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Humana profit rises, but challenges remain

Posted On: Nov. 6, 2015 12:00 AM CST

Humana profit rises, but challenges remain

Humana Inc. on Friday recorded improved third-quarter profit reflecting gains in Medicare membership.

The health insurer, which agreed in July to merge with competitor Aetna Inc., posted net income of $314 million in the three months ended September 30, up 8.3% from a year earlier.

Humana reported consolidated revenue of $13.36 billion during the third-quarter, a 9.2% increase over the same period last year.

The insurer's premiums and services revenue increased, reflecting “higher retail and group segment totals,” the insurer said in the statement.

Humana's group segment posted $1.82 billion in premiums and services revenues versus $1.81 billion in last year's third quarter. The overall flat revenue reflected an increase in fully insured commercial medical premiums per member, partially offset by declines in fully insured and administrative-services-only commercial group medical membership.

“Our third-quarter results included operating performance for our Medicare businesses that was generally in line with our expectations and continuing momentum in our health care services segment, but were challenged by our individual commercial business,” Humana President and CEO Bruce D. Broussard said in the statement.

“As we look to 2016, we anticipate marked improvement in our Medicare and individual commercial businesses as a result of actions taken during 2015,” Brian A. Kane, Humana's senior vice president and chief financial officer, said in the statement. “However, we remain cautious with regard to our expectations around 2016 earnings growth due to the ongoing challenges in the individual commercial business and as we continue to evaluate the impact of the Medicare financial recovery process changes made during 2014.”

For the year to date, Humana reported $40.93 billion in total revenue, up 13.1% from a year earlier, with net income of $1.18 billion, up 17.3% compared with the first nine months of 2014.