Health insurer Humana Inc
Analysts said the fourth-quarter results were messy because of multiple charges that may be one-time in nature. But they were heartened by enrollment trends for Humana's Medicare plans, which account for a large percentage of the company's revenue.
Shares of Humana, one of the largest Medicare plan providers, fell more than 2 percent in premarket trading.
Humana reported strong enrollment despite a shorter Medicare selling season that had led to some uncertainty about how the company would perform.
Their enrollment was considerably better than expected, Gleacher & Co analyst Joseph France said. A lot of the uncertainty about the outlook depends on their enrollment, and their enrollment is done, and it's very good.
Shares of health insurers have outperformed the broader market this year as investors become more comfortable with the fallout from the U.S. healthcare overhaul and are reassured by the companies' outlooks for this year.
Humana said fourth-quarter net income fell 57 percent to $107.3 million, or 63 cents per share, from $250.7 million, or $1.48 per share, a year earlier.
Analysts on average expected 81 cents per share, according to Thomson Reuters I/B/E/S. However, Humana cited $1.02 per share in various costs, and it was not immediately clear whether analysts would exclude them as one-time items.
The expenses included strengthening reserves tied to the company's long-term care business, spending to launch a Medicare prescription drug plan, and costs from a just-completed deal, Humana said.
While the quarter may take some deciphering of what should be included or excluded by different analysts, the operating performance is clearly ahead of track, Wells Fargo analyst Peter Costa said in a research note.
Revenue rose more than 9 percent to $8.35 billion.
The company now expects 2011 earnings of $5.70 to $5.90 per share, up from its prior range of $5.45 to $5.65. It initially forecast a 2011 profit of $5.35 to $5.55 per share in November.
The outlook still represents a decline from 2010, as the company has previously projected lower profit margins in its Medicare plans.
But Humana said it had enrolled more people than expected in January into its Medicare Advantage plans; its January membership in such plans was about 1.89 million.
The company also saw a huge boost in January in its Medicare prescription drug plans -- up by more than 630,000 from the end of December to nearly 2.4 million. The company cited successful enrollment into a new, national plan it is selling with Wal-Mart Stores Inc
Humana also boosted its 2011 expectation for earnings in its commercial plans that serve employers, citing improved overall operations.
Shares of Humana were down 2.1 percent at $59.26 in trading before the market opened.
(Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn)