Humana Reports Revenue Increase Driven By Medicare Advantage Plan

Armen Hareyan's picture

Humana on Monday announced that first-quarter revenueincreased by 12% to $6.96 billion from $6.20 billion in the period last year,driven by higher-than-average enrollment in the company's Medicare Advantageplans, the Wall Street Journal reports. The company also reportedthat first-quarter net income increased by 13% to $80.2 million, or 47 centsper share, from $71.2 million, or 42 cents per share, a year earlier (Kardos, WallStreet Journal, 4/28).

Analysts surveyed by Thomson Financial estimated higher first-quarter earningsof 45 cents per share on revenue of $6.94 billion (Schreiner, AP/SanFrancisco Chronicle, 4/28). The company in March estimated first-quarter earnings ofbetween 44 cents and 46 cents per share as a result of higher-than-expectedMedicare drug claims, but a lower effective tax rate helped overall profits (WallStreet Journal, 4/28). According to the AP/Chronicle,Humana's government segment, which includes Medicare and military healthservices, experienced a pretax loss of $3.2 million in the first-quarter,primarily because of $100 million in incremental expenses related tohigher-than-expected claims in stand-alone Medicare drug plans. Those losseswere offset by improved performance in MA plans and military services (AP/SanFrancisco Chronicle, 4/28).


The company also reported that its first-quarter medical-loss ratio declined to86.7% from 86.8%, while the ratio in government plans increased by 0.7percentage points to 90%, and its commercial segment experienced a 2.6-pointdrop to 76.8% because of two fourth-quarter acquisitions, the Journalreports. Overall plan membership increased by 0.7% to 11.4 million, andmembership in dental and vision plans grew by more than three times to 6.9million, from 1.9 million. Membership in MA plans increased by 14%, butmembership in stand-alone drugs plans declined by 9.3% (Wall StreetJournal, 4/22).

Humana officials increased full-year earnings projections to between $4.10 and$4.35 per share with revenue between $28 billion and $30 billion (AP/SanFrancisco Chronicle, 4/28).

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