Insurer Humana tops 3Q profit forecasts, reaffirms outlook
LOUISVILLE, Ky. (AP) — Humana’s third-quarter net income climbed 8 percent Friday, beating expectations, as the health insurer continued work to clean up its income statement ahead of its acquisition by larger rival Aetna.
Louisville, Kentucky-based Humana is the nation’s second-largest provider of Medicare Advantage plans, which are privately run versions of the federal government’s coverage program for people who are over 65 or disabled.
The insurer has struggled with setting prices for that business this year. Humana also has struggled with individual insurance business it receives from the health care overhaul’s public insurance exchanges, and it said Friday it has taken several actions to improve its profitability next year.
Aetna Inc. said last summer that it would spend roughly $35 billion to buy Humana in part to grow its presence in Medicare Advantage, a fast-growing segment of the market. Stockholders of both companies have approved the deal, but regulators are still reviewing it. The companies expect to complete the deal in the second half of next year.
In the third quarter, Humana earned $314 million. That compares to $290 million in last year’s quarter, when the higher costs for specialty prescription drugs and investments in health care exchanges affected its performance.
Earnings adjusted for non-recurring costs came to $2.16 per share.
The average estimate of 13 analysts surveyed by Zacks Investment Research was for earnings of $2.13 per share.
Total revenue also climbed 9 percent to $13.36 billion. That fell short of the average analyst forecast for $13.55 billion.
Humana Inc. also reaffirmed its forecast for full-year earnings of $7.75 per share.
That’s a penny below average analyst expectations, according to FactSet.
Humana shares rose 46 cents to $179.51 in light premarket trading Friday more than two hours ahead of the market open. The stock has risen 25 percent since the beginning of the year, while the Standard & Poor’s 500 index has climbed 2 percent.
Elements of this story was generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on HUM at http://www.zacks.com/ap/HUM
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