Humana's first-quarter earnings jumped 91 percent and trumped analyst forecasts, as the health insurer's Medicare Advantage enrollment and revenue grew.

The Louisville, Ky., company also hiked its 2013 earnings forecast well above expectations, and its shares soared more than 4 percent in morning trading. But Humana also said earnings growth next year is uncertain due to funding cuts for Medicare Advantage plans, which bring in more than 60 percent of its revenue.

Humana Inc. is the second-largest provider of Medicare Advantage plans, which are privately run versions of the government's Medicare program for the elderly and disabled people. The insurer trails only UnitedHealth Group Inc. in enrollment.

Shares of Humana and other insurers that provide Medicare Advantage coverage slid in February after the Centers for Medicare and Medicaid Services released data that pointed to payment cuts as steep as 8 percent for next year.

The government then softened the blow to a reduction of around 4 percent, according to some estimates. But UnitedHealth said last month that cut will still be tough to stomach, given rising medical costs and other funding reductions that could hit the program next year.

Insurers offer hundreds of different Medicare Advantage plans around the country, and some have said they may have to cut benefits, raise the premiums customers pay or leave markets entirely to earn adequate profits.

"On the immediate horizon, while the final 2014 Medicare rate notice remedied some aspects of the major reduction that was initially proposed, funding challenges continue, making 2014 earnings growth uncertain at this time," Humana CEO Bruce D. Broussard said in a statement from the company.

Analysts have said Humana's Medicare Advantage membership is skewed toward preferred provider organization coverage, which can yield thinner profit margins than health maintenance organizations. That makes them more vulnerable to funding cuts.

Humana and its competitors usually provide specific earnings forecasts for the next year in the fourth quarter.

For the first quarter, Humana earned $473 million, or $2.95 per share. That compares with $248 million, or $1.49 per share, in last year's quarter.

Total revenue climbed nearly 3 percent to $10.49 billion.

Analysts expected, on average, earnings of $1.80 per share on $10.24 billion in revenue, according to FactSet.

Humana said a litigation settlement and a delay in the implementation of federal spending cuts added about $66 million before taxes to its performance in the quarter, or 26 cents to earnings per share.

The insurer said enrollment in individual Medicare Advantage plans climbed nearly 7 percent to more than 2 million people, which helped premium and service revenue increase.

Enrollment jumped more than 15 percent to 412,800 in employer-sponsored, group Medicare Advantage plans for which Humana provides insurance and doesn't just administer the policies. These fully insured plans are generally more profitable for insurers.

Total Medicare premiums climbed more than 12 percent to $7.69 billion.

Humana said it now expects 2013 earnings to range between $8.40 and $8.60 per share, up from its previous forecast for $7.60 to $7.80 per share.

Analysts expect, on average, earnings of $7.92 per share.

Humana shares traded at $77.55, up $3.44, or 4.6 percent, in early trading.

 

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