LOUISVILLE — Health insurer Humana said Monday its second-quarter profit rose 34 percent on the strength of its robust government business, led by Medicare Advantage offerings, easily offsetting a sluggish commercial segment hamstrung by the recession.
The results for the three months ended June 30 beat Wall Street estimates. The Louisville company stuck with its previous projection of a full-year profit of $6.10 to $6.20 a share, while analysts expect $6.12 a share.
Humana posted net income of $281.8 million, or $1.67 a share, for the quarter, compared with earnings of $209.9 million, or $1.24 a share, a year ago.
Revenue jumped 8 percent to just less than $7.9 billion from $7.35 billion.
Humana's pretax income from its vast government segment surged by 62 percent, to $404.7 million in the second quarter. The company attributed the upswing to lower claim expenses in its Medicare drug plans, a 13 percent increase in average Medicare Advantage membership and the introduction of member premiums for most of the company's Medicare Advantage products.
Medicare Advantage plans are government-sponsored, privately run programs for seniors that offer comprehensive health coverage.
The company said its Medicare Advantage membership grew to nearly 1.5 million members as of June 30, up 12 percent from a year ago and a 4 percent increase since the end of 2008.
Medicare Advantage premiums of $4.15 billion rose 19 percent in the quarter versus a year ago.
Membership in Humana's stand-alone Medicare prescription drug plans totaled 1.99 million as of June 30, down from 3.1 million members a year ago. Humana said the decline resulted mainly from low-income seniors opting to join other plans, as well as members switching to Medicare Advantage plans.
Meanwhile, pretax earnings in Humana's commercial segment fell 53 percent, to $35.3 million in the second quarter, due mainly to lower investment income and lower income from its small group business.
Commercial segment medical membership declined by 110,600, or 3 percent, to nearly 3.45 million as of June 30. Commercial unit premiums rose 1 percent, to $1.87 billion.