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Humana Inc. Message Board

  • ron.wallach ron.wallach Jul 31, 2012 1:10 PM Flag

    or 10.82%, to $62.88. Other insurers also dropped, with CIGNA (CI) losing


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    News Breaks
    July 31, 2012
    10:46 EDT AET, CI, WLP, HUM, UNH Humana tumbles after reducing guidance due to costs
    Health insurer Humana (HUM) is falling significantly after the company reduced its full-year earnings per share, or EPS, guidance due to higher than expected medical costs for some of its customers. Specifically, the company reported that medical costs associated with its Medicare Advantage patients were higher than expected. The insurer reduced its fiscal 2012 EPS guidance to $6.90-$7.10 from $7.38-$7.58. Analysts' consensus estimate was $7.93. Meanwhile, Humana's second quarter EPS came in lower than expected, due to a litigation settlement. The insurer also noted that its benefit expenses amounted to 83.5% of premiums in the second quarter, up from 82.1% during the same period a year earlier. In a note to investors earlier this morning, research firm Stifel Nicolaus advised buying shares of Humana following its guidance and results. The firm still believes that the company has a number of positive catalysts, including the growing Medicare population, the popularity of Medicare Advantage, and what it sees as Humana's proven ability to manage the program. Stifel reduced its price target on the stock to $83 from $95 but maintains a Buy rating on the shares, which sank $7.63, or 10.82%, to $62.88. Other insurers also dropped, with CIGNA (CI) losing 2.10% to $40.50, WellPoint (WLP) declining 2.52% to $53.83, UnitedHealth (UNH) sinking 2.82% to $51.76, and Aetna (AET) losing 1.10% to $36.73.

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