Humana's 1Q15 Results Miss Analyst Expectations (Part 3 of 5)
Revenue growth
Humana’s (HUM) revenues from Medicare PDP (prescription drug plan) enrollments increased by 15.9%, from $865 million in 1Q14 to $1,003 million in 1Q15. The company’s Medicaid revenues rose by 237.2% from $180 million to $607 million in the same time period.
Humana derives about 11.6% of its total revenues from Medicare PDP and Medicaid enrollments. In 1Q15, the company’s total Medicare PDP and Medicaid enrollments increased sequentially by 387,400 and 5,500 members, respectively.
Medicare Part D
Humana witnessed a rise of 13.6% in its Medicare Part D enrollments from 3.86 million in 1Q14 to 4.38 million in 1Q15. The growth was due to the net member additions in the Humana-Walmart plan offerings in 2015. The majority of the enrollment growth, however, was concentrated on plans with low premiums.
Increasing use of Humana’s mail-order pharmacy, RightSource, for dispensing drugs has helped reduce drug-related costs for PDP members, as well as other members. Mail-order penetration of individual MA (Medicare Advantage) members reached 35% in 1Q15. Humana has proactively sent over 4 million messages to about 2.5 million members to prevent gaps in care, especially related to drug regimens. These efforts have helped the company close these gaps in about 30% of the cases.
Medicaid
Humana offered services to 339,000 Medicaid beneficiaries in 1Q15, an increase of 102.4% from the 167,500 enrollments in 1Q14, primarily due to the addition of members in the company’s Florida Medicaid contract.
Health insurance companies (XLV) such as Centene (CNC), Cigna (CI), Humana, and Anthem (ANTM) enter into managed contracts with state governments to provide health insurance services to Medicaid beneficiaries in exchange for payment from the government. Humana offers services to Medicaid beneficiaries in Kentucky and Florida. The company also serves about 18,400 dual eligible members through the state demonstration programs in Illinois and Virginia.
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