Humana Inc. (HUM) posted strong first quarter earnings, beating both the Zacks Consensus Estimate and the prior-year earnings, owing to improved performance in the Employer Group and Health and Well-Being Services business segments. Humana benefited from the new rule of the health care reform, which led to an increase in the share repurchase authorization and Humana's 2011 outlook.
Humana also initiated a cash dividend to its shareholders on the strong outlook. The company's medical and specialty membership hiked on better-than-expected sales at the end of the quarter.
Overall, we believe that the increase reflects surplus cash flows generation, favorable prior-period claims development, and higher projected earnings for the company's segments. We retain our Outperform recommendation on Humana shares.
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