LOUISVILLE — Humana Inc. said Monday that its first-quarter profit fell 21 percent as the health insurer paid out more in claims and beefed up spending to handle expected growth in its lucrative Medicare Advantage membership.
The company, based in Louisville, nudged up its earnings expectations for the full year to a range of $7.55 to $7.75 a share, up from its prior forecast of $7.50 to $7.70 a share.
But the first-quarter results and the increased forecast were short of Wall Street expectations. Its shares fell more than 6 percent in morning trading.
Humana cited favorable claims trends from previous periods in raising its forecast.
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In essence, Humana set aside more money in previous quarters than was needed to pay claims during a slowdown in the use of health care services by consumers who felt pinched during the recession. That prior favorable-claims trend amounted to 3 cents per share in the first quarter, compared with a 31-cents-per-share windfall in the same period a year ago, company said.
Several insurers have said they expect health care use to return to more normal levels this year, which means they would pay more claims. Humana said it paid more in claims in its retail and employer group segments in the first quarter.
The earnings period offered mixed results among some of the nation's largest health insurers. Two of Humana's competitors, WellPoint Inc. and UnitedHealth Group Inc., reported first-quarter results that beat Wall Street expectations and raised their annual forecasts. Another key competitor, Aetna Inc., missed Wall Street expectations and failed to raise its 2012 earnings forecast.
Humana said Monday that it paid out more in claims in its retail and employer group segments during the first quarter.
It reported double-digit membership gains for its Medicare Advantage offerings and its stand-alone Medicare prescription drug plans.
"This growth trajectory has contributed solidly to our results for the first quarter and our continued confidence in our projected results for the full year," Humana board chairman and chief executive Michael B. McCallister said in a statement.
In a conference call with industry analysts, McCallister predicted that Humana will add significantly to its membership rolls in its key Medicare Advantage and Medicare prescription drug plans for the full year.
Humana is forecasting its best gains in Medicare Advantage enrollments since 2006, he said.
Humana is one of the largest providers of Medicare Advantage plans, privately run programs offering comprehensive health coverage for seniors.