In the health insurance industry this week, Aetna’s loss was Humana’s gain.

While the Hartford, Conn.-based insurer had a $381 million net loss, primarily because it paid its Louisville-based rival $1 billion related to their failed merger, Humana booked a $1.1 billion first-quarter profit.

Aetna said it incurred transaction and integration costs in the first quarter of $1.2 billion, compared to $66 million a year earlier.

Meanwhile, Humana said this week that its first-quarter net income rose 339 percent from a year earlier, primarily because of $947 million it received from Aetna.

A federal judge in January blocked the two health insurance giants’ proposed merger, siding with government regulators who said that the deal would materially reduce competition and harm consumers, especially older Americans on government-paid health insurance. The insurers had agreed that if the merger failed, Aetna, the proposed acquirer, would pay Humana the break-up fee.

Bruce Broussard

Humana CEO and President Bruce Broussard said the company’s first-quarter results “strongly reinforce Humana’s strength as an independent company.”

The insurer said that it gained nearly 500,000 customers for its Medicare Advantage and prescription drug plans, which boosted revenue in its retail segment. In the Group and Specialty segment, which includes employer plans, the number of customers fell by nearly 270,000, but revenue improved, thanks mostly to higher insurance premiums. Revenue in the Healthcare Services segment fell 4 percent.

The share price of both companies rose this week. Aetna’s shares were up about 3 percent through midday Thursday, as the insurer raised its outlook for the year. Humana’s shares rose 1.7 percent as the company reaffirmed its recently released higher earnings projection. Humana also said that while total first-quarter revenue fell by a fraction of 1 percent, operating expenses, excluding costs related to the merger, fell nearly 2 percent.

Meanwhile, Humana remains an attractive takeover target, according to a recent report by Bloomberg. The Trump administration might be less inclined than its predecessor to stop another megamerger, the report suggested, which might make it easier for Humana to merger, especially with a rival such as Cigna, with which it has little geographic overlap.

A University of Louisville professor had told Insider that regardless of the outcomes of the proposed megamergers, consolidation pressures in the health care industry would remain.

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Boris Ladwig
Boris Ladwig is a reporter with more than 20 years of experience and has won awards from multiple journalism organizations in Indiana and Kentucky for feature series, news, First Amendment/community affairs, nondeadline news, criminal justice, business and investigative reporting. As part of The (Columbus, Indiana) Republic’s staff, he also won the Kent Cooper award, the top honor given by the Associated Press Managing Editors for the best overall news writing in the state. A graduate of Indiana State University, he is a soccer aficionado (Borussia Dortmund and 1. FC Köln), singer and travel enthusiast who has visited countries on five continents. He speaks fluent German, rudimentary French and bits of Spanish, Italian, Khmer and Mandarin.