Humana Expands RightSource Business - Analyst Blog

On Friday, Humana Inc. (HUM) announced the expansion of its RightSource mail and specialty drug business by hiring 200 new employees at a new office complex in Ohio by spring 2012. Besides, the company will also shift 450 existing employees of RightSource to the new location by December 2012.

Humana has already leased a 175,000 square-foot space at an office complex in Springdale, Ohio, which will be the company’s third office in Greater Cincinnati. The company had started its operations in Ohio in 2008 and currently has its regional headquarters and a distribution center in the state.

The new additions will take Humana’s total headcount in Greater Cincinnati to 1,800, including 1,200 RightSource employees. RightSource operates in 50 states and caters to about 800,000 Humana Medicare and commercial health plan members.

The expansion is taking place to manage the growing operations of RightSource’s mail order delivery service. The demand for the service is growing at a fast pace due to Humana’s growing Medicare business and the ease of home delivery.

Humana has been rapidly increasing its employee base. Last week the company announced its plans of adding 200 new full-time employees at the National Medicare service center in Louisville, taking the head count in Louisville to 10,800 by 2011-end. Additionally, in August 2011, the company had announced its plan to hire 300 new employees in its Humana Cares division and in July 2011, it had announced its plan to hire 200 full-time employees at its national Medicare service operations center in Tampa Bay.

We believe that the recognition of RightSource’s services and Humana’s Medicare plans will lead to continued increase in demand, thereby increasing Humana’s market share against rivals like CIGNA Corporation (CI), Aetna Inc. (AET) and UnitedHealth Group Inc. (UNH). Thus, we can expect more expansions and job creations by the company in future.

Currently, Humana carries a Zacks #1 Rank, which translates into a Strong Buy rating for the short-term.

On Friday, the shares of Humana closed at $79.40, up 1.46%, on the New York Stock Exchange.

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