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Humana Sees Rising Revenues in Q1

News  |  By Jack O'Brien  
   May 02, 2018

The strength of the insurer's retail and specialty sectors, along with its Medicare Advantage populations, helped bolster its financial performance.  

Humana Inc. released its first-quarter earnings report Wednesday, showing consolidated GAAP revenues of $14.3 billion, up 4% from $13.8 billion in the first quarter of 2017.

Humana attributed the revenue growth to the strength of its retail division as well as the Medicare Advantage business. The insurer's consolidated GAAP pretax income totalled $707 million, down from $1.7 billion year-over-year, though that can mainly be attributed to the terminated merger agreement with Aetna, for which Humana had to pay a break-up fee.

"We're pleased that we continue to consistently deliver strong financial results, while advancing our health and consumer‐focused strategy," Bruce Broussard, CEO of Humana, said in a statement. "It really comes down to the consistency of our operating model, which has enabled us to perform well in all parts of our business."

Humana's earnings report was released amid speculation about its future, namely the potential merger with Walmart.

Related: Walmart-Humana 'Signifies the Beginning of the Avalanche' in Healthcare

Below are highlights from Humana's first-quarter earnings report:

  • Adjusted earnings per diluted share of $3.36; GAAP earnings per diluted share of $3.53.

  • Raised full year 2018 adjusted earnings per share guidance rose from $13.70 to $14.10; GAAP earnings per share guidance rose from $13.54 to $13.94.

  • GAAP earnings per share guidance affected by share repurchases last year and lower tax rate as a result of the tax reform law.

  • Brian Kane, CFO of Humana, said its medical utilization was "better than initially expected," leading to a productive start to the year from its retail, group, and specialty sectors.

  • GAAP consolidated benefits ratio held steady at 84.5%.

  • Humana had $21 billion in cash, cash equivalents, and investment securities, up 28% from the start of the quarter.

  • This reflects Medicare premium remittance of $3.34 billion in March and $1.45 billion in net receipts from CMS associated with Part D claim subsidies.

  • GAAP operating cost ratio rose slightly to 12.4% in Q1 compared to 11.4% this time last year.

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

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