While the Affordable Care Act has seen many players in the medical industry struggling, health insurer Humana appears to doing quite well. The company has just reported, on Friday, quarterly profit higher than they originally expected. Stock is up 2 percent—selling now at $169 per share in the early morning—backed largely by a strong Medicare Advantage business.
Indeed, the Aetna, Anthem, and UnitedHealth Group insurers have all said they are losing money as a result of lower-than-expected enrollment in the Affordable Care Act—aka, “Obamacare”—exchanges. Unfortunately for insurers, there were not enough healthy enrollees to contribute to those who have enrolled, patients who are also sicker and older (and therefore require more medical care) than they had originally expected.
Humana had originally said, back in August, that the company would shrink its individual commercial business to 156 counties next year. This is a massive reduction from its original 1,351 counties. The company said that focusing in this way keeps performance in line with expectations.
As such, Humana said it now expects for premiums to reach between $1 billion and $1.25 billion through next year—in its ACA plans—which is up from the $750 million-to-$1 billion range estimated from August. Humana had estimated premiums to reach about $3.4 billion in 2016.
The company goes on to assimilate that recent market exits from competing insurers have resulted in some members being assigned to other companies that continue to offer health care plans through Obamacare.
Of course, this is only the beginning; Humana was recently acquired by larger rival Aetna in a transaction that has been challenged by US antitrust authorities. Humana does report its net income rose from $314 million ($2.09 per share) to $450 million ($2.98 per share) in the third quarter with earnings of $3.18 per share. This beat analyst expectations of $3.15 per share. Furthermore, the company now expects to reach full-year earnings of roughly $9.50 per share.
At the same time, Humana shares have fallen just shy of 8 percent since the first of the year but its rating on the Standard & Poor’s 500 index has increased by 2 percent. At close of day, yesterday, Humana stock was down 7.4 percent.