If You Invested $1000 in Humana a Decade Ago, This is How Much It'd Be Worth Now
For most investors, how much a stock's price changes over time is important. This factor can impact your investment portfolio as well as help you compare investment results across sectors and industries.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you'd invested in Humana (HUM) ten years ago? It may not have been easy to hold on to HUM for all that time, but if you did, how much would your investment be worth today?
Humana's Business In-Depth
With that in mind, let's take a look at Humana's main business drivers.
Founded in 1964 and headquartered in Louisville, KY, Humana Inc. is one of the largest health care plan providers in the United States. It was organized as a Delaware corporation in the year 1964. It provides health insurance benefits under Health Maintenance Organization (HMO), Private Fee-For-Service (PFFS), and Preferred Provider Organization (PPO) plans. The company also provides other benefits with specialty products including dental, vision, and other supplementary benefits.
It exited 2022 with around 17.1 million members under its medical benefit plans and approximately 5.2 million members in its specialty product category.
Humana's medical and specialty insurance products allow members to access healthcare services primarily through its networks of healthcare providers. In December 2022, it redistributed some of its businesses within its earlier reportable segments - Retail, Group and Specialty, and Healthcare Services. The realignment gave rise to two distinct segments: Insurance and CenterWell.
The Insurance segment (83.7% of the company's total segment revenue in 2022): The Insurance unit encompasses businesses that were part of the Retail as well as Group and Specialty segments. Earlier contained within the Healthcare Services unit, the Pharmacy Benefit Manager (PBM) business also forms a part of the newly formed Insurance segment.
The CenterWell (16.3%): This comprises the payor-agnostic healthcare services offerings of Humana that includes pharmacy dispensing services, provider services and home services.
Also, there is the Other Businesses category that includes businesses, which are not separately reportable because they do not meet the quantitative thresholds.
In January 2022, Humana inked two separate deals with two third-party financial institutions to effect an aggregate $1-billion ASR program under its authorization, to boost capital deployment. It is taking multiple initiatives like cost savings and others to generate $1 billion additional value to fund the Medicare Advantage business and boost Healthcare Services capabilities.
Bottom Line
Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little bit of risk. So, if you had invested in Humana a decade ago, you're probably feeling pretty good about your investment today.
A $1000 investment made in April 2013 would be worth $6,595.50, or a 559.55% gain, as of April 6, 2023, according to our calculations. Investors should note that this return excludes dividends but includes price increases.
The S&P 500 rose 163.34% and the price of gold increased 22.92% over the same time frame in comparison.
Going forward, analysts are expecting more upside for HUM.
Humana's Medicaid business benefits from several contract wins and renewals thereby contributing to its top line. Buyouts and alliances place it well for growth. Revenues for 2023 are expected within $102.7-$104.7 billion. We expect the top line to grow 11.4% year over year in 2023. Solid contributions from the segments formed after the business realignment – Insurance and CenterWell, bode well. Management estimates 2023 EPS to be at least $28, reflecting minimum growth of 11% year over year. It has been deploying excess capital on balance sheet strength. Its shares have outperformed the industry in a year. However, escalating operating costs are affecting Humana's profits. A debt-laden balance sheet induces a rise in interest expenses. Woes over Medicare membership linger. As such, the stock warrants a cautious stance.
Over the past four weeks, shares have rallied 5.50%, and there have been 5 higher earnings estimate revisions in the past two months for fiscal 2023 compared to none lower. The consensus estimate has moved up as well.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Humana Inc. (HUM) : Free Stock Analysis Report
