According to the Wall Street Journal Humana’s earnings topped 13% in the third quarter based largely on a managed care strategy. The economy apparently had a major impact on earnings with fewer people seeking medical care due to financial stress. Humana’s medical-cost ratio or the percentage of premium actually used to provide health care services dropped from 81.6% to 80.7% resulting a greater profit margin for Humana.
Humana recently announced its intent to purchase two Medicare Advantage HMOs to add an additional 80,000 members in the western U.S. to its member base.
Humana, following other companies like Aetna, is making a major play for Medicare managed care programs. Humana recorded a third quarter profit of $448.8 Million Dollars. Humana is betting that larger companies will benefit from the economics of scale related to large presence in the Medicare market. Humana is projecting revenues for the coming year in the range of $38.25 billion dollars. The question is whether Humana provides value for the amount of money it rakes in from government sources. Humana shares were up 5.7% yesterday.