Humana posts $193M profit, eyes expansion of Walmart relationship

Humana will consider ways to expand its relationship with Walmart, the health insurer's CEO said during an Aug. 1 earnings call, according to Reuters.

The comments, from Humana CEO Bruce Broussard, eased some concerns the health insurer's collaboration with Walgreens Boots Alliance would pose as a barrier to future Walmart-Humana cooperation. Walgreens is teaming up with Humana to open primary care clinics for Medicare beneficiaries in two Walgreens stores in Kansas City, Mo., the companies said June 19.

Walmart and Humana currently have a co-branded Medicare prescription drug plan, which offers members up to a 20 percent discount on drug costs. In March, reports surfaced that Walmart was in preliminary talks with Humana about developing a closer partnership, with one possibility being Walmart acquiring Humana.

"Both of them [ties to Walmart and Walgreens] are complementary," Mr. Broussard said during the call, according to Reuters. He said partnering with one does not preclude a partnership with the other.

Humana saw shares rise 4 percent to a record $326.97 after Mr. Broussard's comments. Humana posted better-than-expected earnings, reporting revenues of $14.3 billion in the second quarter of 2018, up 5.4 percent from $13.5 billion reported in the same period a year prior. Humana said the change largely reflected gains in its Medicare Advantage business, as well as its group and specialty segments.

At the same time, the health insurer's expenses climbed 7.7 percent year over year to $13.4 billion, compared to $12.4 billion a year before. Some of the increases reflected workforce and benefit investments as a result of gains realized under the new tax law.

Humana ended the quarter with a steep decline in net income — 70.3 percent — to $193 million, compared to $650 million in the second quarter of 2017. The change largely reflected a $790 million loss due to the sale of its KMG America Corp. subsidiary.

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