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Aug 2 (Reuters) - U.S. health insurer Humana Inc reported a much better-than-expected quarterly profit on Wednesday, due to strength in its Medicare Advantage business, which sells plans to the elderly and to people with disabilities.
The company, which also raised its full-year earnings forecast, said the individual Medicare Advantage results significantly outperformed its original expectations.
The individual Medicare Advantage business is exceeding its operational targets, experiencing lower-than-anticipated utilization, higher-than-expected revenue on a per member basis, the company said.
Humana said on Wednesday it expects 74 percent of members in its Medicare Advantage plans to be in its 4-Star plans or higher for bonus year 2018.
Last year Centers for Medicare and Medicaid Services had cut its quality rating on Humana Medicare plans.
The insurer said it had filed a reconsideration request with the regulator, which was denied. The company decided not to appeal the denial and worked through existing CMS processes.
Medicare uses a Star rating system to measure how well Medicare Advantage and prescription drug plans perform. Medicare scores are based on several categories including quality of care and customer service. Ratings range from 1 to 5 stars, with five being the highest and one being the lowest score.
"Our conviction in Humana and its industry-leading Medicare franchise has been further strengthened after a solid 'Beat & Raise' Q2 with success on reversing the 4 Star ratings downgrade," Leerink analysts wrote in a note.
The company said net income rose to 650 billion, or $4.46 per share, in the second quarter ended June 30, from $311 million, or $2.06 per share, a year earlier.
Excluding items, the company earned $3.49 per share, beating the analysts' average estimate of $3.08, according to Thomson Reuters I/B/E/S.
Total revenue fell 3 percent to $13.53 billion.
The company said it now expects full-year adjusted earnings to be at least about $11.50 per share from its previous guidance of at least $11.10.
Humana, which walked away from its $34 billion deal with Aetna Inc earlier in the year, has already said it will exit Obamacare business in 2018 because of losses.
Republican lawmakers have vowed to repeal and replace former President Barack Obama's signature healthcare law, often called Obamacare, but have not agreed on how to do so, creating uncertainty about how the program will be run and whether it will be fully funded. (Reporting by Ankur Banerjee in Bengaluru; Editing by Shounak Dasgupta)