Humana Inc. (HUM) topped analysts’ expectations on revenue and earnings for the fourth quarter of 2018. Shares inched up slightly by 0.85% in premarket hours on Wednesday.
On a GAAP basis, total revenues grew 7% year-over-year to $14.1 billion. On an adjusted basis, revenue growth was 9.3%.
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.
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.
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.