third-quarter earnings rose 36% from a year ago, driven by improvements in its Medicare and commercial health insurance lines. The company guided its 2005 earnings estimate higher, although it said fourth-quarter earnings would trail forecasts because of spending on sales support.
Humana earned $84.3 million, or 52 cents a share, in the three months ended Sept. 30, compared with earnings of $62.1 million, or 38 cents a share, last year. Revenue rose 2% from a year ago to $3.18 billion. Analysts had been forecasting earnings of 44 cents a share on revenue of $3.22 billion in the quarter.
For the fourth quarter, Humana expects to earn 23 cents to 26 cents a share, reflecting the higher investment. Analysts had been forecasting 34 cents a share. For 2005, Humana expects to earn $1.90 to $1.95 a share, compared with the Thomson First Call consensus of $1.86.
By segment, pretax earnings rose 49% from a year ago to $38.7 million. Medical membership in the segment rose 9% to 3.32 million at Sept. 30, while profitability grew because of the "lapse of certain underperforming, at-risk accounts." Pretax earnings in Humana's government segment rose 32% from a year ago to $88.8 million, reflecting lower medical and overhead expenses and higher earnings under a new bidding regime.
Humana shares closed Friday at $19.15.