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Humana (HUM) Beats on Q2 Earnings, Raises Guidance

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Humana Inc. (HUM - Free Report) is one of the largest health care plan providers in the United States. The company’s takeover by Aetna Inc. is a much-awaited and closely watched event in the health insurance space. The acquisition is due in the second half of 2016. The agreement has been unanimously approved by the board of directors of both companies. The combined entity is expected to be the second-largest managed care company in the U.S.

At present Humana’s core operations include the provision of health insurance benefits under Health Maintenance Organization (HMO), Private Fee-For-Service (PFFS), and Preferred Provider Organization (PPO) plans. The company also provides other benefits with specialty products including dental, vision, and other supplementary benefits. Humana capitalizes on its established Accountable Care arrangement to provide its Medicare Advantage (MA) members with quality care at an affordable price.   

Currently, Humana has a Zacks Rank #2 (Buy), but that could definitely change following its earnings report which was just released. We have highlighted some of the key stats from this just-revealed announcement below:

Earnings: Humana surpassed our earnings estimate. Our consensus called for EPS of $2.26, and the company reported EPS of $2.30.

HUMANA INC NEW Price and EPS Surprise

HUMANA INC NEW Price and EPS Surprise | HUMANA INC NEW Quote

Revenue: Revenues also beat our estimates. Our consensus called for revenues of $13.63 billion, and the company reported revenues of $14.01 billion.

Key Stats to Note: Benefit ratio decreased 90 basis points to 84.3% in the quarter. Operating cost ratio decreased 110 basis points to 12.2%.

Cash flows used in operations totaled $296 million, which compared favorably to cash flow used in operations of $608 million in the year ago quarter.

The company raised its 2016 adjusted EPS to at least $9.25.

Check back later for our full write up on this HUM earnings report later!

 

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