Credit Herald

Health insurer Humana Inc. reported a slight drop in second-quarter profit Monday caused by a double-digit decline in premiums from its Medicare prescription drug plans, which offset solid growth in its Medicare Advantage and commercial segments.

Humana’s results for the three months ended June 30 still outperformed Wall Street expectations, and the company raised its earnings-per-share projection for the full year.

Louisville-based Humana (HUM, Fortune 500) earned $209.9 million, or $1.24 per share, in the second quarter, down 3% from $216.8 million, or $1.28 per share, a year ago. The performance beat Humana’s own earnings-per-share projection of $1.15 to $1.20 per share.

The company said results from its stand-alone Medicare prescription drug plans — with premiums down 14% to $905 million — were better than expected.

Analysts surveyed by Thomson Financial had expected profit of $1.18 per share.

Second-quarter revenue rose 14% to $7.3 billion from $6.4 billion.

Buoyed by its second-quarter performance, the company raised its earnings-per-share projection for the full year to a range of $4.30 to $4.40, up from $4.10 to $4.35.

"We had a good quarter across all our lines of business," said Humana President and Chief Executive Officer Michael B payday loans. McCallister, adding that the Medicare prescription issue is "playing out better than expected."

Humana said earlier in the year that it was absorbing higher-than-expected claims in its Medicare prescription plans.

Those lower premiums from the Medicare prescription plans caused a drop in Humana’s pretax earnings in its government segment for the second quarter.

The company’s Medicare Advantage premiums rose 25% to $3.49 billion, primarily due to a 17% increase in average membership and higher per member premium revenues. The Medicare Advantage plans offer comprehensive health coverage.

Pretax earnings for Humana’s commercial segment increased 49% to $75.6 million, compared to $50.8 million a year ago. 

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