Health benefits provider Humana reported sharply higher first-quarter profits, driven partly by an earnings upswing in its government business as Medicare enrollment surged. The company also raised its earnings projection for the year.
Humana, Louisville, Ky., posted a 62% increase in net income to nearly $109.8 million, or 67 cents per share, for the quarter ended March 31, compared with $67.8 million, or 41 cents a share, in the year-ago period. The latest results included a tax benefit of 14 cents per share. Revenue for the quarter rose 3% to $3.39 billion.
The company's Medicare membership increased by 72,700 members to reach 449,900 as of March 31, up 19% over the year-end total in 2004. The first-quarter figure included 50,400 members gained through Humana's acquisition of CarePlus Health Plans of Florida in February.
The higher earnings also reflected Humana's continued efforts to shift its commercial product mix toward self-funded, individual and consumer-choice plans, said Michael McCallister, Humana's president and chief executive officer. He said Humana is positioned to achieve "substantial earnings growth" in 2005 and beyond.
The company raised its earnings-per-share projection for the year to between $2.23 and $2.25, up from the previous estimate of about $2.20 per share.
Humana reported first-quarter pretax earnings of $72.2 million from its government segment -- which covers Medicare, Medicaid and military-related members -- up 13% from a year ago.
The company attributed the growth to an improved Medicare medical-expense ratio as well as the growth in its Medicare membership.
Humana predicted continued growth in its Medicare Advantage membership, and projected membership of 480,000 to 500,000 by year-end. In the first quarter, Medicare Advantage premiums per member increased by 10% to 12% over the year-ago period.
Humana has about 7 million medical members, mainly in 15 states and Puerto Rico.