, one of the top health care providers in the U.S., fell 16% Wednesday after the company reported a 36% drop in quarterly earnings, far weaker than Wall Street had expected. The shortfall was attributed to rising costs.
Humana stock finished Wednesday trading down 1 5/16, or 16%, to 6 11/16.
For the first quarter ended March 31, net income fell to $21 million, or 13 cents a diluted share, from $33 million, or 20 cents a share a year earlier. The consensus estimate of analysts polled by
First Call/Thomson Financial
was 15 cents.
Revenue rose to $2.64 billion from $2.45 billion a year ago.
Louisville-based Humana recorded an increase in costs across the board. The medical expense ratio rose 70 basis points to 85.0% from 84.3% a year ago and rose 20 basis points from 84.8% in the fourth quarter. The company said the change reflected higher-than-anticipated medical costs in small group commercial markets and Medicare markets.
The administrative expense ratio rose 10 basis points to 14.8% from 14.7% in both a year ago and the fourth quarter, with the increase coming from investments in infrastructure and technology.
Humana provides medical insurance to about 5.9 million people.