But its earnings still beat analysts' expectations and the company raised its earnings forecast for the full year.
Humana also announced a deal aimed at solidifying its Medicare Advantage business, especially in Florida.
And the company said that a top executive being groomed as its next CEO will take over those daily management duties soon. Bruce D. Broussard, the company's president since last December, will double as chief executive officer effective this coming Jan. 1.
Michael B. McCallister, who guided the company's growth as CEO for 12 years, will become non-executive board chairman. McCallister's plans to retire as CEO were disclosed a year ago.
Louisville-based Humana said it has agreed to acquire Metropolitan Health Networks Inc. in a deal aimed at strengthening its Medicare Advantage business, a government-subsidized comprehensive health insurance for seniors.
Metropolitan Health co-ordinates medical care for Medicare Advantage and Medicaid recipients, primarily in the crucial Florida market. Under the agreement, Humana will pay $11.25 per share in cash to acquire Metropolitan Health's outstanding shares. That part of the deal is worth about $500 million. Humana said it will also assume Metropolitan Health's debt. Humana said that and transaction costs will boost the total value of that deal to about $850 million.
The transaction, subject to Metropolitan Health shareholder approval, is expected to close early next year.
In another deal, Humana said it has acquired Certify Data Systems, which specializes in health information exchange technology. Certify Data specializes in connecting healthcare providers so they can share patient health information in real time. Terms of that transaction were not disclosed.
In its earnings report, Humana reported net income of $426 million, or $2.62 per share, in the third quarter. That's down from $445 million, or $2.67 per share, a year ago. Analysts polled by FactSet expected earnings of $2.05 per share.
Revenue rose to $9.65 billion from $9.3 billion a year ago. Analysts expected $9.88 billion.
Humana said it now expects to earn $7.25 to $7.35 per share in 2012, up from its previous estimate of $6.90 to $7.10 per share.
The company cited improvement in its medical claim reserves and higher enrolment in its stand-alone Medicare prescription drug plans for raising its full-year earnings estimate.
Analysts had expected earnings of $7.12 per share for the year.
Its shares rose 99 cents, or 1.3 per cent, to $76.20 in premarket trading. Humana shares are up 26 per cent from a 52-week low of $59.92 in late July. They traded as high as $96.46 in mid-January.
Humana's third-quarter earnings, however, were dragged by a trend in which a higher percentage of premium dollars from its members are going to pay for medical claims in its retail and employer group segments.
Humana reported pretax income of $424 million in its key retail segment, down by $117 million from the year-ago period.
Its individual Medicare Advantage membership surpassed 1.9 million as of Sept. 30, up 18 per cent from a year ago. Those plans offer privately run, government-subsidized comprehensive health insurance for seniors with extras likes vision or dental coverage in addition to basic Medicare coverage. Humana said its group Medicare Advantage membership reached 395,700, up 25 per cent from a year ago.
Membership in its individual stand-alone Medicare prescription drug plans rose 19 per cent to nearly 2.95 million as of Sept. 30. Humana's position in that market has benefited from teaming with Wal-Mart Stores Inc.
Pretax income in its health and well-being services segment totalled $148 million, compared to $83 million a year ago. The increase mainly reflected growth in Humana's pharmacy business