Stephens analyst Dana Hambly said he expects the final rule for home health reimbursement to be released by CMS in the first week of November. He is concerned that if the final rule looks similar to the draft rule, particularly regarding behavioral assumptions, it would weigh on home health stocks. For-profit, urban providers with higher percentages of therapy visits are estimated to take the largest cuts under a Patient Driven Groupings Model for reimbursement, said Hambly, who sees the impact being largest for Brookdale Senior Living (BKD) and Humana's (HUM) Kindred at Home. Others that may be impacted include Amedisys (AMED), Encompass Health (EHC), Ensign Group (ENSG) and LHC Group (LHCG).

RBC Capital lowered the firm's price target on Humana to $353 from $415 but keeps an Outperform rating on the shares after its Q1 results and updated outlook. While the management is taking 2025 adjusted EPS growth targets off the table for now, the company also stressed its continued commitment to margin improvement next year, indicating that pulling guidance does not signal that 2025 is a no-growth year, the analyst tells investors in a research note. RBC adds however that it is still cutting its FY25 EPS outlook for Humana to $20.28 from $23.87.

Oppenheimer analyst Michael Wiederhorn lowered the firm's price target on Humana to $370 from $415 and keeps an Outperform rating on the shares. The firm says Humana handily topped Q1 2024 expectations and maintained FY2024 guidance, highlighted by improving IP trends in March, leading to an in-line MLR without any contribution from favorable Q4 PPRD that seems likely. Looking forward, management pulled its 2025 growth guidance of $6-$10 EPS due to the rate pressures and TBC limitations, and also extended its return to 3% margins beyond 2026, says Oppenheimer. Overall, Humana continues to face the magnified impact from MA due to its significant exposure, but also boasts a portfolio with significant long-term margin upside, the firm adds.

Reports Q1 revenue $1.32B, consensus $1.27B. "We are pleased with our first quarter performance," said President and Chief Executive Officer of Encompass Health Mark Tarr. "Revenue growth of 13.4% driven primarily by strong discharge growth combined with prudent expense management to drive Adjusted EBITDA growth of 19.2%. Our value proposition and operating strategy continue to be validated and we remain highly optimistic about the long-term prospects of our business."

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Affirms FY 2024 Insurance segment benefit ratio of approximately 90%. Raises 2024 individual Medicare Advantage annual membership growth by 50,000 to now anticipate annual growth of approximately 150,000, or 2.8%.

Reports Q1 revenue $29.61B, consensus $28.47B.