Humana Cuts Guidance, Citing Medicare Advantage Admissions -- 2nd Update

By Lisa Beilfuss 

Humana Inc. on Monday cut its adjusted earnings outlook for the full year and issued downbeat guidance for the current quarter on the heels of its $34.1 billion tie-up announcement with Aetna Inc. on Friday.

Humana said higher-than-expected Medicare Advantage admissions, among other items, prompted the guidance changes.

The insurer, which agreed to be bought by rival Aetna for about $230 a share, said it now expects to earn an adjusted per-share profit of $7.75, down sharply from its previous estimate of $8.50 to $9. Adjusted earnings forecasts typically exclude one-time costs.

For the quarter ended in June, Humana predicted earnings of $1.60 to $1.65 a share, short of the $2.36 anticipated by analysts polled by Thomson Reuters.

The Louisville company disclosed the updated guidance in a regulatory filing ahead of a conference call to discuss the Aetna tie-up. During that call, Aetna chief financial officer Shawn Guertin called the update "consistent with the information we examined during our diligence," adding the companies did "months of thoughtful analysis."

Humana chief executive Bruce Broussard, meanwhile, said his firm is performing in a "reasonable fashion," but notes hospital admissions in its Medicare Advantage business "have not come down as quickly" as it projected.

Shares of Humana were up 2.4% to $192.04 in early trading, well below the deal's offer price when it was announced.

Anna Wilde Mathews contributed to this article

Write to Lisa Beilfuss at [e-mail]

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