Humana shares fall 3 percent on Q1 report

Humana shares fell more than 3 percent in morning trading after the Louisville-based insurer said that first-quarter pretax income fell by nearly $1 billion compared to a year ago — though results at that time reflected a nearly $950 million gain from the failed Aetna merger.

Excluding the impact of the breakup fee and other items, first-quarter pretax income, at $684 million, fell 8.9 percent.

Revenue, at $14.3 billion, rose 3.8 percent.

Humana said that thanks to the growing number Medicare Advantage customers and “solid performance across all segments” it was raising its earnings expectations for the year: The insurer now projects earnings per share between $13.54 and $13.94, up from the previous guidance of $13.16 to $13.66.

Bruce Broussard

“We’re pleased that we continue to consistently deliver strong financial results, while advancing our health and consumer‐focused strategy,” President and CEO Bruce D. Broussard said in an earnings release. “It really comes down to the consistency of our operating model, which has enabled us to perform well in all parts of our business. This shows up in our earnings results, in the trajectory of our membership growth, and also in the strength of our brand as we continue to make great strides in improving the experience of our members.”

Humana also said that pretax income in two of its three business segments fell compared to a year ago. Pretax income rose only in the company’s Group and Specialty Segment. Revenue in that segment nearly doubled, primarily because of an additional 2.8 million military customers.

The company in 2016 had won a five-year, $40.5 billion contract for the TRICARE East Region, taking that business from rival UnitedHealthcare. The new contract took effect on Jan. 1.

Operating costs increased in all three business segments, while revenue rose only in two.

Humana’s shares traded near $288 at 12:45 p.m. Wednesday, down $6.80 or 2.3 percent. The Dow Jones industrial average was down 0.17 percent.