U.S. health insurer Humana reported a better-than-expected quarterly profit and raised its full-year profit forecast on Wednesday, as it signed up thousands more for its government-backed Medicare Advantage business.
Membership for Medicare Advantage's individual plans, which provide insurance to the elderly and disabled, rose 6 percent to 3 million in the first quarter. Employer or other group-based Medicare Advantage plans added 14 percent more members.
The fast-growing and profitable Medicare Advantage plans account for about a third of Medicare members, making it an important growth area for private insurers.
"We experienced strong Medicare Advantage enrollment growth ... with early positive indicators of medical utilization allowing us to raise guidance for the year," Chief Financial Officer Brian Kane said.
The health insurance giant has been diversifying to move deeper into patient care and drug retail, leading to a wave of consolidation in the sector.
Last week, Humana paired up with two private-equity firms to buy privately held Curo Health Services for about $1.4 billion, the group's second such deal in five months.
Net income fell to $491 million, or $3.53 per share, in the quarter ended March 31, from $1.12 billion, or $7.49 per share, a year earlier.
Last year's results included a gain related to its terminated merger agreement with Aetna Inc.
Excluding items, the company earned $3.36 per share, beating analysts' average estimate of $3.19, according to Thomson Reuters I/B/E/S.
The company said its adjusted benefit expense ratio the percent of premiums spent on claims improved to 84.9 percent from 85.2 percent a year earlier.
Revenue rose nearly 4 percent to $14.28 billion.
The company now expects full-year adjusted earnings of $13.70 per share to $14.10 per share, compared with its previous forecast of $13.50 to $14.00 per share.
Humana's shares, up 19 percent this year, were 1.6 percent higher in light premarket trading.