Humana's profit drops on higher costsHumana posted middling quarterly results this week as it struggled to adhere to cost reduction initiatives.

Humana, one of the nation's larger health insurers, said this week its first quarter profit fell 21 percent as it paid out more in claims from customers. What's more, the company also affirmed it increased spending during the first three months of this year in an effort to more readily contend with an uptick in the number of customers participating in its Medicare Advantage program, a segment that is highly profitable for the company.

The Associated Press reports the company's quarterly results came in below analysts' expectations. Louisville, Kentucky-based Humana noted it expects its earnings to increase over the course of this year, offering shareholders a range of between $7.55 and $7.75 per share. The health insurer had previously forecast earnings of anywhere between $7.50 and $7.70 per share.

According to company executives, Humana is bullish on future growth prospects for the remainder of its fiscal year because of what they deemed a favorable climate in claims. Though its profit fell in the first quarter, Humana's earnings report was not entirely lackluster.

The company said its first quarter consolidated revenues were up 11 percent from the same period in 2011. In total, the company reported $10.22 billion in consolidated revenue in its last fiscal quarter. Total premiums and services also climbed in the quarter, increasing 11 percent from 2011.

Humana chairman and chief executive Michael B. McCallister affirmed the uptick in enrollment in the Medicare Advantage program would help fuel future growth. The division is lucrative for the health insurer, and Humana has aggressively courted customers to join the program.

"Our compelling senior value proposition and favorable demographics have made Humana one of the fastest growing Medicare Advantage and PDP companies in the nation," he said in a statement. "This growth trajectory has contributed solidly to our results for the first quarter and our continued confidence in our projected results for the full year."

Investors were largely underwhelmed by the firm's quarterly earnings report, as shares fell more than 6 percent in trading on Monday morning.

 
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