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Humana Contract Renewal to Aid Medicaid Members in Kentucky

Humana Inc. HUM recently received a contract from the Kentucky Cabinet for Health and Family Services (CHFS) again. This new agreement is likely to benefit enrollees of the company’s Medicaid programs in Kentucky. Humana, which is based in Kentucky currently serves 150,000 Medicaid members in the state and has a long history of effectively catering to health issues in the region.

Per the new deal, eligible Kentuckians will be enlisted for the renewed program from January of next year. The agreement will expire through 2024 and it even holds potential to get six contract extensions of two years each. Notably, this contract intends to offer health care benefits to around 1.26 million Medicaid members in Kentucky. One of Humana’s industry peers, namely Molina Healthcare, Inc. MOH, has also received a Medicaid contract from CHFS on the same day.

With a existing strong base of Medicaid members in Kentucky, the renewed program is likely to enable Humana in improving health conditions of the state further. This, in turn, is expected to strengthen the company’s presence in Kentucky. Notably in 2019, the health care provider introduced more than 100 clinical roles across the state.

Moreover, the new contract is announced at a time when the entire United States is grappling with financial woes brought about by the COVID-19 pandemic. Notably, Humana has been proactively taking measures from March through eliminating certain costs related to coronavirus treatment. The company also waived costs for remaining part of this year related to all primary care visits for Medicare Advantage members in May.

Furthermore, Humana has been making every effort to enhance its existing suite of health services. It has facilitated increased use of telehealth services that enables easy communication, which will facilitate easy communication between members sitting at home and their healthcare providers.

Humana also intends to focus on population health programs and establish sound value-based care relationships with local providers. Such initiatives bode well for the company, which in turn, are likely to bolster the top line in the days ahead. Notably in first-quarter 2020, the company’s revenues improved 17.6% year over year, courtesy of higher premium revenues from improved membership and per member premiums in its Medicare Advantage and state-based contract businesses.

Shares of this Zacks Rank #2 (Buy) health care provider have gained 64.1% in a year compared with the industry’s growth of 19.8%. We believe the company’s strong fundamentals are likely to sustain momentum in the long run.

 

Other Stocks to Consider

Some other top-ranked stocks in the medical space include The Ensign Group, Inc. ENSG and Abeona Therapeutics Inc. ABEO, both carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ensign and Abeona Therapeutics have a trailing four-quarter positive earnings surprise of 7.87% and 5.45%, on average, respectively.

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