Upcoming AWS Coverage on Express Scripts Holding Post-Earnings Results

LONDON, UK / ACCESSWIRE / May 17, 2017 / Active Wall St. announces its post-earnings coverage on Humana Inc. (NYSE: HUM). The Company announced its first quarter fiscal 2017 financial results on May 03, 2017. The US health insurer exceeded earnings expectations. Register with us now for your free membership at:

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One of Humana's competitors within the Health Care Plans space, Express Scripts Holding Co. (NASDAQ: ESRX), reported on April 24, 2017 its Q1 2017 financial results. AWS will be initiating a research report on Express Scripts in the coming days.

Today, AWS is promoting its earnings coverage on HUM; touching on ESRX. Get our free coverage by signing up to

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Earnings Reviewed

Humana's GAAP consolidated revenues for Q1 2017 were $13.76 billion, down 0.3% compared to revenues of $13.80 billion in Q1 2016. The marginal decrease primarily reflected lower Individual Commercial segment's premiums, partially offset by higher Retail segment's revenues primarily resulting from the company's Medicare business. The Company's adjusted consolidated revenues for the reported quarter totaled $13.48 billion, up 4% compared to adjusted consolidated revenues of $12.91 billion in the year ago same period.

Humana's GAAP consolidated benefit ratio of 84.5% decreased 30 basis points from 84.8% for Q1 2016 primarily reflecting planned exits from certain Medicare Advantage markets that carried a higher benefit ratio than other markets, the impact of the Individual Commercial business. The Company's Q1 2017 GAAP consolidated operating cost ratio of 11.4% decreased 130 basis points from 12.7% in Q1 2016 primarily reflecting the temporary suspension of the health insurance industry fee for 2017.

For Q1 2017, Humana's net income rose to $1.12 billion, or $7.49 per share, compared to net income of $254 million, or $1.68 per share, in Q1 2016. The results included a net gain of $947 million associated with its terminated merger agreement with Aetna Inc. On an adjusted basis, the Company reported earnings of $2.75 per share, thus outperforming Wall Street's estimates for earnings of $2.50 per share.

Segmented Operating Results

During Q1 2017, revenues for Humana's Retail segment were $11.43 billion, up 5% compared to revenues of $10.90 billion in Q1 2016 primarily reflecting higher revenues associated with the company's Medicare Advantage business resulting from increased membership, as well as increased per-member premiums for the individual Medicare Advantage and state-based contract businesses.

Individual Medicare Advantage membership was 2,839,700 as of March 31, 2017, up 1% from 2,807,200 at March 31, 2016. Group Medicare Advantage membership was 431,100 as of March 31, 2017, an increase 23% from 349,200 at March 31, 2016. State-based contracts membership was 380,400 as of March 31, 2017, down 2% from 388,400 at March 31, 2016.

The Q1 2017 benefit ratio for the Retail segment of 88.1% decreased 50 basis points from 88.6% in Q1 2016 primarily due to planned exits from certain Medicare Advantage markets that carried a higher benefit ratio than other markets and the seasonal impact of leap day in Q1 2016 versus none in 1Q17. The Retail segment's GAAP pretax income of $370 million in Q1 2017 surged 162% to a GAAP pretax income for the segment of $141 million in Q1 2016.

For Q1 2017, Humana's Group and Specialty segment reported revenues of $1.88 billion, up 2% compared to revenue of $1.85 billion in Q1 2016 primarily reflecting an increase in group fully-insured commercial medical per-member premiums, partially offset by declines in average group fully-insured and ASO commercial medical membership.

The segment's Group fully-insured commercial medical membership was 1,119,400 at March 31, 2017, down 1% from 1,136,400 at March 31, 2016. Group ASO commercial medical membership was 447,000 at March 31, 2017, down 23% from 579,400 at March 31, 2016. The Group and Specialty segment reported GAAP pretax income of $171 million in Q1 2017 compared to GAAP pretax income of $172 million in Q1 2016.

During Q1 2017, Humana's Healthcare Services segment revenues of $5.96 billion decreased 4% from $6.23 billion in Q1 2016. The Company's generic dispensing rate improved to 91.1% in the reported quarter compared to 90.1% in the year ago same quarter. Primary care providers in value-based relationships of 51,300 at March 31, 2017, increased 7% from 47,800 at March 31, 2016. Pharmacy script volume of 107 million for the reported quarter improved 2% versus 104 million for the year earlier comparable quarter. Healthcare Services segment's GAAP pretax income fell 3% to $244 million in Q1 2017 compared to GAAP pretax income of $252 million in Q1 2016.

Balance sheet

At March 31, 2017, Humana had cash, cash equivalents, and investment securities of $19.05 billion, up 39% from $13.68 billion at December 31, 2016, primarily reflecting the early receipt of the April 2017 Medicare premium remittance of $3.07 billion in March 2017 because the scheduled payment date of April 01, 2017, fell on a weekend.

Humana's Debt-to-total capitalization at March 31, 2017 was 33.9%, up 620 basis points from 27.7% at December 31, 2016, primarily reflecting higher debt balances associated with the Company's recent debt issuance. During Q1 2017, the Company closed on a public offering of $1.00 billion in senior notes, with the intent of using the net proceeds for general corporate purposes. The Company's long-term target debt-to-total capitalization range of 30% to 35 % is expected to allow the Company to maintain its investment grade credit rating, while providing significant financial flexibility.

Operating cash flows

For Q1 2017, Humana's GAAP cash flows provided by operations were $4.21 billion compared favorably to cash flows provided by operations of $502 million in Q1 2016. Adjusted cash flows provided by operations for the reported quarter were $1.13 billion, 125% on a y-o-y basis.

Share repurchases

In February 2017, Humana's Board of Directors approved a $2.25 billion share repurchase authorization with an expiration date of December 31, 2017, and the Company subsequently entered into an agreement with a third party financial institution to effect a $1.50 billion accelerated stock repurchase program under the authorization.

Cash dividends

In April 2017, Humana's Board of Directors declared a cash dividend to stockholders of $0.40 per share, payable on July 31, 2017, to stockholders of record on June 30, 2017.

Stock Performance

On Tuesday, May 16, 2017, the stock closed the trading session at $226.20, dropping 2.12% from its previous closing price of $231.11. A total volume of 1.83 million shares have exchanged hands, which was higher than the 3-month average volume of 1.50 million shares. Humana's stock price surged 10.03% in the last three months, 17.48% in the past six months, and 32.76% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have gained 11.24%. The stock is trading at a PE ratio of 22.96 and has a dividend yield of 0.61%.

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