Humana 4Q profit climbs, partly on lower expenses

[February 01, 2010]  LOUISVILLE, Ky. (AP) -- Humana Inc. said Monday that its fourth-quarter profit rose as expenses related to prescription drug plans declined.

The health insurer also lifted its full-year earnings outlook, but the guidance fell short of analysts' expectations.

Humana earned $250.7 million, or $1.48 per share, for the period ended Dec. 31, meeting the forecasts of analysts surveyed by Thomson Reuters. These estimates usually remove one-time items.

The results were 44 percent higher than the company's profit of $174.1 million, or $1.03 per share, a year earlier.

Revenue grew 2 percent to $7.63 billion from $7.49 billion, partly on higher revenue from premiums and administrative services fees. But the performance missed Wall Street's view of $7.78 billion.

Humana said its higher premiums and fees were mostly due to an increase in average Medicare Advantage membership and per-member premiums, which were somewhat offset by lower average commercial medical membership. Medicare Advantage premiums increased 12 percent to $4.07 billion.

Medicare Advantage membership climbed to about 1.5 million at quarter's end, which was 72,600 more members than the prior-year period.

Medicare Advantage plans are government-sponsored, privately run programs for seniors that offer comprehensive health coverage.

The Medicare Advantage program has been one of Humana's strong points, helping to offset its softer commercial business. In November Humana President and CEO Michael B. McCallister predicted more membership gains in Medicare Advantage offerings in 2010 -- in the range of about 180,000 to 240,000.

Full-year earnings surged to $1.04 billion, or $6.15 per share, from $647.2 million, or $3.83 per share, in 2008.

Annual revenue increased 7 percent to $31 billion from $28.95 billion.

Humana, based in Louisville, Ky., now anticipates 2010 earnings of $5.15 to $5.35 per share, up from a previous range of $5.05 to $5.25 per share. The health insurer said its improved guidance was due mostly to its belief that it will still have its South region Tricare contract for another quarter.

Analysts expect a higher profit of $5.40 per share for the year.

Humana has about 10.3 million medical members and approximately 7.2 million specialty-benefit members.

[Associated Press]

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