LOUISVILLE, Ky. -- Health insurer Humana Inc. said Monday that its third-quarter net income fell 4 percent as more premium dollars from its members went to pay for medical claims, offsetting continued growth in its lucrative Medicare Advantage business.
But its earnings still beat analysts' expectations and the company raised its earnings forecast for the full year.
Humana also announced a deal aimed at solidifying its Medicare Advantage business, especially in Florida.
And the company said that a top executive being groomed as its next CEO will take over those daily management duties soon. Bruce D. Broussard, the company's president since last December, will double as chief executive officer effective this coming Jan. 1.
Michael B. McCallister, who guided the company's growth as CEO for 12 years, will become non-executive board chairman. McCallister's plans to retire as CEO were disclosed a year ago. He said the transition plan has progressed in line with expectations.
"Bruce has confirmed our board of directors' initial confidence in his ability to lead Humana successfully for many years to come," McCallister said in a conference call with industry analysts.
Louisville-based Humana said it has agreed to acquire Metropolitan Health Networks Inc. in a deal aimed at strengthening its Medicare Advantage business, a government-subsidized comprehensive health insurance for seniors.
Metropolitan Health coordinates medical care for Medicare Advantage and Medicaid recipients, primarily in the crucial Florida market. Under the agreement, Humana will pay $11.25 per share in cash to acquire Metropolitan Health's outstanding shares. That part of the deal is worth about $500 million. Humana said it will also assume Metropolitan Health's debt. Humana said that and transaction costs will boost the total value of the deal to about $850 million.
The transaction, subject to Metropolitan Health shareholder approval, is expected to close early next year.
In another deal, Humana said it has acquired Certify Data Systems, which specializes in health information exchange technology. Certify Data specializes in connecting health care providers so they can share patient health information in real time. Terms of that transaction were not disclosed.
In the conference call with industry analysts, Broussard said Humana plans to build about 15 primary and chronic care centers as part of its expansion efforts.
In its earnings report, Humana reported net income of $426 million, or $2.62 per share, in the third quarter. That's down from $445 million, or $2.67 per share, a year ago. Analysts polled by FactSet expected earnings of $2.05 per share.