Humana, one of the largest Medicare providers, boosted its forecast for membership in its full-service Medicare plans but projected worse trends for its commercial plans serving employers.
The company slightly raised its full-year profit forecast, a move some analysts had expected after the company won an extension of a military health contract. It was not immediately clear how the new forecast compared with analysts' estimates, analysts said.
Humana shares fell 2.6 percent in premarket trade.
Fourth-quarter net income rose to $250.7 million, or $1.48 per share, matching the average estimate of analysts, according to Thomson Reuters I/B/E/S. The results compared with $174.1 million, or $1.03 per share, a year earlier.
Revenue rose 2 percent to $7.37 billion. Analysts looked for $7.78 billion.
Humana, whose business is highly leveraged to Medicare, trades at among the lowest valuations for health insurers amid fears that the government will pressure reimbursement rates for the program.
Many analysts said the results met their expectations and that the shares were more likely to react to the U.S. budget released on Monday by President Barack Obama.
Humana's enrollment in its full-service Medicare Advantage plans rose 5 percent from a year earlier to nearly 1.51 million at the end of the year, but was down slightly from the end of September.
The company now expects to add 240,000 to 260,000 Medicare Advantage members by year-end, compared with previous expectations of 180,000 to 240,000.
Profit in its government segment that includes Medicare soared 69 percent to $452.3 million. The company faced lower prescription drug claim costs than a year earlier, when the design of one of its prescription drug plans led to steep costs.
Its commercial segment that includes plans serving employers reported a loss of $53.6 million against a loss of $6.3 million a year ago. The company cited higher medical and administrative costs.
Medicare results were better than expected ... while the commercial business results were worse than expected, Wells Fargo analyst Matt Perry said in a research note.
Louisville, Kentucky-based Humana raised its full-year earnings forecast slightly, to $5.15 to $5.35 per share, compared with a range of $5.05 to $5.25 previously, as the company won an extension of the Tricare military contract through the first quarter of 2011. Analysts' average forecast was $5.41.
Humana's forecast includes asset writedowns and charges tied to the exit of the Tricare contract. Some analysts excluded those charges from their projections, making it unclear if the consensus estimate was comparable to Humana's forecast, analysts said.
Collins Stewart analyst Brian Wright said Humana's new forecast equates to $5.58 to $5.78 per share excluding the Tricare charges. Perry characterized the outlook as in line.
Humana shares fell $1.25 to $47.37 in premarket trading.
(Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn, Derek Caney and John Wallace)