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Humana Announces $750 Mln Accelerated Stock Repurchase; Backs 2018 EPS View

Humana Inc. (HUM) said that it will repurchase $750 million of its common stock through an accelerated stock repurchase agreement with Goldman Sachs & Co. LLC, as part of the $3.0 billion share repurchase program that Humana announced in December, 2017.

For the year ended December 31, 2018, Humana reaffirmed its GAAP guidance of $11.96 in earnings per common share, or approximately $14.40 in adjusted earnings per common share. Analysts polled by Thomson Reuters expect the company to report earnings of $14.43 per share for fiscal year 2018. Analysts' estimates typically exclude special items.

Based on actual annual election period or AEP results to date, the company revised its net membership growth estimate for its individual Medicare Advantage products for the year ended December 31, 2019 to 350,000 to 400,000 members, compared to its initial estimate of 250,000 to 300,000 members.

The revised membership estimate represents expected net membership gains of 11 percent to 13 percent above the expected year ended December 31, 2018 membership level of approximately 3.07 million members. The improved estimate is attributable to higher than forecasted retention of existing members during AEP as well as higher than anticipated sales.

The company confirmed its initial expectations for group Medicare Advantage net membership gains for the same period, projecting an increase of approximately 30,000 members year over year.

For PDP, the company now estimates a net membership decline of 750,000 to 800,000 members for the year ended December 31, 2019, compared to its initial estimate of a decline of approximately 500,000 members. The net decline is primarily attributable to the competitive nature of the industry and the pricing discipline the Company is employing, which has resulted in it no longer being the low cost plan in any market for 2019.

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