Share in the misery due to tough times...yeah, right...gotta protect that bottom line...at the elderly's expense! They AREN'T jesting!!
What's YOUR 2009 "profit forecast?" Here's Humana's............
Humana Inc., the second-biggest provider of U.S.-funded health insurance, beat analysts’ estimates for fourth-quarter revenue and said higher prices for elderly customers will help it meet its 2009 profit forecast. (Surely they jest-John)
Advantage Enrollment
The company’s [Medicare] Advantage enrollment this year has begun shifting away from plans that allow customers to use any doctor or hospital. The share of customers choosing 2009 plans requiring them to use doctors and hospitals that have contracts with Humana rose to 59 percent from 51 percent last month, the company said.
The unrestricted plans will lose Medicare funding in rural areas in 2011 because of action by Congress last year. The plans with provider networks are “more stable and politically safe,” said Matt Perry, an analyst with Wachovia Securities in New York, in a note to clients today.
By Avram Goldstein
Feb. 2 (Bloomberg) -- Humana Inc., the second-biggest provider of U.S.-funded health insurance, beat analysts’ estimates for fourth-quarter revenue and said higher prices for elderly customers will help it meet its 2009 profit forecast.
Revenue climbed 18 percent from a year earlier to $7.49 billion because of higher enrollment in health plans, the Louisville, Kentucky-based company said today in a statement. That compares with an average $7.35 billion in a Bloomberg survey of a dozen analysts.
Humana said it expects to earn $5.90 to $6.10 a share this year, helped by a 64 percent increase in average premiums for its biggest U.S. Medicare-backed drug plans for the elderly. In 2008, drug plans derailed Humana’s profit goals because a larger number of sicker people joined the plans and generated higher-than- anticipated claims. The company raised premiums, a move that Humana says may drive away 1.2 million expensive customers.
“They’re better off being very careful in their pricing, even if it means giving up some enrollment,” said Ana Gupte, an analyst with Sanford C. Bernstein & Co. in New York, in a telephone interview today. Medicare drug plans have “fairly tight margins.”
Humana jumped $1.89, or 4.9 percent, to $39.82 at 10:25 a.m. in New York Stock Exchange composite trading. The shares sank 54 percent in the 12 months before today.
At year-end, Humana covered 3.1 million customers in Medicare drug plans. Membership will plunge to fewer than 2 million in 2009, according to the statement.
Investment Income
The drug plans and lower investment proceeds dragged net income down 28 percent in the fourth quarter, to $174.1 million, or $1.03 a share. Earnings missed by 3 cents a share the average estimate of analysts surveyed by Bloomberg. Earnings for the year were $3.83 a share.
The company reported a 23 percent decline in investment income for the fourth quarter to $66.2 million.
The insurer is second to UnitedHealth Group Inc., the largest U.S. health insurer, in Medicare-subsidized plans for the elderly.
Humana covered 1.4 million people in plans known as Medicare Advantage, which provide drug coverage and extras not offered by traditional Medicare. That figure will increase by as much as 75,000 this year, after Humana raised prices on most of its Advantage plans, compared with 292,000 new customers last year, the company said.
Advantage Enrollment
The company’s Advantage enrollment this year has begun shifting away from plans that allow customers to use any doctor or hospital. The share of customers choosing 2009 plans requiring them to use doctors and hospitals that have contracts with Humana rose to 59 percent from 51 percent last month, the company said.
The unrestricted plans will lose Medicare funding in rural areas in 2011 because of action by Congress last year. The plans with provider networks are “more stable and politically safe,” said Matt Perry, an analyst with Wachovia Securities in New York, in a note to clients today.
“These results show that Humana’s strategy is working and are a positive sign for the long-term viability of Humana’s Medicare Advantage business,” said Perry.
The insurer also provides coverage through Medicaid, the state-federal program for the poor, and Tricare, for military personnel, families and retirees.
Drug Costs
Humana spent 83.3 percent of premium revenue from all plans on medical care in the fourth quarter, compared with 80.3 percent a year earlier, because of the drug costs, the company said.
Many of those unanticipated costs were in plans that offered zero premiums and out-of-pocket costs known as co-payments, said Sheryl Skolnick, an analyst at CRT Capital Group in Stamford, Connecticut.
“Seniors understand free,” she said in a Jan. 8 telephone interview. “All you have to do is say ‘free,’ and everyone lines up. Zero co-pays are an invitation to high utilization.”
In fourth-quarter earnings reported in the past 11 days, UnitedHealth’s net income declined 40 percent from a year earlier and WellPoint Inc.’s fell 61 percent. Philadelphia-based Cigna Corp. is scheduled to announce earnings this week, and Aetna Inc., of Hartford, Connecticut, plans to release them next week.
To contact the reporter on this story: Avram Goldstein in Washington at agoldstein1@bloomberg.net
posted by Kathie Bracy at 9:46 PM
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