Humana third-quarter profit falls on investments, drug costs

[November 07, 2014]  (Reuters) - U.S. health insurer Humana Inc on Friday reported a lower third-quarter profit that missed Wall Street estimates as it paid for costly hepatitis C treatments and invested in the Obamacare health insurance exchanges and state-based health contracts.

For 2015, the company said earnings would rise as it spends less on those state-based health contracts and its large Medicare business benefits from a new government ratings system that should offset planned cuts to payments in the program for the elderly and disabled.

Humana also said relatively flat premiums and stable networks next year should help increase its membership and improve its return on capital. It has added 1.8 million new customers in 2014, including 580,000 in individual plans and about 200,000 in the government's Medicaid program for the poor.
 

Humana said it expected 2015 earnings of $8.50 to $9.00 a share. It also lowered the top end of its 2014 outlook to a range of $7.40 to $7.60.

Analysts were expecting earnings of $8.83 per share for 2015 and $7.75 for 2014, according to Thomson Reuters I/B/E/S.

The company reported net income of $290 million, or $1.85 per share, compared with $368 million, or $2.31 per share, a year earlier. Analysts had expected $2.00 per share.

Humana said that medical utilization had decreased during the quarter due to its health management programs. Investors have been closely watching insurers and hospitals for signs that medical use is increasing doing to an economic rebound.

(Reporting by Caroline Humer; Editing by Lisa Von Ahn)

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