Last week, Humana Inc. (HUM) announced that it has acquired Harris, Rothenberg International Inc. The financial terms of the deal were not divulged. However, this acquisition is not likely to materially affect Humana’s 2012 financial results.
Harris Rothenberg is a 30-year old privately-held service provider that offers work/life services and employee assistance programs for a variety of issues, such as financial, legal or emotional difficulties, addiction to alcohol or drugs, child care, etc. The company also provides coaching and training to employees. Harris Rothenberg provides its services to 5.5 million people in the U.S. and 70,000 people outside the country.
The acquisition will strengthen Humana’s employee assistance programs and help its corporate clients to reduce expenditure on healthcare. It will also enable the client company to tackle problems, such as reduced productivity due to absenteeism and health problems of employees.
Earlier, in July 2012, Humana completed the acquisition of chronic-care provider SeniorBridge for an undisclosed amount. New York-based SeniorBridge is a healthcare provider, which offers in-home care to seniors with chronic diseases such as Alzheimer’s disease, Parkinson’s disease and congestive heart failure. It has a network of 1,500 care managers in the U.S.
The acquisition will expand Humana’s Health and Well Being segment, which provides primary care, pharmacy, integrated wellness, and home care services. SeniorBridge’s services will be particularly useful for Humana’s Medicare members as professional post-hospitalization home care will significantly reduce readmissions and will also ensure speedy recovery. Moreover, professional care at home will improve the general health of the old and chronically-ill members of Humana.
Earnings Review
Humana’s second-quarter 2012 operating earnings per share came in at $2.19, lagging the Zacks Consensus Estimate of $2.23 as well as the year-ago earnings of $2.59 per share. On a reported basis, Humana earned $356 million or $2.16 per share in the reported quarter, against $460 million or $2.71 per share in the prior-year quarter.
The Zacks Consensus Estimate for Humana’s third-quarter 2012 earnings stands at $2.05 per share, falling about 19% year over year. Of the 13 firms covering the stock, 12 revised their estimates downward, while no upward revisions were witnessed in the past 30 days.
Currently, the earnings for 2012 are expected to be around $7.17 per share, dipping 8% year over year. However, the estimate stands higher than Humana’s 2012 earnings forecast of $6.90–7.10 per share.
Humana Inc. is one of the largest health care plan providers in the U.S. and competes with other industry heavyweights like WellPoint Inc. (WLP) and Aetna Inc. (AET). The company carries a Zacks #4 Rank, which translates into a short-term Sell rating.
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