Humana Plunges 27%

123jump.com Staff
12 Mar, 2008
New York City

Humana, health insurance provider lowered its earnings estimate for the first quarter by half between 44 and 46 cents. For the full year Humana estimated earnings between $4.00 and $4.25 from $5.35 and $5.55 per share. The company lowered its operating margins, cash flow and gave a cautious guidance on revenue.

[R]10:00AM New York – Health care insurance companies dropped for the second day after Humana lowered its earnings sharply.[/R]

Humana lowered its earnings guidance for the first quarter and for the year 2008 on higher than anticipated claims volume through February 2008.

Humana now anticipates earnings per share for the fiscal first quarter in the range of $0.44 to $0.46 versus its previous guidance of $0.80 to $0.85 and for the fiscal year 2008 now projected to be in the range of $4.00 to $4.25 compared to previous guidance of $5.35 to $5.55.

The company estimates consolidated fiscal 2008 revenue between $28 billion and $30 billion. The company revised its guidance for the Medicare products benefits ratio in the range of 85% to 86% from the earlier projection of between 83% and 84%. For the commercial fully insured groups, same locations benefit expense trends and premium yields of 6% to 7% and will be between 3.5% and 4.5%.

Humana also lowered its operating margins for Medicare Products to 3% from 5% and military services to 2.5% from 3.5% and lowered its cash flow projection for the fiscal year to $1.2 billion from $1.5 billion.

Two days ago WellPoint lowered its earnings estimate but today Aetna reaffirmed its guidance.

Aetna today reaffirmed its guidance for full-year 2008 operating earnings per share to be $4.00, with medical membership growth of 800,000 to 850,000 and a Commercial Medical Benefit Ratio of less than 80%. The company expects first-quarter operating earnings per share to be $0.92.

Humana ((HUM)) stock fell $13.55 to $33.80 in the morning trading, Aetna ((AET)) added $1.12 to $43.77, and WellPoint ((WLP)) dropped 20 cents to $47.09. Cigna ((CI)) rose 90 cents to $39.60.