Thursday, February 11, 2016
Health insurer Humana Inc (HUM.N), which is being bought by rival Aetna Inc (AET.N), on Wednesday said that it had set aside 74 cents per share in the fourth quarter to cover anticipated shortfalls in its 2016 individual health plan business.
Humana had said last month that it would book anticipated losses on the money-losing business but had not given details on the amount. Wall Street analysts had estimated last month that the set aside would be about 70 cents per share.
It made the disclosure as part of its quarterly earnings report.
Humana also said that it continues to evaluate its participation in the individual commercial business for 2017.
Other insurers including UnitedHealth Group (UNH.N) are considering the extent of their individual business in 2017 and have also taken losses, saying that some members are costing more than they expected.
Humana said that many of its high cost members from 2015 had renewed their 2016 plans through Obamacare, a new type of individual insurance created under President Barack Obama's national healthcare reform law.
The company said it had 899,100 individual customers at the end of 2015 and expects that number to decline 200,000 to 300,000 people in 2016.
In addition to Obamacare plans, Humana also has individual customers in plans that do not comply with the Affordable Care Act but that were grandfathered through this year.
Humana said that it had set aside a total reserve of $176 million in the fourth quarter, saying it set premium prices too low for the medical services use.
Humana, whose business is primarily managing Medicare Advantage health plans for the elderly and disabled and also runs individual plans under Obamacare, said it expects growth in both earnings per share and revenue in 2017.
Humana said it continues to expect its deal to be bought by Aetna to close by the end of the year.
The company said it expects adjusted earnings of at least $8.85 in 2016, well above the average analysts' estimate of $8.73 per share, according to Thomson Reuters I/B/E/S.
The company's net income fell to $101 million, or 67 cents per share, for the fourth quarter ended Dec. 31, from $145 million, or 94 cents per share, a year earlier.
On an adjusted basis, Humana earned $1.45 per share, beating the average analysts' estimate of $1.44 per share.
Total revenue rose 8.4 percent to $13.36 billion, missing average analysts' estimate of $13.51 billion.
Source : reuters.com
