Humana 4Q Profit Up on Gov't Segment Gain

Monday, February 6th 2006, 10:03 am
By: News On 6

LOUISVILLE, Ky. (AP) _ Health benefits provider Humana Inc. said Monday its fourth-quarter profit grew 34 percent on gains in its commercial and government segments, including rising enrollments in its Medicare offerings.

The company reported net income of $64.6 million, or 39 cents per share, for the three months ended Dec. 31, up from $47.1 million, or 29 cents a share, for the year-ago period.

Revenues totaled nearly $3.7 billion for the period, up from $3.2 billion a year ago.

``Humana achieved record levels of revenues, net income and membership in 2005, as our Medicare business grew significantly and our commercial profits improved,'' said Michael B. McCallister, Humana's president and chief executive officer.

Analysts polled by Thomson Financial projected earnings of 45 cents per share for the period. Excluding a 7-cent-per-share charge related to Hurricane Katrina, Humana would have beaten Wall Street expectations by a penny a share for the quarter.

For the year, the Louisville-based company reported profits of nearly $308.5 million, or $1.87 per share, compared to $280 million, or $1.72 a share, the previous year. Excluding hurricane-related and other one-time adjustments, Humana earned $2.10 per share for the year.

Revenues for the year rose 10 percent to $14.4 billion, compared to $13.1 billion a year earlier.

Humana's government segment posted pretax earnings of $57.4 million for the quarter, compared to $35.9 million in the year-ago period. The upswing was due to higher Medicare membership and improved earnings by Humana's TRICARE business, which provides health insurance for military families and retirees.

The company said its Medicare Advantage membership rose to 557,800 as of Dec. 31, 2005, an increase of 180,600, or 48 percent, from a year ago and up 54,700, or 11 percent, from the end of September 2005 as Humana stepped up marketing of its Medicare programs.

Medicare Advantage premiums of $1.22 billion in the fourth quarter were up 54 percent from a year ago, due to the higher enrollment and per-member increases in premiums.

TRICARE membership totaled nearly 2.9 million at year's end, essentially unchanged from Sept. 30 of last year. Humana said it anticipates little change in TRICARE membership this year.

Premiums and administrative service fees for TRICARE totaled $585.3 million for the fourth quarter, compared to $486.9 million in the same period a year ago.

Humana's commercial segment posted pretax income of $41.8 million in the fourth quarter, up sharply from $27.3 million in the year-ago period.

Commercial medical membership totaled nearly 3.2 million at year's end, down about 4 percent, or 134,300, from a year earlier, due mainly to a drop in fully insured accounts.

Premiums and administrative service fees for the commercial sector dropped 5 percent to $1.67 billion in the fourth quarter, compared to $1.77 billion a year earlier.

Humana has about 9 million medical members.