Humana (NYSE:HUM) saw a 12% year-over-year revenue bump in the first quarter as more members signed up for coverage and insurance prices climbed. Premiums collected by Humana totaled $11 billion in the quarter, leading the company to post first-quarter revenue of $11.7 billion, up 11.7% from last year. 

The strong top-line performance is in line with prior earnings reports for insurance giants UnitedHealth Group (NYSE:UNH) and WellPoint (NYSE:ANTM). However, since Humana relies far more on Medicare and far less on Medicaid than those two, let's pull back the curtain on Humana's quarterly performance.

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HUM data. Source: YCharts.

Driven by Advantage and Obamacare
The company's biggest business is Medicare, accounting for 75% of Humana's revenue. Sales of its Medicare Advantage, or MA, and Medicare prescription drug plans totaled $8.7 billion in the first quarter.

That's an impressive showing, particularly when you recognize that demand for individual MA products like HMOs allowed the company to handily outpace the $7.7 billion in revenue it collected from its Medicare business a year ago.

Enrollment in individual Medicare Advantage plans grew by 16% to 2.3 million people in the quarter, but Humana also saw membership growth for fully insured plans offered through employers, too. The number of people in those plans advanced 16% year over year to 477,000.

Importantly, that MA growth trend should continue for the foreseeable future given that the over 65 population in the U.S. is expected to double from 35 million to 72 million people between 2010 and 2030. 

While the MA growth was expected, Humana's Obamacare related revenue was a bit of a surprise.

Enrollment in individual insurance plans, like those offered through health-care exchanges, grew by 55% to 715,000 members, resulting in premium revenue from individual plans nearly doubling to $468 million in the quarter.

Thanks to the exchanges' first-quarter membership surge, Humana bumped up its full-year enrollment forecast for such plans to 500,000 from previous expectations of 350,000.

In addition to strength in MA and exchange enrollment, Humana also saw growth in small business commercial plans, which offset a drop in enrollment in large group plans, and helped revenue from the company's fully insured employer business grow 4.8% from last year to $1.3 billion in the quarter.

Humana also collected $169 million in premium payments from Medicaid products in the first quarter, which was up sharply from $79 million last year thanks to participation in temporary assistance and long-term support plans kicking in.

Although the jump in Medicaid business is notable, Medicaid represents just 1.4% of Humana's total sales. That means Medicaid expansion is having a far smaller impact on its quarterly results than it does at UnitedHealth Group's and WellPoint's results.

For example, United's Medicaid revenue grew 17% to $5.2 billion and WellPoint's 4.5 million Medicaid members helped its government business revenue climb to nearly $8 billion in the first quarter.  

Costs climb, profit falls
Humana's benefit ratio, a measure of costs to care for members relative to premiums collected from them, improved slightly during the past year, falling from 83% to 82.3%. That was roughly in line with United's 82.5% rate and WellPoint's 82.7% rate during the quarter.

However, Obamacare's non-deductible mandatory fee and Humana's investments in the exchanges caused operating costs at its retail segment to spike 2.5% in the quarter, causing overall operating costs to climb from 13.9% to 15.4% in the past year.

While the increased costs are disappointing, they're not unexpected. Furthermore, Humana still matches up well against competitors. During the quarter, operating costs at United Healthcare grew 1.2% to 16.4%, and SG&A at WellPoint spiked 2.8% to 16.2%.

Regardless, sagging profitability at Humana caused net income to fall from $473 million last year to $368 million this year, resulting in EPS of $2.35 in the quarter -- well below the $2.95 it earned the year before.

Foolworthy final thoughts
Humana posted a solid quarter that benefited from rising membership across Medicare Advantage and exchange plans.

However, since those plans are harder to leverage for profit than Medicaid, Humana's reliance on them means it's going to take a while for membership growth to boost earnings.

For the full year, Humana projects its EPS will be $7.25 to $7.75 per share. That would be down to in line with the $7.73 it earned in 2013. However, investors should also note that earnings growth is expected to return in 2015, with analysts currently expecting Humana to earn $8.68. If it can deliver on that number in 2015, investors should be rewarded.

Todd Campbell has no position in any stocks mentioned. He owns E.B. Capital Markets, LLC, whose clients may or may not have positions in the companies mentioned. He also owns Gundalow Advisors, LLC, whose clients do not have positions in the companies mentioned. The Motley Fool recommends UnitedHealth Group. It recommends and owns shares of WellPoint. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.