LOUISVILLE — Humana said Monday that its fourth-quarter profit surged 86 percent on the strength of higher-than-expected Medicare Advantage enrollment and low use of health care services.
But the health insurer's shares dropped more than 5 percent Monday as revenue fell below Wall Street forecasts and the company's own yearlong projection remained below industry expectations.
The company raised its earnings expectations for 2012 to a range of $7.50 to $7.70 a share, up from its prior forecast of $7.40 to $7.60 a share. That's still less than the $8.03 a share forecast of analysts polled by FactSet. The Louisville-based company typically starts with conservative earnings forecasts.
Humana ranks as one of the largest providers of Medicare Advantage plans, privately run programs offering comprehensive health coverage for seniors. Subsidized by the government, the plans offer basic Medicare coverage topped with extras like vision or dental coverage.
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Individual Medicare Advantage membership stood at 1.64 million at the end of 2011, up 12 percent from a year ago. By January of this year, enrollment had risen to 1.81 million, more than the company expected.
The company's growth, though, was driven mostly by medical cost trends, said Goldman Sachs analyst Matthew Borsch in a research note. The slowdown in the use of health care services by consumers is a carry-over from the economic downturn. Analysts say consumers tend to cut back their use of health care after a recession by delaying elective procedures or skipping doctor visits.
For the three months ended Dec. 31, Humana earned $199 million, or $1.20 a share, matching analyst expectations and up from $107 million, or 63 cents a share, in the fourth quarter of 2010. Revenue rose 9 percent, to nearly $9.1 billion, short of analysts' estimate of $9.26 billion.
For the full year, Humana's net income rose 29 percent from 2010, while revenue increased 10 percent.
Shares fell $4.87 to close at $85.25.