5.5% below baseline in the back of the year while being partially offset by 3% of COVID costs, therefore, again assuming total utilization would be 2.5% below baseline in 2H of FY21.

* Guidance: Humana is revising its FY21 GAAP EPS guidance to approximately $23.67 from the prior outlook of $24.97 - $25.47.

* The Company is also revising its FY21 Adjusted EPS guidance to approximately $20.50 from $21.25 - $21.75.

* The current FY21 EPS guidance reflects the Company's updated view of utilization for Q4 of 2021.

* Updates FY 2021 expected individual Medicare Advantage membership growth to 450,000 members, +11% Y/Y down from previous guidance of 425,000 - 475,000.

* Price Action: HUM shares closed at $457.11 on Tuesday.