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What happened: Humana (HUM) stock fell more than 2% in premarket trading on Wednesday.
What’s behind the move: The health insurer reported a strong quarter but reiterated its adjusted full-year profit outlook, expecting at least $9 per share. Meanwhile, it cut its nonadjusted earnings forecast to at least $8.36 a share, down from its previous estimate of at least $8.89 a share.
Humana also highlighted that it is incurring charges related to its multiyear transformation program. The intent of the initiative is to “re-align the company’s cost structure, operating model, and technology footprint with evolving market conditions.”
Revenue for the first quarter jumped 23%. Adjusted earnings per share also beat expectations.
What else you need to know: Higher medical and pharmaceutical costs, as well as more utilization of services, have been a drag on the healthcare insurance industry.
As one of the largest providers of Medicare Advantage plans, Humana has long relied on the program as a steady source of profit. However, tighter government oversight and more restrictive payment policies have reduced that reliability.
Year to date, Humana stock is down about 13%.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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