LOUISVILLE, Ky. (AP) — Health insurer Humana Inc. is lowering its 2012 earnings outlook to account for a $45 million charge for settling litigation related to a military health insurance program.
The Louisville, Ky., company said it now expects earnings of $7.38 to $7.58 per share in 2012, down from the forecast it made last month for a range of $7.55 to $7.75 per share.
Analysts surveyed by FactSet expect, on average, earnings of $7.91 per share from Humana this year.
Humana said the case, filed in U.S. District Court in Florida, alleged contract and fraud claims.
Goldman Sachs analyst Matthew Borsch said in a research note Monday that the charge stems from a case in which Humana was accused of breaking its network agreements by providing reimbursement rates to health care providers that were below contracted amounts.
He said the program involved is TriCare, which provides health insurance for active and retired military members and their families.
Borsch said the charge is not an operating expense and won't happen again, so he's keeping his forecast for 2012 operating earnings of $7.85 per share.
Humana shares rose 1.7 percent, or $1.26, to $75.79 in Monday afternoon trading. The Dow Jones industrial average was up less than 1 percent.