Humana (NYSE:HUM) revealed a 21% drop in first-quarter profit on Monday that fell short of Wall Street's expectations, however the health insurer raised its fiscal 2012 earnings guidance.
The results follow similarly weaker-than-expected results from rivals Aetna (NYSE:AET) and Coventry Health Care (NYSE:CVH). WellPoint (NYSE:WLP) and UnitedHealth (NYSE:UNH) both topped the Street.
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Hurt by higher benefit costs, the Louisville, Ky. health insurer reported net income of $248 million, or $1.49 a share, compared with a year-earlier $315 million, or $1.85 a share.
While the company attributed a large chunk of its year-earlier gains to claim reserves, as fewer people visited the doctor than had been expected, it only saw a moderate bump from recognizing those gains in the latest quarter.
The results were short of average analyst estimates of $1.49 a share in a Thomson Reuters poll, but Humana said they topped the company’s own expectations in the range of $1.35 to $1.45.
The company lifted its earnings guidance for the year ending Dec. 31 to a range of $7.55 to $7.75, from an earlier view between $7.50 and $7.70, citing favorable prior-period claims development. Analysts are looking for a higher full-year profit of $7.99.
Humana, one of the largest providers of Medicare products, said revenue grew 11% to $10.22 billion from $9.19 billion a year ago, with total premiums and services revenue up during the quarter and continued membership growth in Medicare Advantage plans.
Individual Medicare Advantage membership was more than 1.88 million as of the end of March 31, an increase of 15%, or 243,500, from a year ago. Membership in the company’s stand-alone prescription drug plans grew 13% to more than 2.86 million.
"Our compelling senior value proposition and favorable demographics have made Humana one of the fastest growing Medicare Advantage and PDP companies in the nation," Humana CEO Michael McCallister said in a statement.