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Humana profits drop 11% as insurer cuts 2,700 jobs

Humana reported third quarter income of $799 million, compared to $902 million during the same period in 2016.

Susan Morse, Senior Editor

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Humana's profits dropped by 11 percent in the third quarter fueled by charges associated with the voluntary early retirement and forced layoff of about 2,700 employees representing 5.7 percent of its workforce.

Another factor was lower pretax earnings in its healthcare services segment primarily due to continued lower mail order pharmacy utilization, partially associated with new members in the company's Humana-Walmart stand-alone prescription drug plan.

[Also: Humana enters value-based agreement for its Medicare Advantage members in New York]

On Wednesday, Humana reported third quarter income of $799 million, compared to $902 million during the same period in 2016.

Losses were offset by year-over-year improvement in the company's  individual commercial, retail, and group and specialty segments. Retail continues to perform well, primarily driven by Medicare Advantage, Humana said.

[Also: Cleveland Clinic, Humana, partner on Medicare Advantage plans]

Another big factor during the first quarter was the $1 billion payment by Aetna of the breakup fee owed to the failed merger of the two insurers. Net gain from the termination of the agreement was approximately $947 million pretax.

Year-to-date profit for 2017 is $3.53 billion compared to $2 billion in 2016, a $1.49 billion increase, or 73 percent.

"Our 2017 financial performance and improved Star ratings that were announced in October reflect the solid execution of our strategy and the effectiveness of our integrated care delivery model," said CEO Bruce D. Broussard. "With the first several weeks of the Annual Election Period behind us, we feel comfortable with our 2018 Medicare Advantage competitive positioning. As a result of our over performance in 2017 and other cost savings measures, we made targeted investments in our product design, clinical programs and operating processes, which enabled us to maintain stable plan benefits, simplify the member experience and improve clinical outcomes."

Humana has 12 contracts rated 4 stars or above. This is 2.4 million members, representing 74 percent of the company's Medicare Advantage membership.

Humana received a 4.5 star rating on CMS's 5-Star rating system for five MA contracts offered in eight states, an increase from one  contract last year, the insurer said.

Twitter: @SusanJMorse
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