Humana Inc. reported lower fourth-quarter earnings that still exceeded analysts' expectations as the health insurer kept control of rising costs.
The company said on Monday that net income had fallen to $192 million, or $1.19 a share, from $199 million, or $1.20 per share, a year earlier.
Analysts on average had expected earnings of $1.06 per share, according to Thomson Reuters I/B/E/S.
Leerink Swann analyst Jason Gurda said that 7 cents per share of the earnings beat was due to a decline in the company's tax rate from the year-earlier quarter.
He said the company's first-quarter outlook indicated that the quarter was shaping up to be better than expected.
Humana said it expected first-quarter earnings of $1.75 to $1.85 per share, compared with analysts' expectations of $1.53.
Fourth-quarter revenue rose 6 percent to $9.56 billion from $9.06 billion, missing the analysts' average estimate of $9.73 billion.
Humana backed the outlook it gave in November for 2013 earnings of $7.60 to $7.80 per share, saying it expected to benefit from improved operating results and its Metropolitan Health Networks Inc acquisition.
The company forecast 2013 revenue of $41 billion to $41.5 billion, in line with Wall Street estimates.
Louisville, Kentucky-based Humana said the costs of providing benefits in its retail business had risen, but operating expenses for this group, combined with healthcare for employer groups, had fallen. Operating expenses for its military healthcare contract rose, the company said.
Humana, which has a large business providing Medicare and Medicaid healthcare, has struggled with rising costs and downward pressure on payments from the U.S. government for medical services.
Other health insurers, including UnitedHealth Group Inc., WellPoint Inc. and Aetna Inc., have also reported on difficult conditions in their fourth-quarter earnings. The industry is bracing for further change this year and next as state and U.S. government-run electronic health exchanges begin selling insurance directly to consumers.
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