Humana Inc. (NYSE: HUM): Q1 Earnings Preview 2011

Humana Inc. (NYSE: HUM) is scheduled to release its first-quarter earnings before the opening bell on Monday, May 2, 2011.  Analysts, on average, expect the company to report earnings of $1.36 a share on revenue of $9.14 billion. In the year ago quarter, the company reported earnings of $1.52 per share on revenue of $8.44 billion.

Humana Inc. provides various health and supplemental benefit plans for employer groups, government benefit programs, and individuals in the United States. It is one of the nation's largest Medicare providers and over the last several years, the majority of Humana's enrollees have been in state- or federal-government-sponsored programs.

In the preceding fourth-quarter, the Louisville, Kentucky-based company's net income was $107.33 million, or 63 cents per share, compared to $250.66 million, or $1.48 per share, in the year-ago quarter. The results included $1.02 per share of incremental expenses, reflecting reserves strengthening for closed block of long-term care business, incremental spending associated with the change in Medicare Advantage enrollment periods, and the launch of the Humana Walmart-Preferred Rx Plan among others.Revenue increased 9.2% to $8.42 billion from $7.72 billion. Analysts, on average, currently expected the company to report earnings of 81 cents a share on revenue of $8.36 billion.

The company recently announced that it has realigned its business segments and will start paying a quarterly dividend. The company raised its fiscal 2011 earnings outlook and said it now expects first-quarter earnings to exceed its previous guidance. It has also gotten authorization to increase share repurchases to $1 billion from $250 million. Effective immediately, the Louisville, Kentucky-based company will report its operating results under the following segments - Retail, Employer Group, Health and Well-Being Services and Other Businesses. The company's board of directors approved a quarterly cash dividend policy and declared a cash dividend to stockholders of $0.25 per share, payable on July 28, 2011 to stockholders of record on June 30, 2011. The board also replaced its previously approved share repurchase authorization of up to $250 million with a new authorization for repurchases of up to $1 billion by June 30, 2013. The previous share repurchase authorization had about $100 million outstanding as of April 25, 2011.

The company said that it now expects first earnings per share of $1.86, exceeding the company's previous guidance of $1.15 to $1.20 per share. Humana said that the better-than-expected results reflect a lower-than-expected benefit ratio for the quarter and include the impact of favorable prior-year development in medical claims reserves of $0.31 per share. Humana has also raised its outlook for fiscal year 2011 earnings per share to a range of $6.70 to $6.90 from the prior range of $5.95 to $6.15 per share.

Late in February, the U.S. Department of Defense awarded the South Region TRICARE contract to the company's wholly owned subsidiary, Humana Military Healthcare Services Inc.

Humana is positive about its Medicare Advantage program to grow over the longer-term due to the healthcare overhaul passed in March 2010. Over the long term also, Humana will be in a favorable position as demographic and reform-related trends expand Medicare and the individual market.

Recently, the health insurer said that is on target with enrollments and is on the look-out for further acquisitions that could increase vertical integration.

Full Disclosure: None.

Humana Inc. (NYSE: HUM): Q4 Earnings Preview 2010

Humana Inc. (NYSE: HUM) is scheduled to release its fourth-quarter earnings before the opening bell on Monday, February 7, 2011.  Analysts, on average, currently expect the company to report a net earnings of 81 cents a share on revenue of $8.36 billion. In the year ago quarter, the company reported earnings of $1.48 per share on revenue of $7.63 billion.

Humana Inc. provides various health and supplemental benefit plans for employer groups, government benefit programs, and individuals in the United States. The company operates in two segments, Government and Commercial. It is one of the nation's largest Medicare providers and over the last several years, the majority of Humana's enrollees have been in state- or federal-government-sponsored programs.

In the preceding third-quarter, the Louisville, Kentucky-based company's net income was $393.2 million, or $2.32 a share, compared to $301.5 million, or $1.78 a share, in the year-ago quarter. Revenue increased 9.2% to $8.42 billion from $7.72 billion. Analysts, on average, expect the company to report earnings of $1.66 per share on revenue of $8.46 billion. 

At its last earnings call in November, the company boosted its full-year 2010 outlook. The company now anticipates EPS of approximately $6.40 to $6.50 for the year ending December 31, 2010 (FY10) reflecting the improved operating performance and the expectation of a TRICARE contract extension. Previously, the company expected full year earnings in the range of $5.65 to $5.75 range. Consolidated revenues are now estimated in the range of $33.5 billion to $34.0 billion, compared to the prior forecast of $33.5 billion to $34.5 billion. 

In December, the company raised its fiscal 2011 earnings guidance. The company said it now expects consolidated earnings per share for the full year 2011 of $5.45 to $5.65, compared to its prior expectations of $5.35 to $5.55 per share.

In December, the company also announced that  that it has completed its acquisition of Concentra Inc., a privately held health care company based in Addison, Texas, for about $790 million in cash. Humana said its consolidated revenues for the year ending December 31, 2011 are expected to increase by about $800 million in connection with the acquisition. The acquisition of Concentra will help in increasing Humana’s focus on its core businesses as a health care provider, besides providing revenue diversification and opportunities for strategic expansion over the longer term. Additionally, Concentra will provide access to Humana’s medical members in certain regions. The revenue diversification enjoyed by Humana will also help reduce its exposure to health care overhaul regulations, as the health law seeks to compress an insurer’s profits from selling benefits. Humana will also benefit from Concentra’s focus on evidence-based, cost-effective medical care and a service-driven culture. The acquisition gives Humana “both revenue diversification and opportunities for strategic expansion longer term,” said Michael B. McCallister, Humana’s chief executive officer, in the statement.

In January, the company said that it expects gross sales for Medicare Advantage for 2011 to be modestly higher than expected, with net growth slightly higher than the company's previous expectation of 60,000 to 65,000. Gross sales for stand-alone Prescription Drug Plans are expected to be higher than expected with respect to the Humana-Walmart Preferred plan, and in line with previous projections with respect to the company's other plans. Net growth in the company's stand-alone Prescription Drug Plans is expected to be higher than the Company's previous expectation of 325,000 to 375,000. 

Humana is positive about its Medicare Advantage program to grow over the longer-term due to the healthcare overhaul passed in March 2010. Over the long term also, Humana will be in a favorable position as demographic and reform-related trends expand Medicare and the individual market.

Recently, the health insurer said that is on target with enrollments and is on the look-out for further acquisitions that could increase vertical integration.

Full Disclosure: None.

Humana Inc. (NYSE: HUM): Q4 Earnings Preview 2009

Humana Inc. (NYSE: HUM) is scheduled to release its financial results for fourth quarter of fiscal year 2009 before the opening bell on Monday, February 1, 2010. Analysts, on average, expect the company to report earnings of $1.48 a share on revenue of $7.78 billion. In the year ago quarter, the company reported earnings of $1.07 per share on revenue of $7.49 billion.

Humana Inc. provides various health and supplemental benefit plans for employer groups, government benefit programs, and individuals in the United States. The company operates in two segments, Government and Commercial.

In recent quarters, the company has consistently generated solid income from its government business in posting strong profit. As of September 30, Humana's Medicare Advantage membership surpassed 1.5 million , up 11 percent from a year ago. The health insurer anticipates net growth of 20,000 to 60,000 members in its Medicare Advantage individual offerings in 2010.Medicare Advantage plans are government-sponsored, privately run programs for seniors that offer comprehensive health coverage.In December, Humana won a temporary extension of its contract to administer Tricare benefits in the south region through March 31, 2011, implying that the company will continue to draw income from the Tricare business even as widely anticipated cutbacks in Medicare Advantage diminish profits from its biggest line of business. The contract was scheduled to expire on March 31, 2010.Tricare is the government health plan for military service members, their families and survivors. Commercial insurers are contracted to administer the benefits domestically in three regions: South, North and West.

In the preceding third quarter, the Louisville, Kentucky based company earned $301.5 million, or $1.78 per share, compared to net income of $183.0 million, or $1.09 per share, in the prior-year quarter. Total revenues for the quarter increased to $7.7 billion from $7.1 billion in the comparable quarter last year. Analysts, on average, expected the company to earn $1.77 per share on revenue of $7.82 billion.

For the full year 2009, the company anticipates earnings of approximately $6.15 per share.

For the full year 2010, the company expects to report earnings in the range of $5.05 per share to $5.25 per share.

In November, Humana announced that it will offer many new Medicare plans across the U.S. in 2010, providing consumers a wide variety of choices, including Medicare Advantage plans that feature affordable monthly premiums while offering health-and-wellness benefits and cost savings compared to what's available through Original Medicare. The Medicare enrollment period began Sunday, November 15, 2009, for plans that take effect as soon as January 1, 2010.Humana said it will continue to offer Medicare Advantage plans that feature benefits not available to people enrolled in Original Medicare - at a cost that, in many cases, is lower than Original Medicare. Humana will also offer more than 100 Medicare prescription-drug plans in 2010, including a new cost-saving "Value PDP" - which will be available in nearly half of Medicare's 34 regions in 2010, replacing one of the 2009 plans in those areas.

Recently, home health provider Amedisys Inc. said Wednesday it signed a contract to provide home health services to Humana Inc.'s Medicare Advantage members. The deal between Amedisys and Humana covers about 1.5 million participants.

Shares of Humana and other health insurance stocks have rallied since last fall, as the push for health care reform in Washington began to stumble. Investors and analysts had worried for months about the impact any reform push may have on the industry.

The company's stock currently trades at a forward P/E (fye 31-Dec-10) of 9.11 and PEG ratio (5 yr expected) of 0.88. In terms of stock performance, Humana shares have gained 30 percent over the past three months.

Full Disclosure: None.