Humana posts 4Q profit, results miss Wall Street forecasts


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LOUISVILLE, Kentucky — Humana Inc. on Wednesday reported a big turnaround in fourth-quarter net income following a loss a year ago, as the health insurer posted revenue gains from continued membership growth in its key Medicare business.

Looking ahead, the company reaffirmed its earnings-per-share estimate for 2015 in the range of $8.50 to $9, with projected revenue in the range of $54.5 billion to $55 billion. Humana predicted continued strong growth in its Medicare offerings, improvement in its health care services businesses and reduced investment spending in state-based contracts for the full year.

For all of 2014, Humana earned net income of nearly $1.15 billion, or $7.36 per share, compared to $1.2 billion, or $7.73 per share, in prior year.

"This past year was particularly dynamic considering Medicare rate reductions, increased income taxes, the launch of health care exchanges and our entry into state-based contracts," said Humana President and CEO Bruce D. Broussard.

Humana's results for the quarter ending on Dec. 31, 2014, fell short of Wall Street expectations.

Individual Medicare Advantage membership — a key segment of Humana's business — reached nearly 2.45 million by the end of 2014, up 18.2 percent from the year-ago figure. The latest number included 18,300 dual-eligible members from state-based contracts.

By last month, its individual Medicare Advantage membership had grown to about 2.7 million, up 10.5 percent from the end of 2014, the company said. The growth reflected net membership additions during the sign up period for Medicare recipients.

The Louisville, Kentucky-based company is among the nation's largest providers of Medicare Advantage plans, which are privately run versions of the government's Medicare programs for elderly and disabled people.

Membership in Humana's individual stand-alone Medicare prescription drug plans totaled nearly 4 million as of Dec. 31, 2014, up 21.9 percent from a year ago. Humana promotes its Medicare prescription drug offerings and other plans at Wal-Mart stores.

Overall, Humana reported fourth-quarter net income of $145 million, after reporting a $30 million loss in the same period a year earlier. On a per-share basis, the company said it earned 94 cents in the just-ended quarter, compared to a 19-cent-per-share loss a year ago. Earnings, adjusted to extinguish debt, were $1.09 per share.

The average estimate of analysts surveyed by Zacks Investment Research was for earnings of $1.16 per share.

The health insurer posted revenue of $12.33 billion in the period, up 21 percent from a year ago but short of Wall Street forecasts. Analysts expected $12.4 billion, according to Zacks.

Humana shares closed Wednesday at $150.54, up $1.96. The stock has increased 4.8 percent since the beginning of the year, while the Standard & Poor's 500 index has stayed nearly flat. The stock has climbed 54 percent in the last 12 months.


Elements of this story were generated by Automated Insights ( ) using data from Zacks Investment Research. Access a Zacks stock report on HUM at


Keywords: Humana, Earnings Report

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