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.
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.
Get access to timely and accurate verbatim transcripts that are published within hours of the event.
Most Popular
IPO Alert: What to look for when Boundless Bio goes public
Boundless Bio is preparing to debut on the Nasdaq stock market this week, and become the latest addition to the list of biotech firms that have launched IPOs this year.
Nike (NKE) bets on innovation and partnerships to return to high growth
Sneaker giant Nike, Inc. (NYSE: NKE) has been going through a rough patch for some time, with sales coming under pressure from weak demand and rising competition. Post-pandemic, the company
Walgreens Boots Alliance set to report earnings next week. Here’s what to expect
Walgreens Boots Alliance, Inc. (NASDAQ: WBA), the drug store chain that is expanding into a diversified healthcare provider, is on a restructuring drive aimed at better aligning the business with