Humana boosts profit forecast following strong Q1 earnings performance

Humana is increasing its full-year profit forecast thanks to strong a Medicare Advantage membership increase and high medical utilization. But it isn't the only insurer who's been riding the MA wave to financial success.

The Louisville-based insurer announced on Wednesday that company revenues were up 4% to $14.28 billion in the quarter ending March 31, compared to the same quarter last year.

Net income fell to $491 million, from $1.12 billion last year, and earnings declined to $707 million. Even though 2017's earnings report included a gain of almost $1 billion from its terminated merger with Aetna, net income was still down slightly compared to last year. Adjusted shares were still up $3.36 from $2.75 in the first quarter last year. 

The company pointed to growth within its Medicare Advantage segment as a major component of the strong first-quarter showing, with plan membership up 6%, hitting the 3 million mark. 

“We experienced strong Medicare Advantage enrollment growth and solid performance across all segments in the first quarter, with early positive indicators of medical utilization allowing us to raise guidance for the year,”  Brian Kane, CFO of the company, said in a statement.

Humana has made major moves in the healthcare market recently, with Kindred Healthcare shareholders approving a sale to the insurer and two equity firms, as well as purchasing a minority stake in Curo Health Services. 

Due to the better-than-expected numbers, the insurer upped its full-year adjusted earnings projection to $13.10 to $14.10 per share, compared to the previous estimate of $13.50 to $14.00 per share. 

Medicare Advantage plans have been a major driver of insurers' recent financial success, and the future for such plans is bright due to the current administration's support for privatization. 

RELATED: Aetna rides Medicare Advantage growth, ACA exit to profitable Q1

Humana's report follows other strong first-quarter earnings from other major health insurers. Aetna saw a $1.2 billion in net income and added 250,000 MA members and UnitedHealth's income also increased thanks to a 10% MA enrollment increase compared to the same period last year.

The Trump-controlled Centers for Medicare and Medicaid Services (CMS) has been supportive of private MA plans as a way of moving beneficiaries off of traditional Medicare and keeping spending growth down. 

CMS Administrator Seema Verma announced in April that encounter data from MA plans are now available, following a nearly year-long delay. The release is intended to allow researchers to study the program's efficiency and the rapid growth of private plans. 

RELATED: CMS to release Medicare Advantage encounter data as part of new data-driven strategy

Additionally, the agency announced a larger-than-expected payment boost for MA plans last month, another sign of the Trump administration's confidence in the private market. 

Humana CEO Bruce Broussard, in a press call, also praised the agency for allowing MA insurers to offer more tailored supplemental benefits. 

Medicare Advantage programs continue to grow and now encompass over one-third of Medicare beneficiaries. Humana, alongside other insurers, clearly expect that trend to continue.