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Last Update: 05-Nov-12 08:47 ET
Humana shares little changed following beat on earnings and acquisition of Metropolitan Health
Humana (HUM $75.21 +0.00) reported third quarter earnings of $2.62 per share, $0.57 better than the Capital IQ consensus of $2.05, while revenues rose 3.8% year/year to $9.65 bln vs the $9.86 billion consensus. The company raised guidance for fiscal year 2012 with EPS of $7.25-7.35 from prior guidance of $6.90-7.10 versus the $7.11 consensus. The company issued downside guidance for fiscal year 2013 with EPS of $7.60-7.80 vs. $7.87 Capital IQ Consensus Estimate. Results for 3Q12 reflect the beneficial impact of certain Part D and operating expenses shifting from the previously expected 3Q12 timing to the fourth quarter 2012 as well as the beneficial impact of favorable prior-year medical claims reserve development of ~$0.21 per share in 3Q12 compared to $0.13 per share for 3Q11. Results for FY13 are expected to include approximately $0.30 per share as the company accelerates investments in integrated care delivery models in key markets to ready itself for the future health care environment. The 3Q12 consolidated benefit ratio of 82.2 percent increased by 150 basis points from 80.7 percent for the prior year's quarter. Individual Medicare Advantage membership was 1,911,800 at September 30, 2012, an increase of 298,400 members, or 18 percent from 1,613,400 at September 30, 2011.
As disclosed in November 2011, Michael B. McCallister, Humana's Chairman and Chief Executive Officer, plans to retire as the company's Chief Executive Officer. The company's Board of Directors has appointed Bruce D. Broussard, the company's President since December 2011, to become President and Chief Executive Officer effective January 1, 2013, completing the company's year-long transition plan for the CEO position. The company announced that it has entered into a definitive agreement to acquire Metropolitan Health Networks (MDF). Under the terms of the agreement, Humana will pay $11.25 per share in cash to acquire all of the outstanding shares of MDF and repay all outstanding debt for an estimated transaction value of approximately $850 mln plus transaction costs. The transaction is subject to Metropolitan shareholder approval as well as expiration of the Hart-Scott-Rodino anti-trust waiting period and is expected to close by the end of the first quarter of 2013. Humana expects to finance this transaction with a combination of cash and debt. Humana anticipates the transaction to be modestly accretive to its earnings for the year ending Dec 31, 2013.
As disclosed in November 2011, Michael B. McCallister, Humana's Chairman and Chief Executive Officer, plans to retire as the company's Chief Executive Officer. The company's Board of Directors has appointed Bruce D. Broussard, the company's President since December 2011, to become President and Chief Executive Officer effective January 1, 2013, completing the company's year-long transition plan for the CEO position. The company announced that it has entered into a definitive agreement to acquire Metropolitan Health Networks (MDF). Under the terms of the agreement, Humana will pay $11.25 per share in cash to acquire all of the outstanding shares of MDF and repay all outstanding debt for an estimated transaction value of approximately $850 mln plus transaction costs. The transaction is subject to Metropolitan shareholder approval as well as expiration of the Hart-Scott-Rodino anti-trust waiting period and is expected to close by the end of the first quarter of 2013. Humana expects to finance this transaction with a combination of cash and debt. Humana anticipates the transaction to be modestly accretive to its earnings for the year ending Dec 31, 2013.
