Humana Inc.’s (HUM – Free Report) third-quarter 2017 operating earnings per share of $3.39 beat the Zacks Consensus Estimate by approximately 3.7%. The bottom line improved 6.6% year over year driven by lower share count.

However, adjusted consolidated pretax income of $915 million declined 2% due to charges associated with voluntary and involuntary workforce reduction program and lower pretax earnings in the company’s Healthcare services segment. However, this was partially offset by improvement in the company’s Group & Specialty and Retail segments.

Operational Update

Adjusted consolidated revenues of $13.1 billion grew 2% on higher Retail segment revenues from the company’s Medicare business. Revenues, however, missed the Zacks Consensus Estimate by 2%.

Humana’s adjusted consolidated benefit ratio of 82.4% deteriorated 90 basis points (bps) from the prior-year quarter, primarily due to the impact of the temporary suspension of the health insurance industry fee in 2017.

Adjusted consolidated operating cost ratio of 11.8% improved 70 bps from the year-ago quarter, also due to the temporary suspension of the health insurance industry fee for 2017.

Quarterly Segment Results

Retail Segment

Revenues from the Retail segment were $11.05 billion, up 2% year over year, primarily owing to higher revenues from the company’s Medicare Advantage business resulting from increased membership.

Benefit ratio of 84.3% deteriorated 70 bps year over year, primarily due to the impact of the temporary suspension of the health insurance industry fee in 2017. The segment’s operating cost ratio of 9.8% improved 80 bps year over year because of the same reason.

Adjusted pretax income of $616 million remained flat year over year.

Group and Specialty Segment

Revenues from the Group and Specialty segment were $1.85 billion, up 1% from the prior-year quarter, primarily due to increased group fully insured per-member premiums.

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