Humana Completes Aggregate $1.0 Billion of Senior Notes Offering
March 16 2017 - 3:30PM
Business Wire
Humana Inc. (NYSE: HUM) announced today the completion of its
public offering of $1.0 billion in senior notes. These senior notes
are comprised of $600 million of the company’s 3.950 percent senior
notes, due March 15, 2027 at 99.877 percent of the principal amount
and $400 million of the company’s 4.800 percent senior notes, due
March 15, 2047 at 99.905 percent of the principal amount
(collectively, “Senior Notes Offerings”).
The company expects net proceeds from the Senior Notes Offerings
of approximately $988 million, after deducting underwriters’
discounts and estimated offering expenses. The company intends to
use the net proceeds for general corporate purposes.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy the securities described herein,
nor shall there be any sale of these securities in any state or
jurisdiction in which such an offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.
Cautionary Statement
This news release includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
When used in investor presentations, press releases, Securities and
Exchange Commission (SEC) filings, and in oral statements made by
or with the approval of one of Humana’s executive officers, the
words or phrases like “expects,” “believes,” “anticipates,”
“intends,” “likely will result,” “estimates,” “projects” or
variations of such words and similar expressions are intended to
identify such forward-looking statements.
These forward-looking statements are not guarantees of future
performance and are subject to risks, uncertainties, and
assumptions, including, among other things, information set forth
in the “Risk Factors” section of the company’s SEC filings, a
summary of which includes but is not limited to the following:
- If Humana does not design and price its
products properly and competitively, if the premiums Humana
receives are insufficient to cover the cost of health care services
delivered to its members, if the company is unable to implement
clinical initiatives to provide a better health care experience for
its members, lower costs and appropriately document the risk
profile of its members, or if its estimates of benefits expense are
inadequate, Humana’s profitability could be materially adversely
affected. Humana estimates the costs of its benefit expense
payments, and designs and prices its products accordingly, using
actuarial methods and assumptions based upon, among other relevant
factors, claim payment patterns, medical cost inflation, and
historical developments such as claim inventory levels and claim
receipt patterns. We continually review estimates of future
payments relating to benefit expenses for services incurred in the
current and prior periods and make necessary adjustments to our
reserves, including premium deficiency reserves, where appropriate.
These estimates, however, involve extensive judgment, and have
considerable inherent variability because they are extremely
sensitive to changes in claim payment patterns and medical cost
trends, so any reserves we may establish, including premium
deficiency reserves, may be insufficient. In addition, there can be
no guarantees that any reconsideration that Humana may file with
respect to certain of the Company’s Star rating measures for the
2018 bonus year will be successful, that operational measures
Humana may take will successfully mitigate any negative effects of
Star quality ratings for the 2018 bonus year, or that Humana will
not experience a decline in membership growth for 2017 or 2018 as a
result of the Company’s 2018 bonus year Star ratings.
- If Humana fails to effectively
implement its operational and strategic initiatives, particularly
its Medicare initiatives, state-based contract strategy, and its
participation in the new health insurance exchanges, the company’s
business may be materially adversely affected, which is of
particular importance given the concentration of the company’s
revenues in these products.
- If Humana fails to properly maintain
the integrity of its data, to strategically implement new
information systems, to protect Humana’s proprietary rights to its
systems, or to defend against cyber-security attacks, the company’s
business may be materially adversely affected.
- Humana’s business may be materially
adversely impacted by the adoption of a new coding set for
diagnoses (commonly known as ICD-10), the implementation of which
became effective on October 1, 2015. Humana is involved in various
legal actions, or disputes that could lead to legal actions (such
as, among other things, provider contract disputes relating to rate
adjustments resulting from the Balanced Budget and Emergency
Deficit Control Act of 1985, as amended, commonly referred to as
“sequestration”; other provider contract disputes; and qui tam
litigation brought by individuals on behalf of the government) and
governmental and internal investigations, any of which, if resolved
unfavorably to the company, could result in substantial monetary
damages or changes in its business practices. Increased litigation
and negative publicity could also increase the company’s cost of
doing business.
- As a government contractor, Humana is
exposed to risks that may materially adversely affect its business
or its willingness or ability to participate in government health
care programs including, among other things, loss of material
government contracts, governmental audits and investigations,
potential inadequacy of government determined payment rates,
potential restrictions on profitability, including by comparison of
profitability of the company’s Medicare Advantage business to
non-Medicare Advantage business, or other changes in the
governmental programs in which Humana participates.
- The Health Care Reform Law, including
The Patient Protection and Affordable Care Act and The Health Care
and Education Reconciliation Act of 2010, could have a material
adverse effect on Humana’s results of operations, including
restricting revenue, enrollment and premium growth in certain
products and market segments, restricting the company’s ability to
expand into new markets, increasing the company’s medical and
operating costs by, among other things, requiring a minimum benefit
ratio on insured products, lowering the company’s Medicare payment
rates and increasing the company’s expenses associated with a
non-deductible health insurance industry fee and other assessments;
the company’s financial position, including the company’s ability
to maintain the value of its goodwill; and the company’s cash
flows. Additionally, potential legislative changes, including
activities to repeal or replace the Health Care Reform Law, creates
uncertainty for the company’s business, and it cannot predict when,
or in what form, such legislative changes may occur.
- Humana’s participation in the federal
and state health insurance exchanges, which entail uncertainties
associated with mix, volume of business and the operation of
premium stabilization programs that are subject to federal
administrative action, could adversely affect the company’s results
of operations, financial position and cash flows.
- Humana’s business activities are
subject to substantial government regulation. New laws or
regulations, or changes in existing laws or regulations or their
manner of application could increase the company’s cost of doing
business and may adversely affect the company’s business,
profitability and cash flows.
- If Humana fails to develop and maintain
satisfactory relationships with the providers of care to its
members, the company’s business may be adversely affected.
- Humana’s pharmacy business is highly
competitive and subjects it to regulations in addition to those the
company faces with its core health benefits businesses.
- Changes in the prescription drug
industry pricing benchmarks may adversely affect Humana’s financial
performance.
- If Humana does not continue to earn and
retain purchase discounts and volume rebates from pharmaceutical
manufacturers at current levels, Humana’s gross margins may
decline.
- Humana’s ability to obtain funds from
certain of its licensed subsidiaries is restricted by state
insurance regulations.
- Downgrades in Humana’s debt ratings,
should they occur, may adversely affect its business, results of
operations, and financial condition.
- The securities and credit markets may
experience volatility and disruption, which may adversely affect
Humana’s business.In making forward-looking statements, Humana is
not undertaking to address or update them in future filings or
communications regarding its business or results. In light of these
risks, uncertainties, and assumptions, the forward-looking events
discussed herein may or may not occur. There also may be other
risks that the company is unable to predict at this time. Any of
these risks and uncertainties may cause actual results to differ
materially from the results discussed in the forward-looking
statements.Humana advises investors to read the following documents
as filed by the company with the SEC for further discussion both of
the risks it faces and its historical performance:
- Form 10-K for the year ended December
31, 2016;
- Form 8-Ks filed during 2017.
About Humana
Humana Inc., headquartered in Louisville, Ky., is a leading
health and well-being company focused on making it easy for people
to achieve their best health with clinical excellence through
coordinated care. The company’s strategy integrates care delivery,
the member experience, and clinical and consumer insights to
encourage engagement, behavior change, proactive clinical outreach
and wellness for the millions of people we serve across the
country.
More information regarding Humana is available to investors via
the Investor Relations page of the company’s web site at
humana.com, including copies of:
- Annual reports to stockholders
- Securities and Exchange Commission
filings
- Most recent investor conference
presentations
- Quarterly earnings news releases
- Calendar of events
- Corporate Governance information
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170316006206/en/
Humana Investor RelationsRegina Nethery,
502-580-3644Rnethery@humana.comorTom
Noland, 502-580-3674Humana Corporate
CommunicationsTnoland@humana.com
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