Humana Inc. reports lower 4Q earnings

[February 02, 2009]  LOUISVILLE, Ky. (AP) -- Health insurer Humana Inc. reported a 28 percent drop in fourth-quarter profit Monday, driven by higher claim expenses from its stand-alone Medicare prescription drug plans and a triple-digit plunge in earnings from its commercial business.

The company predicted a big turnaround in the next year, forecasting earnings per share in the range of $5.90 to $6.10, compared with earnings per share of $3.83 for the year just ended.

Humana earned nearly $174.1 million, or $1.03 per share, for the three months ended last Dec. 31, compared with earnings of $243.2 million, or $1.43 per share, in the year-ago period. The results came in below the consensus forecast by analysts surveyed by Thomson Financial.

Revenue rose 18 percent to nearly $7.5 billion from $6.3 billion a year ago.

For the full year, the company's net income was $647.2 million, down 22 percent from $833.7 million the previous year.

Humana's pretax income in its vast government segment dropped 12 percent to $267.3 million in the just-ended quarter, compared with $304.6 million a year ago. The decline was driven by previously announced lower operating results from its Medicare prescription drug plans and lower net investment income.

Humana said its Medicare Advantage membership grew to 1.4 million as of Dec. 31, up 26 percent, or 292,900 members, from the end of 2007. The Medicare Advantage plans offer comprehensive health coverage.

Membership in Humana's stand-alone prescription drug plans totaled nearly 3.07 million at the end of 2008, compared with 3.4 million members a year earlier.

Meanwhile, pretax earnings for Humana's commercial segment dropped 112 percent to a loss of $6.3 million in the quarter, compared with a profit of $54.4 million a year ago. The company said the decline was driven mainly by the impact of growth in high-deductible health plan membership along with a 37 percent decrease in net investment income.

[Associated Press; By BRUCE SCHREINER]

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