Humana Profit Climbs 30% Amid Cost Controls

Humana Inc., the No.2 operator of Medicare health plans, said third-quarter earnings rose 30% as it left unprofitable markets.

Net income rose to $30 million, or 18 cents a share, from $23 million, or 14 cents, a year earlier. Revenue fell 1% to $2.61 billion.

Humana has raised premiums by more than 15% in some markets to catch up with rising medical costs. The company also is dropping unprofitable customers in Medicaid and employer health plans and trying to control costs for customers covered by Medicare.

“I think the company is definitely headed in the right direction,” said analyst Greg Crawford of Fox-Pitt Kelton Inc.

Humana Chief Executive Michael McCallister is focusing on profitable employer health plans and government contracts. He was named to the post after Humana’s stock fell by more than half in 1999 as medical costs rose and hospital company HCA Inc. raised prices, hurting Humana’s profit.

Shares of Louisville, Ky.-based Humana rose 28 cents to $11.48 on the New York Stock Exchange.

Humana’s third-quarter results matched the 18-cent average estimate of analysts surveyed by Thomson Financial/First Call. The company expects 2002 per-share earnings of 84 cents to 88 cents. Analysts expect 87 cents a share.

Other earnings, excluding one-time gains or charges unless noted, include:

* Mercury General Corp. reported net income of $32 million, or 59 cents a share, up 17% from $27.4 million, or 51 cents, a year earlier. The Los Angeles-based automobile insurer said company-wide premiums written in the third quarter were $373.7 million, a 16.6% increase over 2000.

* Mirant Corp., one of the biggest U.S. electricity producers and energy traders, said third-quarter earnings more than doubled because the company sold more power and natural gas. Net income rose to $234 million, or 67 cents a share, from $98 million, or 29 cents, a year earlier. Revenue surged 95% to $8.19 billion.

* Newmont Mining Corp., the second-largest gold producer, returned to profit in the third quarter as production rose and operating costs fell in Indonesia. Denver-based Newmont had net income of $21.5 million, or 11 cents a share, contrasted with a loss of $36.5 million, or 19 cents, a year earlier. Analysts expected profit of 4 cents. Revenue rose 1% to $424 million.

* United California Bank reported third-quarter net income fell 39% to $25.7 million from $42.1million a year earlier. Average core deposits at the Los Angeles bank increased by $548 million.