Humana Jumps 5.5% on Strong Guidance, Membership Growth

Humana Inc. reported a 90% jump in its Q3 earnings, on a strong one-time gain in its government healthcare unit and solid membership growth, especially in the Medicare Advantage program. Shares rose 5.56% in pre-market action (as of 8:03 AM ET). Net income was $302.4 million, good for EPS of $1.78, versus $0.95 a year ago; sales rose 12% to $6.3 billion. EPS were $1.53 on an adjusted basis. Consensus analyst estimates were for adjusted EPS of $1.49 on sales of 6.2 billion. The company expects some of its one-time gains to boost earnings again in Q4, as well as into FY2008. The company saw HMO membership grow 2.2% to 11.3 million members in the latest quarter, while membership in Medicare Advantage jumped 15% to 1.14 million members. Humana expects Q4 EPS in a range of $1.27 to $1.32, FY EPS of $4.75 to $4.80, and FY2008 EPS of $5.30 to $5.50. Wall Street is expecting EPS of $1.34 in Q4, $4.52 for FY 2007 and $5.20 in FY 2008. CEO Michael B. McCallister believes the latest quarter "positioned us well to extend our industry-leading growth in both revenues and earnings through 2008 and beyond."

Sources: Press release, Wall Street Journal, Reuters, AP, MarketWatch
Commentary: Friday's Options Report: MSFT, Terso, HAL, Wellcare, EWJ, & IVV • Humana Beats and Raises; Medicare Payments May Be Problematic
Stocks/ETFs to watch: HUM. Competitors: UNH, AET, CI, CVH, WLP. ETFs: IHF

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