Health insurer Humana profit beats on higher premiums for Medicare plans

U.S. health insurer Humana beat quarterly profit estimates and stuck to its full-year forecast on Wednesday, benefiting from more members paying higher premiums for its government-backed Medicare plans.

Sales at its retail unit, which includes Medicare plans offered to people older than 65 or those with disabilities, rose 19.6% to $16.76 billion in the first quarter as it added 404,800 more members, bringing the total to 3.8 million.

The insurer said a rise in pharmacy costs after it allowed early prescription refills for members helped offset a drop in healthcare spending in the second half of March as members and healthcare providers deferred non-essential procedures.

Its consolidated benefit ratio, the percentage of premiums spent on claims, improved to 85.1% in the quarter from 86.2% last year, beating consensus estimates of 85.79%.

Humana continues to expect full-year adjusted profit to be in the range of $18.25 to $18.75, the mid-point of which is above Street estimates of $18.44.

Net income fell to $473 million, or $3.56 per share, in the quarter, from $746 million, or $4.16 per share, a year earlier.

Excluding items, it earned $5.40 per share, beating the analysts’ average estimate of $4.68 per share, according to Refinitiv data.

Total revenue rose 17.6% to $18.94 billion, above estimates of $18.47 billion and the company said the impact of the Covid-19 outbreak was not material during the quarter.