Humana profit beats on individual Medicare Advantage strength

Fri Nov 6, 2015 7:43am EST
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(Reuters) - Health insurer Humana Inc (HUM.N: Quote), which agreed to be bought by Aetna Inc (AET.N: Quote) for $37 billion in July, reported a better-than-expected quarterly profit as it added more members to its individual Medicare Advantage business.

Humana, which manages large Medicare Advantage health plans for the elderly and disabled, said individual Medicare Advantage membership increased 14 percent to 2.74 million at the end of September.

However, individual commercial membership decreased 11 percent to 963,700 as of Sept. 30.

"We remain cautious with regard to our expectations around 2016 earnings growth due to the ongoing challenges in the individual commercial business," Humana's Chief Financial Officer Brian Kane said in a statement on Friday.

Larger rival Anthem Inc (ANTM.N: Quote) said last month its Obamacare insurance business is being hampered by lower-than-anticipated enrollment due to fewer applicants than expected and cheaper premium rates at competitors.

Cigna Corp (CI.N: Quote), which also reported a better-than-expected quarterly profit on Friday, said it expected 2016 revenue growth to be hurt by reduction in customers in its individual plans.

President Barack Obama's signature healthcare law, the Affordable Care Act, in 2014 overhauled the individual market with new government subsidized plans sold through newly created exchanges.

Insurers are betting on mergers to help them compete better, as the government tries to rein in healthcare spending following the implementation of Obamacare.

Anthem agreed over the summer to acquire Cigna in a $47 billion deal that would make it the largest U.S. health insurer by membership.   Continued...