Humana Inc.(HUM) reported on Friday that 2014 Medicare payments are expected to hurt results for the company as well for several other insurance providers.
Humana reported to Centers for Medicare and Medicaid Services(CMS) that it sees a mid-single digit decline in its benchmark rate.
The company said on February 4 that it is confident in the future growth of the company. HUM expected to increase Medicare membership and earnings for 2014. This expectation was based on the Medicare Advantage payment rate remaining flat.
Shares are dropping in the early session for Humana as well as several other health insurance company’s including UnitedHealth Group Inc.(UNH), which is declining -5.7% WellPoint Inc.(WLP), with a -4.3% drop, Aetna Inc.(AET), dropping by -3.5% and Cigna Corp.(CI), which is declining -3.5%.
With the decline, CMS reported that they are allowing public comments on the preliminary rates before the rates are finalized on April 1. The prices will be subject to government pricing, which will likely appeal to customers. However, it is expected that customers will not receive the same level of service as they did prior to the reduced prices.
Humana shares were down -$6.95, or -8.91% during Tuesday morning trading. The stock has declined -21% in the past year.
The Bottom Line
Shares of Humana Inc.[[HUM] have a 1.48% yield, based on Tuesday morning’s price of $70.10.
Humana Inc.(HUM) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.2 out of 5 stars.