“Although the company reaffirmed its full year insurance segment benefits expense ratio guidance (a key measure of profitability) of between 86.3% and 87.3%, it warned investors that it ‘now expects to be at the top end of this full year range’ — i.e., reduced profitability,” the complaint says. “Additionally, Humana explained that it now ‘assume[d] it will continue to experience moderately higher-than expected trends for the remainder of the year.'”
On this news, Humana’s stock price fell by $18.20 per share, or almost 4%, from $463.85 per share on June 15, 2023, to close at $445.65 per share on June 16, 2023, according to the complaint.
Humana then announced additional increases in its expected medical costs, and in August 2023, it revealed the utilization rate increases it disclosed in June had now stabilized at new higher levels, the complaint says.
A third stock drop occurred in January, according to the complaint, when Humana preliminary released its financial results for the fourth quarter and full year of 2023 and “shocked” investors by revealing its benefits expense ratio increased to roughly 91.4% for the fourth quarter of 2023 and approximately 88% for the full year.
