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Humana 2nd-Quarter Profit Up 32%

July 31, 2001|From Bloomberg News and Reuters

Humana Inc. on Monday reported a 32% jump in quarterly profit as the second-largest operator of Medicare health plans raised premiums and added customers in government insurance contracts.

Net income rose to $25 million, or 15 cents a share, in its second quarter, from $19 million, or 11 cents, a year earlier, matching the average estimate of analysts surveyed by First Call/Thomson Financial.

Revenue declined 8% to $2.48 billion, reflecting the company's departure from numerous non-core markets and products last year to bolster profitability.

Humana has raised premiums 15% to 18% this year for some employer health plans, after falling behind rivals in the effort to control medical costs. The company is dropping customers in unprofitable Medicaid and employer plans and battling higher costs for customers in Medicare.

Chief Executive Michael McCallister is raising profit by focusing on profitable employer health plans and government contracts. McCallister was named CEO after Humana's stock fell by more than half in 1999 as medical costs rose and hospital company Columbia/HCA Healthcare Corp. raised prices, pinching profit.

Humana, which has about 6.5 million customers, said it lost members in employer health plans as it raised premiums almost 13% for those customers in the quarter. Premiums for Medicare customers rose almost 9%.

In the second quarter, Humana gained 1.2 million customers covered by the U.S. military's Tricare program when it bought an Anthem Insurance Co. unit. The May 31 transaction nearly doubled Humana's Tricare membership.

Humana said its medical-loss ratio, or the portion of premium dollars that pay for medical care, fell to 83.7% in the quarter, from 85% a year ago, as it exited unprofitable markets, including pulling its Medicare plans out of 45 counties.

The company has about 488,000 people in Medicaid plans, down 27% from a year ago.

Humana covers 418,000 people under Medicare, down 20% from a year ago.

PacifiCare Health Systems Inc., the biggest operator of Medicare health plans with about 1 million customers, reports earnings today.

Shares of Louisville, Ky.-based Humana rose 83 cents to close at $10.13 on the New York Stock Exchange.

Other earnings, excluding one-time gains or charges unless noted, include:

* Coach Inc.'s fiscal fourth-quarter profit climbed 76% to $9.24 million, or 20 cents a share, 2 cents better than forecasts. Sales by the maker of luxury handbags and accessories rose 12% to $136.8 million, boosted by new styles.

* Expedia Inc. reported profit of $15 million, or 25 cents a share, for its fiscal fourth quarter, exceeding analysts' average forecast of 20 cents, and said first-quarter profit also may beat expectations. In the year-earlier period, the Internet travel service had a loss of $13.1 million, or 30 cents a share. Sales climbed 112% to $78.5 million.

* Papa John's International Inc. said second-quarter profit fell 3.6% to $12.5 million, or 55 cents a share, hurt by higher energy and labor costs. Sales rose 3.3% to $239.2 million. The pizza chain also said higher advertising spending and rising cheese costs will result in earnings at the low end of estimates in the next two quarters.

* Tommy Hilfiger Corp.'s fiscal first-quarter profit fell 7.2% to$9 million, or 10 cents a share. Sales declined 11% to $355.7 million, led by a 16% drop in men's clothing sales. The results beat analysts' expectations by 2 cents.

* Tyson Foods Inc. said earnings fell 52% in its fiscal third quarter to $19.4 million, or 9 cents a share, as higher promotional costs, increased general expenses and a glut in the chicken-breast market all took a toll. The largest U.S. poultry producer said sales rose 4.8% to $1.89 billion. The latest results, which beat revised analysts' forecasts of9 cents, also were hurt by the strong dollar. Tyson forecast fourth-quarter earnings of 8 cents to 12 cents a share. Analysts on average have expected 15 cents, with a range of 8 cents to 20 cents.

* Williams Cos., an energy trader, pipeline and natural gas exploration company, said second-quarter profit from continuing operations rose 3.7% to $296.5 million, or 60 cents a share. Williams, which supplies gas to fuel California power plants run by AES Corp., said revenue rose 20% to $2.82 billion. The results, which beat analysts' expectations of 54 cents, were helped by better fuel refining earnings and higher natural gas prices.

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