Health insurer Humana posts 4th-qtr profit gain
LOUISVILLE, Ky. — Humana Inc. said Monday its fourth-quarter profit surged 86 percent on the strength of higher-than-expected Medicare Advantage enrollment and continued low use of its health care services.
The health insurer also raised its earnings expectations for the year to a range of $7.50 to $7.70 per share, up from its prior forecast of between $7.40 and $7.60. The Louisville-based company typically starts with conservative earnings forecasts.
Humana continued to benefit from rising membership in its crucial Medicare Advantage business.
Individual Medicare Advantage membership stood at 1.64 million at the end of 2011, up 12 percent from a year ago, following a successful enrollment season in the fall.
By January of this year, enrollment had risen again to about 1.81 million, reflecting the higher-than-expected membership additions.
Humana ranks as one of the largest providers of Medicare Advantage plans, privately run programs offering comprehensive health coverage for seniors. Subsidized by the government, the plans offer basic Medicare coverage topped with extras like vision or dental coverage. Medicare accounts for well over half of Humana's revenue.
For the three months ended Dec. 31, Humana earned $199 million, or $1.20 per share. That compares with $107 million, or 63 cents per share, last year. Revenue was up 9.4 percent to nearly $9.1 billion.
Analysts predicted, on average, earnings per share of $1.20 on revenue of $9.26 billion.
Membership in Humana's individual stand-alone Medicare prescription drug plans stood at 2.54 million at year's end, up 52 percent from a year ago. The company has benefited from teaming with retail giant Wal-Mart Stores Inc. to offer a Medicare prescription drug plan.
The Medicare enrollment gains were reflected in an upswing in pretax income in Humana's crucial retail segment. Pretax income totaled $326 million in the fourth quarter, compared to $250 million a year ago. The gain also reflected lower use of health care.
Meanwhile, Humana reported a $51 million pretax loss in its employer group segment for the quarter, compared with pretax income of $29 million a year ago. The decline was due mainly to higher operation costs and health care use.
Group Medicare Advantage membership reached 318,200 at year's end, up 6 percent from a year ago.
The company's health and well-being services segment posted pretax income of $85 million, up 93 percent from a year ago. The segment reflects Humana's decision to branch out into health care delivery in part with its acquisition of Concentra Inc., which provides occupational medicine, urgent care, physical therapy and wellness services at several hundred medical centers.
"For 2012, we see further growth opportunities in Medicare and, more broadly, in our continuing expansion into adjacencies related to lifelong well-being," said Michael B. McCallister, Humana's board chairman and CEO.