Humana (HUM) is operating in a good news, bad news environment, which is driving swings in the company’s stock price. Like many companies, the stock was battered early last week by the news of increasing cases of coronavirus in the United States.
But, earlier this week, the stock regained almost all of its losses, as Vice President Joe Biden put in a much better than expected showing on Super Tuesday. Investors saw this as a major win for health insurers.
Biden is seen as making much more moderate changes to American insurance plans than Senator Bernie Sanders, who was seen as strong going into voting on Tuesday. And Humana, like other health insurers, responded strongly to the news, bouncing 11% higher Wednesday, the day after the election.
It is against this backdrop of uncertainty, with both the coronavirus outbreak and election results, that investors must currently evaluate an investment in Humana.
Internally on the coronavirus front, the company is taking precautionary actions to protect employees, as many other large companies have announced. Most recently Humana announced its employees will not be attending the Healthcare Information and Management Systems Society’s (HIMSS20) annual health information and technology conference next week.
Speaking on the changes Humana is making, a company spokesman stated, “As the COVID-19 coronavirus continues to spread around the world, Humana is making changes to its travel policy, including asking employees to cancel non-essential travel within the United States, inclusive of conferences and trade shows.”
The cancellation demonstrates the importance Humana is placing on employee safety, as it is one of the largest medical IT conferences, and President Trump is currently scheduled to address the conference. This is the first time a sitting President will do so.
While coronavirus may negatively impact earnings, the positive news from Super Tuesday should have a longer lasting effect on earnings certainty going forward. Medicare for All, as proposed by Sanders and Senator Elizabeth Warren, who just dropped out of the race, was seen as universally negative for managed care organizations (MCO).
Biden’s proposed plan is viewed by analysts as very favorable to MCOs, including Humana, which have a large number of Medicaid and public exchange members. This was clear after Biden’s strong showing, when some of what analysts have termed the “Medicare for All discount” came out of stocks like Humana and Anthem (ANTM), which bounced 15% on the Biden victories.
Humana’s stock will continue to be impacted by both coronavirus and election news in the coming months, until the picture on both fronts become clearer.
Steven Adams’s personal position in Humana: none.