Humana beats on Medicare Advantage plans, raises outlook

Health insurer Humana (HUM) today reported its second-quarter earnings that surpassed analysts’ forecast, mainly due to surge in enrollment in the company’s Medicare Advantage plans. Along with the Q2 earnings release, the company also raised its profit outlook for the full-year.

The Louisville, Kentucky-based company lowered the 2018 GAAP EPS guidance to approx $11.52 from the previous range of $13.54 to $13.94. On the other hand, adjusted EPS guidance was raised from the previous guidance of $13.70 to approx $14.15.

During Q2, the company’s earnings fell to $19 million, or $1.39 a share, compared with $1.04 billion, or $4.46 a share, in the same period a year ago. Much of this decline was due to a pretax loss of approx $790 million linked with the pending sale of its wholly-owned subsidiary, KMG America Corporation (KMG).

The company, which is known to have the second largest Medicare presence, has consistently topped consensus estimate over the last four quarters.

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Excluding items, the company earned $3.96 a share in Q2, that topped consensus estimate of $3.77 a share.  Revenue during the quarter, rose 5.4% to $14.26 billion, higher than $14.11 billion analysts predicted.

Ever since drugstore chain CVS Health (CVS) acquired pharmacy benefits manager (PBM) Aetna (AET), there has been a major transformation in the healthcare business. Early this year, rumors were rife that Walmart (WMT) wants to deepen its existing partnership with Humana, and from the start has always considered an outright merger. If this deal goes through, it would create another major player in the PMB segment.

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Shares of the company rose 27% since the beginning of the year. In the last 12 months,  the stock has climbed 36%. The stock closed at $314.18 on July 31.