DOW JONES NEWSWIRES
Humana Inc.'s (HUM) first-quarter net income more than doubled
as prior-year results were hurt by surging prescription-drug
costs.
But the latest results showed increased premiums and fees amid
higher enrollment in its Medicare plans and improving margins.
As such, the health insurer raised its earnings outlook for the
year and projected a second-quarter profit above analysts'
expectations. Humana raised its 2009 earnings target to $6.10 to
$6.20 a share from $5.90 to $6.10 to reflect improved performance
in its government health-care plan business. The company projected
revenue of $30 billion to $32 billion, in line with analysts' mean
estimate of $30.83 billion, according to Thomson Reuters.
For the second quarter, the company expects earnings of $1.65 to
$1.70 a share; analysts were looking for $1.50.
UnitedHealth Group Inc. (UNH) and WellPoint Inc. (WLP), last
week reported big declines in first-quarter enrollment on weakness
in its commercial operations. In that space, Humana reported a
149,300-member decline during the quarter to 3.5 million, but its
Medicare Advantage offerings saw 17% year-to-year growth to 1.5
million. The company is the second-largest provider of the plans,
which include prescription-drug coverage, behind UnitedHealth.
But with such exposure, Humana is more vulnerable to reduced
government payments set to begin next year.
Meanwhile, the company reported first-quarter net income of
$205.7 million, or $1.22 a share, up from $80.2 million, or 47
cents a share, a year earlier. Humana in March forecast earnings of
$1.10 to $1.20, above analysts' views at the time.
Revenue increased 10% to $7.71 billion. Analysts most recently
were looking for $7.65 billion.
Humana's consolidated benefits ratio, the percentage of premiums
used to pay medical bills, declined as expected, to 83.9% from
86.7%.
Shares closed at $27.36 on Friday and didn't trade premarket.
The company's stock is down by roughly a quarter this year.
-By Tess Stynes, Dow Jones Newswires; 201-938-2473;
tess.stynes@dowjones.com
