(Bloomberg) -- Humana Inc. said it would eliminate about 2,700 jobs, or 5.7 percent of its workforce, as it looks to rein in its costs amid wider shifts in the health-insurance business.
The industry has been thrown into uncertainty by efforts to repeal or alter the Affordable Care Act. Humana, which this year scrapped a proposed $37 billion combination with rival Aetna Inc., had a smaller slice of the business created by the Obama-era health law than many peers, instead focusing on the more stable market for private Medicare plans.
Humana executives on a Wednesday conference call said other insurers view the Medicare Advantage market as a growth area. They said an increasingly crowded marketplace and a nondeductible government fee of $1 billion will be hurdles for the company next year.
Shares of Humana, which were up 26 percent this year through Tuesday's close, declined 4 percent to $245.91 at 11:02 a.m. in New York.
The company on Wednesday also raised its guidance for adjusted earnings per share for the year. Humana will give its 2018 outlook on its fourth-quarter conference call.
The insurer's moves come as a new round of deal intrigue is unfolding, with CVS Health Corp. said to be in talks to take over Aetna. The industry is also watching with increasing wariness for Amazon.com Inc.'s entry into the health business, a move that could reshape how drugs and medical care are paid for.
Humana's plans to let go of employees will include an early-retirement program as well as involuntary cuts, the Louisville, Kentucky-based company said in a statement on Wednesday. The insurer took estimated charges of 54 cents a share in the third quarter as a result of the anticipated cutbacks.
For the year ending Dec. 31, Humana said it now expects adjusted earnings per share of $11.60, up from its previous estimate of $11.50. The new projection doesn't include the cost of the job cuts.
To contact the reporters on this story: Marthe Fourcade in Paris at mfourcade@bloomberg.net, Natasha Rausch in New York at nrausch@bloomberg.net.
To contact the editors responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net, Timothy Annett, Cecile Daurat
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