Humana Tumbles on Earnings; Drags down Sector

Shares of Humana fell more than 12 percent Tuesday after the managed-care provider reported second-quarter earnings and cut its profit outlook for the year.

After the closing bell on Monday, Humana said it expects full-year earnings to fall within a range of $6.90 to $7.10 a share, down from $7.38 to $7.58 a share. Humana said higher costs related to Medicare Advantage patients caused it to rethink its profit picture for the rest of the year.

One analyst at Goldman Sachs said in a note to clients Tuesday morning that a number of health insurers are experiencing headwinds going into the latter half of the year. The analyst also said, “looking ahead for both [Humana] and the sector, it is not yet clear if pressures will ease in 2013: we should start to get a clearer picture later this year at the time we also absorb the election results.”

Those predictions put a damper on Aetna shares as well. Shares of the insurer traded down about 2 percent for the day.

Tuesday, Aetna (NYSE: AET) reported positive earnings and raised its view for 2012. Specifically, the company reported second-quarter net income of $457.6 million, or $1.32 a share. Revenue was $8.83 billion compared to last year's $8.32 billion. However, the stock traded lower as investors sold off the industry's prospects.

Other health insurers are also feeling the side effects from Humana's results today. UnitedHealth Plans and Wellpoint Inc. were both down 3 percent Tuesday afternoon.

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