Humana Faces Securities Class Action Investigation
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 18 hours ago
0mins
Source: PRnewswire
- Poor Financial Results: Humana reported a benefits expense ratio of approximately 91.4% for Q4 2023 and 88% for the full year, resulting in an adjusted EPS of only $26.09, which is over $2 less than previously predicted, indicating a significant decline in profitability.
- Pessimistic Future Outlook: The company expects an adjusted EPS of only $16 for 2024, a $10 decrease from 2023, well below analysts' expectations of $29, reflecting ongoing pressures from rising medical costs.
- Legal Proceedings Update: Humana and its executives are facing a securities class action lawsuit for failing to disclose material information, with the court partially denying the company's motion to dismiss, allowing the case to proceed, which could further impact the company's reputation and finances.
- Investigation Focus: Kahn Swick & Foti is investigating whether Humana's executives breached their fiduciary duties to shareholders or violated laws, and if findings indicate wrongdoing, the company may face greater legal and financial risks.
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Analyst Views on HUM
Wall Street analysts forecast HUM stock price to fall
19 Analyst Rating
6 Buy
12 Hold
1 Sell
Moderate Buy
Current: 308.700
Low
231.00
Averages
290.39
High
344.00
Current: 308.700
Low
231.00
Averages
290.39
High
344.00
About HUM
Humana Inc. provides Humana insurance services and CenterWell health care services. The Company's segments include Insurance and CenterWell. The Insurance segment consists of Medicare benefits, marketed to individuals or directly via group Medicare accounts, as well as its contract with CMS to administer the Limited Income Newly Eligible Transition (LI-NET) prescription drug plan program and contracts with various states to provide Medicaid, dual eligible demonstration, and Long-Term Support Services benefits. This segment also includes products consisting of employer group commercial fully-insured medical and specialty health insurance benefits marketed to individuals and employer groups. The CenterWell segment includes its pharmacy, primary care, and home solutions operations. The segment also includes its strategic partnerships with WCAS to develop and operate senior-focused, payor-agnostic, primary care centers, as well as its minority ownership interest in hospice operations.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Humana Faces Securities Class Action Investigation
- Poor Financial Results: Humana reported a benefits expense ratio of approximately 91.4% for Q4 2023 and 88% for the full year, resulting in an adjusted EPS of only $26.09, which is over $2 less than previously predicted, indicating a significant decline in profitability.
- Pessimistic Future Outlook: The company expects an adjusted EPS of only $16 for 2024, a $10 decrease from 2023, well below analysts' expectations of $29, reflecting ongoing pressures from rising medical costs.
- Legal Proceedings Update: Humana and its executives are facing a securities class action lawsuit for failing to disclose material information, with the court partially denying the company's motion to dismiss, allowing the case to proceed, which could further impact the company's reputation and finances.
- Investigation Focus: Kahn Swick & Foti is investigating whether Humana's executives breached their fiduciary duties to shareholders or violated laws, and if findings indicate wrongdoing, the company may face greater legal and financial risks.
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- Poor Financial Results: Humana reported a benefits expense ratio of approximately 91.4% for Q4 2023 and 88% for the full year, resulting in an adjusted EPS of only $26.09, which is over $2 less than previously predicted, indicating a significant decline in profitability.
- Pessimistic Future Outlook: The company expects an adjusted EPS of only $16 for 2024, a $10 decrease from 2023, well below analysts' expectations of $29, reflecting ongoing pressures from rising medical costs.
- Legal Proceedings Update: Humana and its executives are facing a securities class action lawsuit for failing to disclose material information, with the court partially denying the company's motion to dismiss, allowing the case to proceed, which could further impact the company's reputation and finances.
- Investigation Focus: Kahn Swick & Foti is investigating whether Humana's executives breached their fiduciary duties to shareholders or violated laws, and if findings indicate wrongdoing, the company may face greater legal and financial risks.
See More
Amazon Health Executive Transition Announced
- Executive Change: Neil Lindsay, Amazon's Senior Vice President of Health Services, will step down on July 1, with Dr. Roy Schoenberg, co-founder of telemedicine company Amwell, taking over; Lindsay will remain as an advisor until year-end to ensure a smooth transition.
- Strategic Focus: Following its 2018 acquisition of PillPack, Amazon has aimed to penetrate the complex U.S. healthcare market, enhancing its capabilities with the $3.9 billion acquisition of One Medical in 2023, which provides access to physical clinics and a robust membership base.
- Technological Innovation: Earlier this year, Amazon launched an AI health tool capable of analyzing medical records, booking appointments, and answering queries, demonstrating its ongoing commitment to investment and innovation in healthcare technology.
- Leadership Restructuring: This transition marks the latest executive shakeup in Amazon's healthcare unit, reflecting the company's strategic reorganization in the medical sector, aimed at driving future growth by introducing leaders with deeper healthcare expertise.
See More
US Stocks Close Higher: S&P 500 Hits All-Time High
- Market Performance: The S&P 500 rose by 0.61% and the Nasdaq 100 increased by 1.76%, reaching all-time highs, indicating strong demand for tech stocks amid falling oil prices and progress in US-Iran peace talks.
- Oil Price Volatility: WTI crude oil prices fell to a 2.5-week low as US-Iran negotiations aimed at reopening the Strait of Hormuz progressed, although military actions by US Central Command pressured market sentiment, leading to declines in energy stocks.
- Economic Data Impact: The Chicago Fed National Activity Index rose to a 13-month high of 0.14, surpassing expectations, while a slight decline in the consumer confidence index reflects the complexities of economic recovery, potentially influencing future market trends.
- Earnings Reports: As of Tuesday, 83% of the 475 S&P 500 companies reported earnings above expectations, with Q1 earnings projected to grow by 12% year-on-year, although excluding the tech sector, the increase is only 3%, highlighting disparities across industries.
See More
US Stock Indices Rally, Led by Technology Stocks
- Strong Market Performance: The S&P 500 Index rose by 0.81% and the Nasdaq 100 Index increased by 1.74%, reaching all-time highs, indicating robust market support for technology stocks, particularly amid falling crude oil prices and declining bond yields.
- Mixed Economic Data: The Chicago Fed National Activity Index rose to a 13-month high of 0.14, surpassing expectations, while the S&P Composite-20 home price index increased by only 0.83% year-on-year, below the expected 0.90%, suggesting weakness in the housing market that could impact future consumer confidence.
- Volatile Oil Market: WTI crude oil prices fell to a 2.5-week low due to progress in US-Iran peace talks, although US Central Command's strikes on Iranian targets caused market fluctuations, highlighting the ongoing geopolitical influence on energy markets.
- Earnings Season Insights: So far, 83% of the 475 S&P 500 companies have beaten earnings estimates, with Q1 earnings projected to rise by 12% year-on-year; however, excluding the technology sector, the increase is only 3%, reflecting pressure on overall economic growth.
See More
Latest Wall Street Rating Updates
- Goldman Sachs Reiterates Buy on Broadcom: Goldman raised Broadcom's price target from $480 to $500, anticipating strong CapEx spending patterns from key customers, indicating that the upcoming earnings report may exceed market expectations.
- Oppenheimer Upgrades Rubrik: Oppenheimer upgraded Rubrik from Perform to Outperform with a price target of $85, based on strong checks from value-added resellers, highlighting the product's competitive strength in the market.
- UBS Upgrades Packaging Corp: UBS upgraded Packaging Corp from Neutral to Buy, expecting the $50/ton price hike to stick, which, combined with high utilization and prior capacity cuts, could add approximately $290 million in annualized EBITDA.
- Deutsche Bank Upgrades Humana: Deutsche Bank believes there is still time to buy shares of Humana, upgrading its rating to Buy, as it anticipates a new rally in managed care organizations that is just beginning.
See More
Market Dynamics and Earnings Preview Ahead
- Market Outlook: U.S. stock futures rise ahead of Nvidia's earnings report, breaking a three-day losing streak for the S&P 500, as President Trump hints at a quick end to the Iran war, leading to slight declines in oil prices and interest rates, which boosts market sentiment.
- Nvidia Earnings Anticipation: Nvidia is set to release its earnings tonight, with market expectations for a beat to drive a post-earnings rally; however, skepticism remains regarding its ability to maintain market share amidst competition from Amazon and Google’s in-house chips.
- Target's Performance Rebound: Under new CEO leadership, Target reported a quarterly earnings beat with same-store sales up 5.6%, significantly surpassing the 2.4% consensus, and raised its full-year net sales growth forecast to 4%, indicating strong growth in fashion and health products.
- UnitedHealth Stock Recovery: UnitedHealth has shown strong performance since CEO Steve Hemsley's return, with Mizuho raising its price target from $410 to $440, reflecting a 20% stock price increase over the past month, indicating market confidence in its growth trajectory.
See More
