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Humana Inc. Message Board

  • friend_of_the_deceased friend_of_the_deceased May 3, 2000 2:02 PM Flag

    dj blurb

    Humana CEO: Disappointed In 1Q, But Recovery On
    Track
    Dow Jones Newswires

    By Dinah Wisenberg
    Brin
    PHILADELPHIA -- Humana Inc. (HUM), which fell 2 cents shy of
    Wall Street's first quarter earnings consensus
    estimate, conceded Wednesday the results were disappointing
    but said the big managed-health-care company
    continues to make progress.

    Company officials told
    analysts Humana plans to exit or raise some premiums in
    six costly small-group markets where there's no
    health-plan membership overlap, and will decide next month
    whether to leave five high-cost Medicare markets in
    2001.

    These troubled markets slowed the pace of Humana's
    overall margin improvement, although commercial and
    Medicare premiums and large-group margins improved as
    planned, the company said.

    Humana also is talking
    to regulators in Texas and California in an effort
    to accelerate small-group premium increases to keep
    up with medical costs there, officials said in a
    conference call.

    "We're disappointed that the results
    of the quarter did not meet our own expectations as
    well as yours. However, we're keeping a perspective,"
    Humana President and Chief Executive Michael B.
    McCallister said.

    "We may not like the speed of our
    recovery but we do like the compelling evidence that our
    recovery is on track," he said.

    Officials said
    higher-than-expected costs in the six troublesome non-overlap
    small-group markets were the big surprise.

    Before the
    market opened Wednesday, Humana reported operating
    earnings of 13 cents a share, compared with operating
    income of 20 cents a share in the year-ago quarter,
    excluding special items. (With those items, the company
    posted a 10 cent loss in the first quarter of
    1999.

    The first quarter consensus estimate of a First
    Call/Thomson Financial survey of 17 analysts was 15 cents a
    share.

    Humana shares recently traded at 7 1/16, down 15/16, or
    11.7%, on volume of 500,000 compared with average daily
    volume of 635,400.

    On the positive side,
    officials said, large-group premium yields were in the 10%
    to 11% range, up about 4% from the fourth quarter.
    The rise reflects Humana's aggressive pricing
    strategy, the company said.

    Medicare premium yields
    rose to 6.2% in the first quarter from 4.6% in the
    fourth because of a new member-premium component for
    many Medicare members and a shift in customer mix to
    markets with higher Health Care Finance Administration
    reimbursement rates, the company said.

    Medicare
    expenses, however, were higher than in the year-ago quarter
    and the fourth quarter because of the five markets
    where costs were significantly
    higher.

    Membership in the small-group division declined nearly 6%,
    or by 94,000 people, from the fourth quarter in
    reaction to significant rate increases.

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HUM
109.65+0.40(+0.37%)Apr 15 4:04 PMEDT

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