Humana, Mercy Partner On Virtual Health Service Access Expansion; Street Says Buy


Humana is partnering with Mercy to expand patient access to virtual health services. This is part of a broader effort by the two companies to enable more holistic care for Humana Medicare Advantage (HMA) members.

Humana’s (HUM) regional Medicare President Jeremy Gaskill said, “This agreement unites two organizations striving to offer care that is more accessible, personalized, and coordinated- a commitment that is more important than ever right now.”

Meanwhile, Mercy’s Executive Vice President, Chief Strategist, and CFO Shannon Sock said, “Strong payor relationships, like this one with Humana, will help in our long-term journey to provide more seamless care for our patients.”

This value based agreement expands the two companies’ current contract, which provides in network access at all of Mercy’s hospitals, outpatient facilities and physician practices. It also provides convenient care options for HMA members who are also patients of Mercy’s 4,000-plus primary and specialty care clinicians.

At the end of 2020, Humana had upwards of 2.7 million individual Medicare Advantage and commercial members. Its total Medicare Advantage membership stands at more than 4.8 million.

The primary aspects of this joint effort are Mercy Virtual and value-based care. Mercy Virtual, called “hospital without beds,” offers 24/7 care to patients when and where they need it.

Under value-based care, the payment to Mercy’s physicians is linked to quality care to improve outcomes and experience. It differs from the current norm of “fee for service” models, where payment is based on the quantity of services provided. (See Humana stock analysis on TipRanks)

On Feb. 4, Oppenheimer analyst Michael Wiederhorn reiterated a Buy rating and a price target of $460 (20.9% upside potential) on the stock. Commenting on Humana’s 4Q performance, Wiederhorn said, “The results reflect the offsetting impacts from the increase in COVID (higher treatment/testing costs, offset by lower non-COVID utilization).” He added, “Humana remains well positioned for 2021.”

Turning to Wall Street, Humana has a Strong Buy consensus rating based on 7 Buys and 1 Hold. The average analyst price target of $474.88 implies about 24.8% upside potential from current levels. Humana stock has seen a gain of about 15% over the past year.

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