Humana Inc. (NYSE: HUM) today reported diluted earnings per common share (EPS) for the quarter ended June 30, 2016 (2Q 2016) versus the quarter ended June 30, 2015 (2Q 2015) and for the six months ended June 30, 2016 (1H 2016) versus for the six months ended June 30, 2015 (1H 2015) as follows:
|Consolidated pretax income (in millions)||2Q 2016||2Q 2015||1H 2016||1H 2015|
|Recast (a)||Recast (a)|
|Generally Accepted Accounting Principles (GAAP)||$636||$793||$1,136||$1,537|
|Transaction and integration costs associated with pending transaction with Aetna Inc. (Aetna)||26||–||61||–|
|Amortization associated with identifiable intangibles||20||24||41||50|
|Gain related to sale of Concentra, Inc. (Concentra)||–||(267)||–||(267)|
|Adjusted (non-GAAP) (a)||$682||$550||$1,238||$1,320|
|Diluted earnings per common share (EPS)||2Q 2016||2Q 2015||1H 2016||1H 2015|
|Recast (a)||Recast (a)|
|Transaction and integration costs associated with pending Aetna transaction||0.16||–||0.37||–|
|Amortization associated with identifiable intangibles||0.08||0.10||0.17||0.21|
|Gain related to Concentra sale (1H15 EPS impact includes tax benefit from 1 st quarter)||–||(1.18)||–||(1.53)|
|Adjusted (non-GAAP) (a)||$2.30||$1.77||$4.29||$4.35|
The company has included financial measures throughout this earnings release that are not in accordance with GAAP. Management believes that these measures, when presented in conjunction with the comparable GAAP measures, are useful to both management and its investors in analyzing the company’s ongoing business and operating performance. Consequently, management uses these non-GAAP financial measures as indicators of business performance, as well as for operational planning and decision making purposes. Non-GAAP financial measures should be considered in addition to, but not as a substitute for, or superior to, financial measures prepared in accordance with GAAP.
“Our second quarter and year-to-date results show the improvement in the effectiveness of our clinical programs and increasing clinical engagement by our members,” said Bruce D. Broussard, Humana’s President and Chief Executive Officer. “The improved health outcomes from these programs is not only lowering healthcare costs, but allowing more affordable options for our Medicare members.”
GAAP consolidated pretax income for 2Q 2016 of $636 million was down $157 million, or 20 percent, compared to $793 million in 2Q 2015, reflecting higher operating earnings in each of the company’s segments more than offset by the impact of the pretax gain associated with the completion of the sale of Concentra in June 2015 as well as the 2Q 2016 increase in the company’s premium deficiency reserve (PDR) for certain of its 2016 Individual Commercial policies. Higher segment operating earnings primarily reflected year-over-year increases across a number of the company’s businesses, particularly the individual Medicare Advantage and Healthcare Services businesses, which were partially offset by continuing challenges in the company’s individual commercial medical (Individual Commercial) business.
Adjusted consolidated pretax income for 2Q 2016 of $682 million rose $132 million, or 24 percent, versus $550 million in 2Q 2015 primarily due to the same factors impacting the GAAP pretax income comparison, with the exception of the prior year Concentra gain, which was not included in Adjusted pretax income.
GAAP consolidated pretax income for 1H 2016 of $1.14 billion decreased $401 million, or 26 percent, from $1.54 billion in 1H 2015. Adjusted consolidated pretax income for 1H 2016 of $1.24 billion declined $82 million, or 6 percent, versus $1.32 billion in 1H 2015. In each case, changes for pretax income for 1H 2016 versus 1H 2015 were primarily due to the same factors impacting the year-over-year comparison for 2Q 2016 as well as the unfavorable effect of leap year seasonality.
- All major lines of business are exceeding management’s original expectations, with the exception of individual commercial
- Enhanced consumer participation and engagement helping to drive improvement in Medicare Advantage and Healthcare Services results
- Humana awarded Department of Defense TRICARE East Region contract