LOUISVILLE — Health insurer Humana Inc. said Monday that its first-quarter profit more than doubled as its government business surged because of higher membership in its Medicare Advantage plans and lower expenses in Medicare drug plans that sapped earnings a year ago.
The company also raised its full-year earnings outlook to between $6.10 and $6.20 a share, up from $5.90 to $6.10 a share.
The Louisville-based company's employer-sponsored health coverage business showed some resilience despite the country's economic turmoil, but the company doesn't expect that to last. Other major health insurers have seen those business lines plunge as employers cut jobs because of the recession.
Humana said it earned $205.7 million, or $1.22 a share, for the quarter that ended March 31, compared with profit of $80.2 million, or 47 cents a share, a year ago. Revenue rose 11 percent to $7.71 billion.
In a note to investors Monday morning, Goldman Sachs analyst Matthew Borsch said Humana's performance showed "many areas of strength" with "overall good earnings quality."
Humana posted a dramatic turnaround in pretax income from its vast government segment, increasing to $166.1 million in the just-ended quarter compared with a loss of $3.2 million a year ago.
The surge was driven mainly by lower claims expenses in its Medicare prescription drug plans, a big increase in average Medicare Advantage membership and the start of member premiums for most of its Medicare Advantage plans, the company said.
Humana said its Medicare Advantage membership grew to nearly 1.47 million members as of March 31, up 16 percent from a year ago, and up 2 percent from the end of 2008.
Such Medicare Advantage plans as Humana's are government-sponsored, privately run programs for seniors that offer comprehensive health coverage.