Humana Inc. this morning released financial results for its third quarter that showed net profits up more than 13 percent compared to its third quarter 2010 results.
For the quarter ending Sept. 30, 2011, Human posted diluted earnings per common share of $2.67, compared to $2.32 per share in the third quarter last year. The performance easily bested stock analysts estimates of $2.02 per share for 3Q earnings. In total, the company registered a diluted earnings of $448.8 million on revenue of more than $9.3 billion.
According to a company press release announcing the financial results, the strong performance was attributable to continued robust member growth in its core Medicare business, as well as lower-than-forecast benefits expenses, as the economic downturn has resulted in fewer people seeking medical care.
In all, the company noted that it has grown its Medicare business by more than 1.6 million members in the past year, both through internal growth and acquisitions.
[See also: Humana to acquire Arcadian Management Services; Humana to acquire Medicare Advantage HMO MD Care]
"Our favorable results in the third quarter and year to date reflect strong operating performance across multiple businesses," said Michael B. McCallister, Humana's chairman of the board and CEO, in the earnings release. "In Medicare, our clear focus on strong financial protection and higher quality coordinated healthcare for seniors represents a powerful value proposition, and continues to drive membership growth, now nearly 4.5 million people."
As a result of the strong results, Humana raised its full-year 2011 guidance for earnings per share (EPS) to $8.35 to $8.40, which is more than $3.00 higher than its 2011 estimates made a year ago of $5.35 to $5.55 per share and higher than its latest estimates released a couple of months ago of $7.50 to $7.60 EPS for the year.
It also gave a preliminary 2012 earnings estimate of $7.40 to $7.60 per share, well below analysts' consensus forecasts of $7.70 per share.
Stock analysts note that Humana and other insurers have recently given low-ball earnings estimates that provide plenty of wiggle room to allow them to either meet forecast or revise them upward, as medical utilization and member growth come into better focus.
"HUM reported another strong quarter, beating the consensus EPS estimate by 32 precent and raising its 2011 EPS guidance," noted Jason Gurda a healthcare investment analyst with New York-based Leerink Swan. "Initial 2012 EPS guidance came in below the consensus; however, HUM's guidance has been substantially below what the company has actually earned in recent years, and we doubt Street estimates will move lower."