UPDATE: Humana Posts Lower Q3 Profit

Humana HUM reported weaker-than-expected earnings for the third quarter. The Louisville, Kentucky-based company posted quarterly earnings of $290 million, or $1.85 per share, compared to $368 million, or $2.31 per share, in the year-ago period. Its revenue climbed 19% to $12.24 billion, while premiums surged 20%. However, analysts were projecting earnings of $2 per share on revenue of $12.35 billion. Benefits costs increased 20% to $9.67 billion, while overall operating expenses jumped 20% to $11.65 billion. At the end of the third quarter, Humana had 13.8 million enrollees in its medical plans, up 11% versus the year-ago quarter. Medicare Advantage membership rolls rose 18% y/y to 2.4 million members in the quarter. Humana projects FY15 earnings of $8.50 to $9 per share, versus analysts' estimates of $8.83 per share. It expects sales of $53.50 billion to $54.50B billion, versus estimates of $53.66 billion. The company also projects 2015 individual Medicare Advantage membership to increase by 235,000 to 255,000. The company now projects FY14 earnings of $7.40 to $7.60 per share, versus earlier forecast of $7.25 to $7.75 per share. Bruce D. Broussard, President and Chief Executive Officer of Humana said, “As we look to 2015, we anticipate an increasingly meaningful enterprise-wide benefit of higher membership. We expect the strong value proposition we provide our members, such as high Star quality ratings, relatively flat premiums and benefits and stable provider networks, will position us well for further membership growth and increasing return on capital.” Humana shares rose 0.67% to close at $139.87 yesterday.