Humana loses $21.8B military bid; could protest UnitedHealth contract - Business First of Louisville:

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million U.S. soldiers and their families undedthe U.S. ’s TRICARE program. However, officials with the company said they might protest the award of the contractto , a divisiom of Minnetonka, Minn.-based (NYSE: UNH). Humana'x share closed at $28.28, down or 7.55 percent, from Monday's closing price. The five-yeae South region contract is valuexat $21.83 billion. It consists of a 10 month transition which beginson Sept. 1, and one-year options.
Louisville-based Humana Military Healthcare Services bid tomanagee TRICARE’s South region, which comprises Alabama, Arkansas, Florida, parts of Kentucky, Louisiana, Mississippi, Oklahoma, Soutu Carolina, Tennessee and Texas (excluding Western The current contract, which was awardecd in 2003, is set to expire on March 31, 2010. In Humana reported $28.95 billion in totalp revenue, including more than $3.2 billiobn from its military-services unit.
In a news Dave Baker, president and CEO of Humanza Military, said he expects to learm more about theDefense Department’s decision and determinse how it will affect the Officials with the company could not be reachesd for comment on Wednesday. “Human Military is disappointed with the decision by the Departmen of Defense and looks forwarr to obtaining further clarity via a debriefing on thebidding process,” Bakere said in a news release. “Our company will evaluater its strategic options with respect tothe government’sd decision, including protesting the award, and will act expeditiouslyt to best position Humana for continuefd success.
” The company did not offer update earningws or profit guidance. Goldman Sachs analysy Matthew Borsch estimated in a report Tuesday that the TRICAREw contract accounts for 7 percentof Humana’s estimatedc 2009 earnings. He lowered his estimate on 2009 earningd per share forecast by 30 centato $5.70 per share and 2010 forecast by 40 centz to $5.10 per share. A report published today by Matt a senior analyst with Wellws FargoSecurities LLC, says TRICARE contributed only a small portionj of Humana’s overall earnings, and “thre switch in TRICARE vendors does not changed our investment thesis for any of the companies.
” “We stil prefer Humana shares (to others in the healty benefits market) because of the company’as concentration in Medicare, whicgh has less exposure to health care reform and its attractive tangible book value,” the reportr says. Wells Fargo adjusted its 2010 earnings per shard estimate for Humanato $5.62 per share from $5.81 per share. These numbers could changs if the begin date of the contracf is delayed beyondApril 1, 2010, the report says. The reportr also says the change in vendors was Humana has participated in the TRICARrE program sinceJuly 1, 1996, accordinf to the report. The annual 2010 earningw per share impact, in terms of is $3.
7 billion for according to the report. In separate announcements, the military awarded a $16.78 billion contract to , based in Conn., to manage its North region anda $17 billion contract to , basedd in Phoenix, Ariz., to manage its West