LOUISVILLE, KY. — Humana’s board of directors has replaced the health insurer’s share buyback plan with a bigger authorization for $2 billion in repurchases.
The Louisville, Kentucky, company said Tuesday that the new authorization expires Dec. 31, 2016. It replaces a $1 billion buyback plan, of which about $782 million was outstanding after the insurer bought back $118 million in shares in the third quarter.
The company said it will buy back shares from time to time on the open market or in privately negotiated deals.
Companies often say share repurchases help shareholders, because theoretically they cut down on the total number of shares and thus boost earnings per share. But critics say that repurchases don’t usually lower the number of shares outstanding because companies can turn around and issue more shares to pay employees. They also crimp companies’ spending on new infrastructure or hiring.
Shares of Humana Inc. rose $1.72, or 1.4 percent, to $129.38 in morning trading. They have climbed 24 percent so far this year through Monday. They reached an all-time high price of $134.93 in July, according to FactSet.
Date: September 16, 2014