DOW JONES NEWSWIRES
Humana Inc.'s (HUM) second-quarter earnings rose 34% as revenue
rose despite falling enrollment on strong gains at its Medicare
Advantage business, where profit surged 62%.
Health insurers profits remain under pressure from rising
medical costs and falling enrollments, while companies expect
payments from their government plans to fall. The industry has been
trying to discourage Washington from establishing competing plans
as the health-care debate continues.
Humana was among three companies poised to lose Tricare federal
contracts to provide health coverage to U.S. military personnel in
11 southern states. Loss of the multibillion-dollar contracts next
year is likely to result in substantial drops in revenue and
profits as membership is likely to drop by 3 million. Humana does a
substantial amount of business within government programs and has
one of the industry's biggest Medicare efforts, making it more
vulnerable to next year's lower government payments.
The company reported a profit of $281.8 million, or $1.67 a
share, up from $209.9 million, or $1.24 a share, a year earlier.
The company in April projected $1.65 to $1.70, above analysts'
estimates at the time.
Revenue increased 7.5% to $7.9 billion. Analysts polled by
Thomson Reuters most recently were looking for $7.77 billion.
Humana's benefits ratio - the percentage of premium revenue used
to pay medical bills - declined to 83.3% from 85% a year earlier.
The company's total medical membership fell 10% to 10.3 million,
but was flat from the prior quarter.
At its smaller commercial business, pretax profit slumped 53%,
in part on lower investment income.
For the third quarter, the company expects earnings of $1.75 to
$1.80, while analysts were looking for $1.78. The company affirmed
its 2009 earnings outlooks.
Shares closed at $32.85 on Friday and didn't trade premarket.
The stock has lost about a quarter of its value in the past year,
though it has advanced nearly 80% from a March low.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;