Shares of Humana, which have been hurt by investor jitters over Medicare, rose 7.2 percent.
The large provider of Medicare plans became the latest U.S. health insurer to easily surpass Wall Street profit forecasts for the latest quarter, even as their shares remain pressured by fears over health care reform.
Net income rose to $205.7 million, or $1.22 per share, from $80.2 million, or 47 cents per share, a year earlier, when its Medicare business suffered.
Analysts on average had expected profit of $1.14 a share, according to Reuters Estimates.
Revenue rose 10.8 percent to $7.71 billion.
We see many areas of strength in the quarter with overall good earnings quality, Goldman Sachs analyst Matthew Borsch said in a research note.
Humana posted pretax income of $166.1 million in its government segment, which includes Medicare, compared with a $3.2 million loss a year earlier. Lower claims expense in its prescription drug plans and implementation of premiums in its full-service Medicare Advantage plans helped results.
The results confirm Humana fixed problems with its Medicare prescription drug plans that plagued results last year, Sanford Bernstein analyst Ana Gupte said in a research note.
Humana's Medicare Advantage membership stood at 1.47 million at March 31, up 16 percent from a year earlier.
Concerns over the future of Medicare -- the U.S. government health program for seniors -- have hurt Humana shares.
Reimbursement rates for 2010 set earlier this year by the Centers for Medicare & Medicaid Services fanned investor worries over Medicare's profitability, while the shape of broader U.S. health reform remains uncertain.
Shares rose $1.99 to $29.35 in premarket trading. Through last week, Humana shares had fallen some 27 percent this year, compared to a 10 percent drop for the S&P Managed Health Care index <.GSPHMO>. At 4.6 times 2009 earnings estimates, Humana trades at about a 30 percent discount to the beaten-down group.
In Humana's commercial segment serving employers, the company reported pretax earnings of $127.7 million, compared with $127.2 million a year earlier.
Louisville, Kentucky-based Humana forecast full-year earnings of $6.10 to $6.20 per share. It had previously projected $5.90 to $6.10.
The higher forecast reflected improved performance in its government segment, partially offset by lower expected investment income, Humana said.
(Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn and Derek Caney)