(Reuters) -U.S health insurer Humana Inc (NYSE:HUM) on Wednesday beat Wall Street estimates for quarterly profit, benefiting from higher sales in its individual Medicare advantage plans and higher premium rates.
Humana has been betting on the strength of its main business of selling government-backed Medicare Advantage health plans, which cater to people older than 65 or with disabilities, to buoy profits amid challenges related to the ongoing COVID-19 pandemic.
In February, the company said it expected a positive impact of $1.32 billion to $2.04 billion in its Medicare Advantage health plans in 2021 from depressed use of non-COVID healthcare services.
The health insurer on Wednesday reiterated its 2021 adjusted earnings target and growth expectation in its individual Medicare Advantage for the year.
Oppenheimer analyst Michael Wiederhorn said, "the results were strong and the posture on guidance is likely related to early-year conservatism."
The company, seeking to strengthen its patient care business, is set to acquire the 60% stake it did not own in home health and hospice provider Kindred at Home for $5.7 billion.
Sales from the company's retail unit rose 11% to $18.65 billion in the first quarter ended March, as it added more members to its individual Medicare Advantage plans as well as Medicaid health plans for low-income Americans due to the economic downturn caused by the pandemic.
Its consolidated benefit ratio, the percentage of premiums spent on claims, worsened to 85.9% from 85.1% a year earlier. This was in-line with the average analyst estimate of 85.98%, according to IBES data from Refinitiv.
Excluding items, the company earned $7.67 per share in the first quarter, beating the average analyst estimate of $7.06 per share.