GAAP pretax income dropped 11% to $436 million while adjusted pretax income declined 16.6% to $480 million from last year. GAAP EPS improved to $2.58 from $1.29 last year while adjusted EPS rose 28% to $2.65.
The quarterly earnings results were driven by lower inpatient medical utilization, partially offset by higher outpatient spending in the Retail segment. EPS results benefited from a lower tax rate and a lower number of shares, reflecting share repurchases. Strong Medicare Advantage membership growth and operating efficiencies from productivity initiatives had a favorable impact on the results for the quarter.
The benefits expense ratio, both on a GAAP and adjusted basis, totaled 83.4% during the quarter. Operating cost ratio was 15%, both on a GAAP and adjusted basis.
In the Retail segment, revenues grew 10% to $12 billion and the benefits expense ratio totaled 84%. In Group and Specialty, revenues rose 5% to $1.9 billion while the benefits expense ratio was 84.6%. In Healthcare Services, revenues inched up by 1.6% to $6.1 billion.
Earnings preview: Medicare Advantage to drive Humana’s Q4 growth
For the full year of 2019, Humana expects GAAP EPS to come in a range of $16.60 to $17.10. Adjusted EPS is expected to be $17.00 to $17.50, reflecting a growth of 17-20% from 2018.
Also see: Humana Q4 2018 Earnings Conference Call Transcript
The company reaffirmed its outlook for individual Medicare Advantage membership growth in the range of 375,000 to 400,000 members for the full year of 2019, reflecting a 12-13% growth.
The company increased its cash dividend by 10% to $0.55 per share from the previous dividend of $0.50 per share.