(RTTNews) -  Private Medicare plans provider Humana Inc. (HUM: News ) on Monday posted a sharp growth in third-quarter profit on strong performance at its Government businesses, boosted by Medicare Advantage program. Further, the health insurer reaffirmed its 2009 earnings forecast, and initiated financial guidance for fiscal 2010.

Q3 Analysis

The Louisville, Kentucky-based company's third-quarter net income was $301.5 million, a jump of 64.8% from $183.0 million reported in the corresponding period last year. On a per share basis, earnings climbed 63.3% to $1.78 from $1.09 in the prior-year quarter.

On average, 21 analysts polled by Thomson Reuters expected the company to post earnings of $1.77 per share. Analysts' estimates typically exclude special items.

The company noted that the year-ago results reflected $0.40 per share in realized losses primarily associated with other-than-temporary impairments in investments and sales of distressed financial institution securities. Third quarter of 2008 results also included high stand-alone Prescription Drug Plan or PDP claim expenses.

Quarterly revenues advanced 8.0% to $7.72 billion from the previous year's revenue of $7.15 billion, but fell short of twelve Wall Street analysts' consensus revenue estimate of $7.82 billion for the quarter.

Michael McCallister, president and chief executive officer of Humana, said, "Our results this quarter reflect continued solid performance in our Government businesses, offsetting continuing challenges in our Commercial Segment."
Premiums rose 6.5% to $7.44 billion from $6.99 billion a year ago, while administrative services fees grew 16.9% to $133.7 million from $114.4 million in the previous year. The increase in premiums and administrative services fees primarily reflects an increase in both average Medicare Advantage membership and per-member premiums for these products.

The latest quarter's consolidated benefit ratio declined to 82.1% from 83.1% in the same quarter of last year, largely due to a decline of 220 basis points in the Government Segment, partially offset by a 250 basis point increase in the Commercial Segment benefit ratio.

Segment Results

The company's Government segment reported pretax income of $474.5 million, compared to $271.7 million in the prior-year quarter, primarily driven by lower PDP claim expenses, an 11% rise in average Medicare Advantage membership, the implementation of member premiums for most of the company's Medicare Advantage products, and higher investment income. Medicare Advantage membership grew to 1.51 million at September 30, 2009, up 11%, from last year.

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