Dive Brief:
- Humana's net income rose to $431 million in Q2 from $344 million last year and the company reported revenue of $13.73 billion, which missed analyst estimates of $13.8 billion.
- The company's consolidated benefit ratio, a carefully watched metric that measures its spending on medical claims versus premium revenue it takes in, was 85.2% versus 83.1% last year. Ana Gupte, a Leerink Partners analyst, told Reuters the ratio was 50 basis points worse than the Wall Street consensus.
- Earlier this month, Human said costs related to hospital admission rates among Medicare beneficiaries was higher than expected and it cut its 2015 outlook by 8%, causing shares to fall.
Dive Insight:
The company said this week that medical costs have not gotten worse since its reported outlook earlier this month. It reiterated that it has priced 2016 premium rates to cover these costs, indicating this key metric should improve.
Humana has missed several analyst expectations over several quarters due to cost issues, raising investor concerns about the Aetna deal. The $37 billion deal is expected to face tough antitrust scrutiny.