Filed by Aetna Inc.
Pursuant to Rule 425 of the Securities Act
of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Humana Inc.
(Commission File No.: 001-05975)
The following communication was distributed to Aetna employees:
Aetna’s Announced
Agreement
to Acquire Humana
What this means for Government Services Employees
Aetna’s recent announcement of its agreement
to acquire Humana means that once the proposed transaction is completed, the combined entity will bring many key benefits for our
customers, members, and employees. The proposed transaction will significantly advance our vision of creating a healthier world
by enabling us to offer more consumers in more parts of the country a broader choice of products; greater access to high-quality,
affordable care; and a better, simpler experience. It will also bring exciting career opportunities in current and new locations.
I’m sure many of you are wondering what
this means specifically for our Government businesses and for you. Since there wasn’t enough time to cover the more than
500 questions submitted at the July 7th All Employee Meeting, I am answering the most frequently asked questions regarding
Government Services in a “4 with Fran.”
For now, there are a few
thoughts that I would like to share:
| · | My goal is to limit disruption for our Government Services offices, employees, members
and customers as we work through the activities and decisions involved in this proposed transaction. |
| · | The proposed Humana transaction is not expected to close until the second half of 2016. We
will use lessons learned during the Coventry acquisition and migration to make sound, forward-thinking decisions as we begin
integration planning and work through the integration of the two companies, after the transaction closes. |
| · | Change brings tremendous opportunity, but it is also important to focus on what’s not
changing – our core values, our commitment to serving our customers, providers, and members; and the focus required to
achieve our 2015 priorities and plan. Our nearly 6 million members are counting on us to continue delivering high-quality, |
compliant
service. And our coworkers throughout the enterprise are counting on us to deliver on our financial commitments which are so important
to Aetna’s continued success.
This is an exciting time. Thank you for your
continued hard work and dedication, which will help make this proposed transaction possible. I look forward to working together
to make it successful.
Important
Information For Investors And Stockholders
This
communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of
any vote or approval. In connection with the proposed transaction between Aetna Inc. (“Aetna”) and Humana Inc.
(“Humana”), Aetna and Humana will file relevant materials with the Securities and Exchange Commission (the “SEC”),
including an Aetna registration statement on Form S-4 that will include a joint proxy statement of Aetna and Humana that also
constitutes a prospectus of Aetna, and a definitive joint proxy statement/prospectus will be mailed to stockholders of Aetna and
Humana. INVESTORS AND SECURITY HOLDERS OF AETNA AND HUMANA ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS
THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Investors and security holders will be able to obtain free copies of the registration statement and the joint
proxy statement/prospectus (when available) and other documents filed with the SEC by Aetna or Humana through the website maintained
by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by Aetna
will be available free of charge on Aetna’s internet website at http://www.Aetna.com
or by contacting Aetna’s Investor Relations Department at 860-273-8204. Copies of the documents filed with the SEC
by Humana will be available free of charge on Humana’s internet website at http://www.Humana.com
or by contacting Humana’s Investor Relations Department at 502-580-3644.
Aetna,
Humana, their respective directors and certain of their respective executive officers may be considered participants in the solicitation
of proxies in connection with the proposed transaction. Information about the directors and executive officers of Humana
is set forth in its Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on February
18, 2015, its proxy statement for its 2015 annual meeting of stockholders, which was filed with the SEC on March 6, 2015, and
its Current Report on Form 8-K, which was filed with the SEC on April 17, 2015. Information about the directors and executive
officers of Aetna is set forth in its Annual Report on Form 10-K for the year ended December 31, 2014 (“Aetna’s Annual
Report”), which was filed with the SEC on February 27, 2015, its proxy statement for its 2015 annual meeting of shareholders,
which was filed with the SEC on April 3, 2015 and its Current Reports on Form 8-K, which were filed with the SEC on May 19, 2015
and May 26, 2015. Other information regarding the participants in the proxy solicitations and a description of their direct
and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other
relevant materials to be filed with the SEC when they become available.
Cautionary
Statement Regarding Forward-Looking Statements
This communication may contain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. You can generally identify forward-looking statements by the use of forward-looking terminology such as “anticipate,”
“believe,” “continue,” “could,” “estimate,” “expect,” “explore,”
“evaluate,” “intend,” “may,” “might,” “plan,” “potential,”
“predict,” “project,” “seek,” “should,” or “will,” or the negative
thereof or other variations thereon or comparable terminology. These forward-looking statements are only predictions and involve
known and unknown risks and uncertainties, many of which are beyond Aetna’s and Humana’s control.
Statements in this communication that are forward-looking, including
Aetna’s projections as to the anticipated benefits of the pending transaction, are based on management’s estimates,
assumptions and projections, and are subject to significant uncertainties and other factors, many of which are beyond Aetna’s
and Humana’s control. Important risk factors could cause actual future results and other future events to differ materially
from those currently estimated by management, including, but not limited to: the timing to consummate the proposed acquisition;
the risk that a condition to closing of the proposed acquisition may not be satisfied; the risk that a regulatory approval that
may be required for the proposed acquisition is delayed, is not obtained or is obtained subject to conditions that are not anticipated;
Aetna’s ability to achieve the synergies and value creation contemplated by the proposed acquisition; Aetna’s ability
to promptly and effectively integrate Humana’s businesses; the diversion of management time on acquisition-related issues;
unanticipated increases in medical costs (including increased intensity or medical utilization as a result of flu or otherwise;
changes in membership mix to higher cost or lower-premium products or membership-adverse selection; medical cost increases resulting
from unfavorable changes in contracting or re-contracting with providers (including as a result of provider consolidation and/or
integration); and increased pharmacy costs (including in Aetna’s and Humana’s health insurance exchange products));
the profitability of Aetna’s and Humana’s public health insurance exchange products, where Aetna membership is higher
than Aetna projected and may have more adverse health status and/or higher medical benefit utilization than Aetna and/or Humana
projected; uncertainty related to Aetna’s accruals for health care reform’s reinsurance, risk adjustment and risk corridor
programs (“3R’s”); the implementation of health care reform legislation, including collection of health care
reform fees, assessments and taxes through increased premiums; adverse legislative, regulatory and/or judicial changes to or interpretations
of existing health care reform legislation and/or regulations (including those relating to minimum MLR rebates); the implementation
of health insurance exchanges; Aetna’s and Humana’s ability to offset Medicare Advantage and PDP rate pressures; and
changes in Aetna’s and Humana’s future cash requirements, capital requirements, results of operations, financial condition
and/or cash flows. Health care reform will continue to significantly impact Aetna’s business operations and financial results,
including Aetna’s pricing and medical benefit ratios. Key components of the legislation will continue to be phased in through
2018, and Aetna will be required to dedicate material resources and incur material expenses during 2015 to implement health care
reform. Certain significant parts of the legislation, including aspects of public health insurance exchanges, Medicaid expansion,
reinsurance, risk corridor and risk adjustment and the implementation of Medicare Advantage and Part D minimum medical loss ratios
(“MLRs”), require further guidance and clarification at the federal level and/or in the form of regulations and actions
by state legislatures to implement the law. In addition, pending efforts in the U.S. Congress to amend or restrict funding for
various aspects of health care reform, and litigation challenging aspects of the law continue to create additional uncertainty
about the ultimate impact of health care reform. As a result, many of the impacts of health care reform will not be known for the
next several years. Other important risk factors include: adverse changes in health care reform and/or other federal or state government
policies or regulations as a result of health care reform or otherwise (including legislative, judicial or regulatory measures
that would affect Aetna’s and/or Humana’s business model, restrict funding for or amend various aspects of health care
reform, limit Aetna’s and/or Humana’s ability to price for the risk it assumes and/or reflect reasonable costs or profits
in its pricing, such as mandated minimum medical benefit ratios, or eliminate or reduce ERISA preemption of state laws (increasing
Aetna’s and/or Humana’s potential litigation exposure)); adverse and less predictable economic conditions in the U.S.
and abroad (including unanticipated levels of, or increases in the rate of, unemployment); reputational or financial issues arising
from Aetna’s and/or Humana’s social media activities, data security breaches, other cybersecurity risks or other causes;
Aetna’s ability to diversify Aetna’s sources of revenue and earnings (including by creating a consumer business and
expanding Aetna’s foreign operations), transform Aetna’s business model, develop new products and optimize Aetna’s
business platforms; the success of Aetna’s Healthagen® (including Accountable Care Solutions and health information technology)
initiatives; adverse changes in size, product or geographic mix or medical cost experience of membership; managing executive succession
and key talent retention, recruitment and development; failure to achieve and/or delays in achieving desired rate increases and/or
profitable membership growth due to regulatory review or other regulatory restrictions, the difficult economy and/or significant
competition, especially in key geographic areas where membership is concentrated, including successful protests of business awarded
to Aetna and/or Humana; failure to adequately implement health care reform; the outcome of various litigation and regulatory matters,
including audits, challenges to Aetna’s and/or Humana’s minimum MLR rebate methodology and/or reports, guaranty fund
assessments, intellectual property litigation and litigation concerning, and ongoing reviews by various regulatory authorities
of, certain of Aetna’s and/or Humana’s payment practices with respect to out-of-network providers, other providers
and/or life insurance policies; Aetna’s ability to integrate, simplify, and enhance Aetna’s existing products, processes
and information technology systems and platforms to keep pace with changing customer and regulatory needs; Aetna’s ability
to successfully integrate Aetna’s businesses (including Humana, Coventry, bswift LLC and other businesses Aetna may acquire
in the future) and implement multiple strategic and operational initiatives simultaneously; Aetna’s and/or Humana’s
ability to manage health care and other benefit costs; adverse program, pricing, funding or audit actions by federal or state government
payors, including as a result of sequestration and/or curtailment or elimination of the Centers for Medicare & Medicaid Services’
star rating bonus payments; Aetna’s ability to reduce administrative expenses while maintaining targeted levels of service
and operating performance; failure by a service provider to meet its obligations to Aetna or Humana; Aetna’s and Humana’s
respective abilities to develop and maintain relationships (including collaborative risk-sharing agreements) with providers while
taking actions to reduce medical costs and/or expand the services each company offers; Aetna’s ability to demonstrate that
Aetna’s products and processes lead to access to quality affordable care by Aetna’s members; Aetna’s and Humana’s
ability to maintain their relationships with third-party brokers, consultants and agents who sell their products; increases in
medical costs or Group Insurance claims resulting from any epidemics, acts of terrorism or other extreme events; changes in medical
cost estimates due to the necessary extensive judgment that is used in the medical cost estimation process, the considerable variability
inherent in such estimates, and the sensitivity of such estimates to changes in medical claims payment patterns and changes in
medical cost trends; a downgrade in Aetna’s financial ratings; and adverse impacts from any failure to raise the U.S. Federal
government’s debt ceiling or any sustained U.S. Federal government shut down. For more discussion of important risk factors
that may materially affect Aetna, please see the risk factors contained in Aetna’s 2014 Annual Report on Form 10-K (“Aetna’s
2014 Annual Report”) on file with the Securities and Exchange Commission (“SEC”). You should read Aetna’s
2014 Annual Report and Aetna’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, on file with the SEC,
for a discussion of Aetna’s historical results of operations and financial condition.
No assurances can be given that any of the events anticipated
by the forward-looking statements will transpire or occur, or if any of them do occur, what impact they will have on the results
of operations, financial condition or cash flows of Aetna or Humana. Aetna does not assume any duty to update or revise forward-looking
statements, whether as a result of new information, future events or otherwise, as of any future date.
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