In the wake of the news that Humana agreed to be sold to Hartford, Conn. insurance giant Aetna for $37 billion, or about $230 per share, the Louisville company on Monday also revised its second quarter and annual projected earnings.
The firm said its estimated 2015 annual earnings will be in the range of $7.75 per share, down from the prior quarter’s estimate of $8.50 to $9 per share. It projected second quarter 2015 EPS of $1.60 to $1.65.
Humana said its annual adjusted EPS was reduced to exclude $1.53 per share, money associated with the gain from the sale of Humana’s Concentra business, leading to the $7.75 figure. That sale also reduced Humana’s upcoming quarterly EPS guidance by $1.18 per share.
Humana also assessed its higher-than-average medical costs for 2015 and projected those costs on its 2016 Medicare Advantage bids. Humana said it continues to target a 2016 Medicare pre-tax margin of 4.5 percent to 5 percent.
Humana engaged actuarial firm Milliman to measure its Individual Medicare Advantage reserves as of May 2015. Milliman’s subsequent report said Humana’s Medicare Advantage reserves are currently “good and sufficient.” Humana stressed these estimates don’t include the firm’s pharmacy-related businesses. Milliman had specifically measured Humana’s Individual Medicare Advantage Part C May 2015 month-end unpaid claim liabilities.
Wall Streeters seem to have taken Humana’s recent news as positive, bidding up Humana shares to above $194 as of late Monday morning, a 3.5 percent increase over close last Thursday. Meanwhile, Aetna is down 4.5 percent today, to $120 per share.