Louisville-based 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 company plans to eliminate the jobs through a combination of about 1,500 layoffs and 1,200 buyouts for senior employees. Humana said the cuts would happen throughout operations. About 12,500 of Humana's 50,000 employees work in the Louisville area, which includes southeastern Indiana.
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 non-deductible 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 6 percent to $240.99 each, Wednesday morning.
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.
Humanais taking an estimated charges of 54 cents a share in the third quarter as a result of the anticipated job 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.
Shares in Indianapolis-based competitor Anthem Inc. rose less than 1 percent, to $217.73.