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Humana reports solid quarterly earnings as Aetna merger looms

Humana reports solid quarterly earnings as Aetna merger looms

Humana Inc. reported increases in net income and premiums on Wednesday, just weeks after announcing a proposed $37 billion merger with larger health insurer Aetna Inc.

The health insurer reported net income of $431 million for the second quarter of 2015, a 25.3% increase over the same period a year ago, Humana said in a statement. Meanwhile, premiums rose 14.1% to $1.32 billion.

Earlier this month the company said it agreed to be acquired by Aetna Inc. The transaction, which is expected to close in the second half of 2016, is subject to approval by Humana and Aetna shareholders, certain state insurance departments and other regulators, as well as expiration of an antitrust waiting period, according to the statement.

Consolidated revenue for the second quarter of 2015 was $13.73 billion, up 12.4% from the same period last year.

“The year-over-year increase in premiums and services revenues reflected higher totals year over year in both the retail and group segments,” the company said in the statement.

For the first half of the year, consolidated revenue was $27.57 billion, a 15.2% increase over the first half of 2014.

“Lower year-over-year adjusted pretax income for the quarter and year to date reflected lower retail segment operating results,” Humana said in the statement. “Lower results in the retail segment were primarily related to lower-than-expected 2015 Medicare Advantage financial claim recovery levels and lower-than-anticipated reductions in inpatient admissions from its clinical programs.”

Humana President and CEO Bruce D. Broussard said in the statement that “Medicare Advantage is stabilizing and our clinical programs continue to focus on the needs of our members living with chronic conditions.”

Brian A. Kane, the company's senior vice president and chief financial officer, added that “while certain operational challenges impacted our second-quarter results, we are encouraged by recent progress.”

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