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Analysis

Q4 and FY 2018 Revenues Inch Up for Humana

By Jack O'Brien  
   February 06, 2019

Even without a Walgreens deal in the works, the Louisville-based insurer raised its earnings per share guidance for 2019.

Total revenues increased for Humana Inc. during both Q4 2018 and the year as a whole, even though its pretax income slid compared to similar metrics from 2017, according to its latest earnings report released Wednesday morning.

Humana reported $436 million in GAAP pretax income, down from $490 million in Q4 2017 and less than half of the $901 million recorded in Q3 2018. Total GAAP revenues for Q4 registered at $14.2 billion, a year-over-year increase of $1 billion, while revenues for fiscal year 2018 grew by more than $3 billion to approximately $57 billion. 

The company finished 2018 with an earnings per diluted share (EPS) of $12.16 per share and accordingly raised its 2019 guidance to a range of $16.60 to $17.10 per share on a GAAP basias. 

The Louisville-based insurer year-end financials show the company is in a stable position to start 2019, despite the lack of a much-speculated deal with Walgreens Boots Alliance.

Related: Humana Leaders Forecast for 2019: No Walgreens Deal, Profits Up

One of the most reliable factors fueling Humana's growth continues to be its Medicare Advantage membership, which CFO Brian Kane cited as one of the factors contributing to the insurer projecting adjusted EPS growth between 17% to 20% for 2019.

C-SUITE PERSPECTIVE: 

"We're pleased with the consistency of and ongoing improvement in our performance, which can be attributed to our focus on optimizing our core operations" Bruce Broussard, CEO of Humana, said in a statement. "The investments we made in 2018 to improve consumer experience, clinical programs and external broker relationships all contributed to our ability to exceed average industry growth in Medicare Advantage (MA) for 2019, with full membership growth estimated between 375,000-400,000 members. Also, both the 2019 improved MA rates and moratorium on the health insurance industry fee (HIF) allowed us to deliver improvements to our members through better benefits and lower premiums."

Related: Positive MA Growth in Q3 Leads Humana to Boost Year-End Guidance

Humana also issued a cash dividend of $0.50 per share payable to its shareholders late last month.

ADDITIONAL HUMANA Q4 EARNINGS REPORT HIGHLIGHTS:

  • Retail segment revenues grew by more than $1 billion in Q4 2018 compared to Q4 2017.
  • Humana reported a negative operating cash flows of $333 million on a GAAP basis, significantly less than the negative $2.9 billion cash flows in Q4 2017.
  • The insurer's expects its Medicare Advantage membership to grow by between 375,000 and 400,000 members in 2019.

Related: Tenet, Humana Renew Multiyear Contract

For complete financial information, review Humana's filing with the Securities and Exchange Commission.

Jack O'Brien is the finance editor at HealthLeaders. 


KEY TAKEAWAYS

Year-over-year, total revenues rose in Q4 2018 while pretax income declined.

CEO Bruce Broussard said he is pleased with the insurer's "consistency" and "ongoing improvement" in performance.

Medicare Advantage membership growth continues to buoy the company's financials.  


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