Humana’s Earnings Surge Continues (HUM)

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Humana is seeing shares up at new year highs in pre-market trading this morning.  The health insurer posted $1.53 EPS versus the $1.48 estimate on revenues of $6.32 Billion versus the $6.22 Billion estimate.  Humana now sees 2007 EPS $4.75 to $4.80 versus a consensus estimate of $4.52 per share.  It also put 2008 earnings above plan with a new range of $5.30 to $5.50 EPS, while consensus estimates are $5.20.

Its expense ratios greatly improved.  The consolidated medical expense ratio mast quarter (MER) of 81.3% was 280 basis points lower than the 3Q 2006 MER of 84.1%, the combined result of a 360 basis point decline in the Government Segment MER.  The consolidated MER for Year to Date 2007 of 83.8% was 50 basis points lower than the Year to date 2006 consolidated MER of 84.3%, substantially due to the same factors driving the year-over-year improvement in 3Q07.

Shares are trading up at $80.00 pre-market, and the 52-week trading range is $51.00 to $77.83.  Memories of major woes just a few years ago are getting harder and harder to think about.

Jon C. Ogg
October 29, 2007