Dive Brief:
- Healthcare giant Humana posted Q3 revenues of $12.24 billion, a more than 18% rise year-over-year.
- But the company's profits tumbled more than 21% to $290 million, a $78 million shortfall compared to Q3 2013.
- Humana's revenue increases were driven by a massive surge in its retail and commercial medical membership, which grew by more than 120%, as well as a sharp rise in premium revenue and services tendered. But the company's operating expenses were also up considerably (more than 20% compared to last year), leading to a much smaller profit margin.
Dive Insight:
Humana really took the "you have to spend money to make money" aphorism to heart in Q3. Many of the increased expenses can probably be explained by an outreach push during healthcare reform's nascent years, as well as the operational considerations of preparing for a new surge of customers.
This trend should become less dramatic in the coming years since Humana has likely established much of the foundation it needs to thrive. But the growing revenue, falling profit dynamic may persist during the roller coaster of the changing American health sector.