Introduction

Humana shares rose Wednesday after the health insurer said medical costs came in lower than expected during its second-quarter earnings report.

Relief for Investors

The results ease investor concerns two months after Humana and rival UnitedHealth Group warned that a surge in demand for non-urgent surgeries and outpatient services among seniors was driving up claims.

Trends Suggest Abating Uptick

Both companies – the two biggest providers of Medicare Advantage plans for people ages 65 and above – have now suggested that the uptick may be abating.

Medical Loss Ratio

Humana reported a medical loss ratio, the percentage of premiums it spends on medical care, of 86.3% for the second quarter. Analysts had estimated that ratio would be 86.5%, according to Refinitiv data.

Positive Outlook

Humana highlighted a “stabilizing Medicare Advantage utilization environment” based on the most recent claims activity, without elaborating. The company said in June it expected its second-quarter medical loss ratio to be toward the top range of its full-year outlook of 86.3% to 87.3%. Humana reiterated that full-year guidance on Wednesday.

Stock Performance

Humana’s stock rose 5% in morning trading Wednesday. Shares are down about 5% for the year after the broader health care sector took a beating in June, putting the company’s market value at around $60 billion.