- Full year 2017 earnings per diluted
common share (EPS) of $11.71 on an Adjusted basis, $16.81 on a GAAP
basis
- Full year 2017 operating cash flow of
$4.1 billion
- Individual Medicare Advantage finished
2017 above target margins, with strong membership growth in the
Annual Election Period providing momentum into 2018
- 2018 EPS guidance of $13.50 to $14.00
on an Adjusted basis, $13.16 to $13.66 on a GAAP basis, including a
net benefit from tax reform of approximately $2.00 EPS
- Company’s Board of Directors increases
cash dividend to $0.50 per share, an increase of 25 percent from
prior dividend of $0.40 per share
Humana Inc. (NYSE: HUM) today reported diluted earnings per
common share (EPS) for the quarter ended December 31, 2017 (4Q17)
versus the quarter ended December 31, 2016 (4Q16) and for the year
ended December 31, 2017 (FY17) versus for the year ended December
31, 2016 (FY16) as follows:
Consolidated pretax income
(loss)
In millions
4Q17 (a)
4Q16 (b)
FY17 (c)
FY16 (d)
Generally Accepted Accounting Principles (GAAP)
$490 ($486 )
$4,020 $1,552 Net (gain) expenses
associated with the terminated merger agreement (for FY17,
primarily the break-up fee)
11
23
(936 )
104 Amortization associated with identifiable intangibles
21 18
75 77 Guaranty fund assessment expense
to support the policyholder obligations of Penn Treaty (an
unaffiliated long-term care insurance company)
- -
54
- Operating loss (income) associated with the
Individual Commercial segment
14
634
(193 )
869 Charges associated with voluntary and involuntary workforce
reduction programs
23 -
148 - Costs
associated with early retirement of debt in 4Q17
17 -
17
- Reserve strengthening for the company’s
non-strategic closed block of long-term care insurance business (f)
- 505
- 505
Adjusted (non-GAAP) –
4Q16 and FY16 as recast $576
$694
$3,185
$3,107
Diluted earnings per common share
(EPS) 4Q17 (a) 4Q16 (b)
FY17 (c)
FY16 (d)
GAAP $1.29 ($2.68
)
$16.81 $4.07 Net (gain)
expenses associated with the terminated merger agreement (for FY17,
primarily the break-up fee)
0.05
0.15
(4.31 )
0.64 Amortization associated with identifiable intangibles
0.09 0.08
0.32 0.32 Beneficial effect of
lower effective tax rate in light of pricing and benefit design
assumptions associated with the 2017 temporary suspension of the
non-deductible health insurance industry fee; excludes Individual
Commercial segment impact
(0.55 )
-
(2.15 )
- Guaranty fund assessment expense to support the
policyholder obligations of Penn Treaty (an unaffiliated long-term
care insurance company)
-
-
0.24 - Operating
loss (income) associated with the Individual Commercial segment
0.06 2.68
(0.84 ) 3.78 Charges associated
with voluntary and involuntary workforce reduction programs
0.10 -
0.64 - Costs associated with early
retirement of debt in 4Q17
0.08
-
0.08 -
Impact of tax reform law enacted on December 22, 2017 (Tax Reform
Law), primarily re-measurement of deferred tax assets at lower
corporate tax rates
0.94
-
0.92 - Reserve
strengthening for the company’s non-strategic closed block of
long-term care insurance business (f)
-
2.11
-
2.11
Adjusted (non-GAAP) – 4Q16 and FY16 as recast
$2.06 $2.34
$11.71 $10.92
The company has included financial measures throughout this
earnings release that are not in accordance with GAAP. Management
believes that these measures, when presented in conjunction with
the comparable GAAP measures, are useful to both management and its
investors in analyzing the company’s ongoing business and operating
performance. Consequently, management uses these non-GAAP financial
measures as indicators of the company’s business performance, as
well as for operational planning and decision making purposes.
Non-GAAP financial measures should be considered in addition to,
but not as a substitute for, or superior to, financial measures
prepared in accordance with GAAP. All financial measures in this
press release are in accordance with GAAP unless otherwise
indicated.
“We continue to make strong progress in advancing our integrated
care strategy, especially in deepening our clinical capabilities
through long-term platform investments in the home and primary
care. And our focus on and commitment to improving the member
experience continue to pay off as we this year saw significant
improvement in our Stars results as well as our Net Promoter Scores
which increased by 500 basis points,” said Bruce D. Broussard,
Humana’s President and Chief Executive Officer. “It’s through the
combination of all our efforts – from optimizing our infrastructure
and operations to making critical investments in consumer and
clinical capabilities – that we’ve been able to achieve strong
short-term results while creating longer-term sustainability.”
The GAAP consolidated pretax income for 4Q17 of $490 million
increased $976 million compared to GAAP consolidated pretax loss of
$486 million in 4Q16. The year-over-year comparison was favorably
impacted by the reserve strengthening recorded in 4Q16 for the
company’s non-strategic closed block of long-term care insurance
business and the improvement in earnings associated with the
Individual Commercial segment in 4Q17, as well as an increase in
earnings year-over-year for our Group and Specialty segment. These
items were partially offset by the decline in earnings for the
company’s Healthcare Services and Retail segments.
The Adjusted consolidated pretax income for 4Q17 of $576 million
declined $118 million, or 17 percent, versus $694 million in 4Q16
primarily due to lower earnings in the company’s Retail and
Healthcare Services segments, partially offset by higher earnings
in the Group and Specialty segment.
GAAP consolidated pretax income for FY17 of $4.02 billion
increased $2.47 billion, or 159 percent, from $1.55 billion in
FY16. The year-over-year comparison was favorably impacted by the
following:
- the net gain associated with the
terminated merger agreement, mainly the break-up fee recognized in
the first quarter of 2017
- year-over-year improvement in earnings
for the company’s Individual Commercial, Retail, and Group and
Specialty segments, and
- reserve strengthening recorded in 4Q16
for the company’s non-strategic closed block of long-term care
insurance business.
These items were partially offset by lower pretax earnings in
the Healthcare Services segment in FY17 and the recording of
charges associated with voluntary and involuntary workforce
reduction programs in the second half of 2017.
The Adjusted consolidated pretax income for FY17 of $3.19
billion increased $78 million, or 3 percent, versus $3.11 billion
in FY16 primarily reflecting the year-over-year improvement in
earnings for the company’s Retail and Group and Specialty segments,
partially offset by lower pretax earnings in the Healthcare
Services.
Further discussions of each segment’s financial results are
included in the segment highlights.
In addition to the factors impacting the year-over-year changes
in quarterly and year-to-date GAAP pretax income, GAAP EPS for 4Q17
and FY17 were further affected by the following:
- a lower number of shares used to
compute EPS, primarily reflecting share repurchases in 2017,
and
- the impact of tax reform law enacted on
December 22, 2017 (the “Tax Reform Law”) which resulted in a
reduction of the company’s after-tax earnings primarily due to the
required re-measurement of deferred tax assets at lower enacted
corporate tax rates.
GAAP FY17 EPS was further impacted by the beneficial effect of a
lower effective tax rate year over year in light of pricing and
benefit design assumptions associated with the temporary suspension
of the health insurance industry fee in 2017.
Adjusted EPS for 4Q17 and FY17 were affected by the same factors
impacting Adjusted pretax income, as well as a lower number of
shares used to compute EPS as discussed above.
“Our results for 2017, led by our individual Medicare Advantage
business, significantly exceeded our initial expectations, allowing
us to make important investments in our business that resulted in
strong Medicare Advantage membership growth in the Annual Election
Period,” said Brian A. Kane, Senior Vice President and Chief
Financial Officer. “This membership growth, coupled with
productivity initiatives undertaken in 2017 and the reduction of
our corporate income tax rate under the Tax Reform Law, provide a
solid foundation for significant earnings growth in 2018 and
beyond.”
2018 Guidance
The company provided its GAAP and Adjusted EPS guidance for the
year ended December 31, 2018 (FY18) as detailed below. GAAP and
Adjusted results for FY17 are also shown below for comparison.
Diluted
earnings per common share FY18 Guidance
(e)
FY17 (c)
GAAP
~$13.16 to $13.66
$16.81 Net (gain) expenses associated with the
terminated merger agreement (for FY17, primarily the break-up fee)
- (4.31) Amortization of identifiable
intangibles 0.42 0.32 Beneficial effect
of lower effective tax rate in light of pricing and benefit design
assumptions associated with the 2017 temporary suspension of the
non-deductible health insurance industry fee; excludes Individual
Commercial segment impact - (2.15)
Guaranty fund assessment expense to support the policyholder
obligations of Penn Treaty (an unaffiliated long-term care
insurance company) - 0.24 Operating
income associated with the Individual Commercial segment
(0.08) (0.84) Charges associated with
voluntary and involuntary workforce reduction programs
- 0.64 Costs associated with early retirement
of debt in 4Q17 - 0.08 Impact of Tax
Reform Law, primarily re-measurement of deferred tax assets at
lower corporate tax rates
- 0.92
Adjusted (non-GAAP) – FY18 projected
~$13.50 – $14.00 $11.71
The company’s earnings guidance for FY18 does
not include any potential impact from the previously announced
pending sale of KMG America Corporation (KMG), whose subsidiary,
Kanawha Insurance Company (KIC), includes Humana’s closed block of
non‐strategic long‐term care insurance policies, to Continental
General Insurance Company (CGIC), a Texas‐based insurance company
wholly‐owned by HC2 Holdings, Inc., a diversified holding company
(NYSE: HCHC).
As a result of the Tax Reform Law, the company anticipates its
lower FY18 corporate income tax rate will benefit the company by
approximately $4.00 EPS, of which the company intends to invest
approximately $2.00 EPS in 2018 as described more fully below.
Accordingly, FY18 EPS guidance in the table above includes a net
benefit from the Tax Reform Law of approximately $2.00 EPS.
The company intends to utilize tax benefits of $2.00 EPS to
invest in employees and the communities of its members to aid in
addressing the social determinants of health for seniors, as well
as to accelerate investments in technology and our integrated care
delivery model, and to benefit shareholders. Certain of these
investments are more fully described in the accompanying slide
presentation available via Humana’s Investor Relations page at
humana.com.
“Our steadfast commitment to simplifying the healthcare
experience, making coverage more affordable and improving health
outcomes for seniors, for TRICARE beneficiaries, and for employer
group members remain the company’s top priorities, and is guiding
the company’s decisions as to how to allocate tax reform proceeds,”
said Bruce D. Broussard, Humana’s President and Chief Executive
Officer.
2019 Rate Notice
On Thursday, February 1, 2018, after the stock market closed,
the Centers for Medicare and Medicaid Services (CMS) issued its
preliminary 2019 Medicare Advantage and Part D payment rates and
proposed policy changes (collectively, the Advance Notice). CMS has
invited public comment on the Advance Notice before publishing
final rates on April 2, 2018 (the Final Notice).
In the Advance Notice, CMS estimates Medicare Advantage plans
across the sector will, on average, experience a 1.84 percent
increase in benchmark funding based on proposals included therein.
As indicated by CMS, its estimate excludes the impact of
fee‐for‐service county rebasing/re‐pricing since the related impact
is dependent upon finalization of certain data, which will be
available with the publication of the Final Notice.
CMS’ estimate includes 30 basis points of negative impact
associated with the proposed Employer Group Waiver Plan Payment
Policy for 2019. Excluding that item, CMS’ estimate would be a 2.14
percent increase.
Based on the company’s preliminary analysis using the same
factors CMS included in its estimate, the components of which are
detailed on CMS’ website, Humana anticipates the proposals in the
Advance Notice would result in a change to its benchmark funding
relatively in line with CMS’ estimate, excluding the impact
attributable to the Employer Group Waiver Plan Payment Policy.
The company will be drawing upon its program expertise to
provide CMS formal commentary on the impact of the Advance Notice
and the related impact upon Medicare beneficiaries’ quality of care
and service to its members through the Medicare Advantage
program.
Detailed Press Release
Humana’s full earnings press release including the statistical
pages has been posted to the company’s Investor Relations site and
may be accessed at https://humana.gcs-web.com/ or via a current
report on Form 8-K filed by the company with the Securities and
Exchange Commission this morning (available at www.sec.gov or on
the company’s website).
Conference Call & Virtual Slide
Presentation
Humana will host a conference call, as well as a virtual slide
presentation, at 9:00 a.m. eastern time today to discuss its
financial results for the quarter and the company’s expectations
for future earnings. A live virtual presentation (audio with
slides) may be accessed via Humana’s Investor Relations page at
humana.com. The company suggests web participants sign on at least
15 minutes in advance of the call. The company also suggests web
participants visit the site well in advance of the call to run a
system test and to download any free software needed to view the
presentation.
All parties interested in the company’s 4Q17 earnings conference
call are invited to dial 888-625-7430. No password is required. The
company suggests participants dial in at least 15 minutes in
advance of the call.
For those unable to participate in the live event, the archive
will be available in the Historical Webcasts and Presentations
section of the Investor Relations page at humana.com, approximately
two hours following the live webcast. Telephone replays will also
be available approximately two hours following the live event until
midnight eastern time on April 7, 2018 and can be accessed by
dialing 855-859-2056 and providing the conference ID #5288588.
Footnotes
(a) 4Q17 Adjusted results exclude the
following:
- Transaction and integration costs of
$11 million pretax, or $0.05 per diluted common share, associated
with the then-pending merger agreement; GAAP measures affected in
this release include consolidated pretax income and EPS.
- Amortization expense for identifiable
intangibles of approximately $21 million pretax, or $0.09 per
diluted common share; GAAP measures affected in this release
include consolidated pretax, EPS, and segment pretax results (for
each segment’s amount of such amortization).
- The one-year beneficial effect of a
lower effective tax rate of approximately $0.55 per diluted common
share in light of pricing and benefit design assumptions associated
with the 2017 temporary suspension of the non-deductible health
insurance industry fee; excludes Individual Commercial segment
impact. The only GAAP measure affected in this release is EPS.
- Operating losses of $14 million pretax,
or $0.06 per diluted common share, for the company’s Individual
Commercial segment given the company’s exit on January 1, 2018, as
previously disclosed. GAAP measures affected in this release
include consolidated pretax income, EPS, consolidated revenues,
consolidated benefit ratio and consolidated operating cost
ratio.
- Expense of approximately $23 million
pretax, or $0.10 per diluted common share, associated with
voluntary and involuntary workforce reduction programs; GAAP
measures affected in this release include consolidated pretax, EPS,
and consolidated operating cost ratio.
- Expense of approximately $17 million
pretax, or $0.08 per diluted common share, associated with early
retirement of debt in the fourth quarter of 2017; GAAP measures
affected in this release include consolidated pretax income and
EPS.
- The impact of approximately $0.94 per
diluted common share associated with the re-measurement of deferred
tax assets at lower corporate tax rates under the Tax Reform Law.
The only GAAP measure affected in this release is EPS.
(b) 4Q16 Adjusted results (recast) exclude
the following:
- Transaction and integration costs of
$23 million pretax, or $0.15 per diluted common share, associated
with the then-pending merger agreement; GAAP measures affected in
this release include consolidated pretax income and EPS.
- Amortization expense for identifiable
intangibles of approximately $18 million, or $0.08 per diluted
common share; GAAP measures affected in this release include
consolidated pretax, EPS, and segment pretax results (for each
segment’s amount of such amortization).
- Operating losses of $634 million
pretax, or $2.68 per diluted common share, for the company’s
Individual Commercial segment given the company’s exit on January
1, 2018, as previously disclosed. Includes the write-off of
receivables associated with the risk corridor premium stabilization
program. See related footnote (g). GAAP measures affected in this
release include consolidated pretax income, EPS, consolidated
revenues, consolidated benefit ratio and consolidated operating
cost ratio.
- Pretax expenses of $505 million, or
$2.11 per diluted common share, of reserve strengthening related to
the company’s non-strategic closed block of long-term care
insurance business (included in “Other Businesses” in company’s
consolidating statement of operations); GAAP measures affected in
this release include the consolidated benefit ratio, consolidated
pretax income and EPS. See related footnote (f).
(c) FY17 Adjusted results exclude the
following:
- Net gain from the termination of the
merger agreement of approximately $936 million pretax, or $4.31 per
diluted common share; includes the net break-up fee and transaction
costs net of the tax benefit associated with certain expenses which
were previously non-deductible; GAAP measures affected in this
release include consolidated pretax income and EPS.
- Amortization expense for identifiable
intangibles of approximately $75 million pretax, or $0.32 per
diluted common share; GAAP measures affected in this release
include consolidated pretax, EPS, and segment pretax results (for
each segment’s amount of such amortization).
- The one-year beneficial effect of a
lower effective tax rate of approximately $2.15 per diluted common
share in light of pricing and benefit design assumptions associated
with the 2017 temporary suspension of the non-deductible health
insurance industry fee; excludes Individual Commercial segment
impact. The only GAAP measure affected in this release is EPS.
- Guaranty fund assessment expense of
approximately $54 million pretax, or $0.24 per diluted common
share, to support the policyholder obligations of Penn Treaty (an
unaffiliated long-term care insurance company); GAAP measures
affected in this release include consolidated pretax income, EPS,
and consolidated operating costs ratio. Under state guaranty
assessment laws, the company may be assessed (up to prescribed
limits) for certain obligations to the policyholders and claimants
of insolvent insurance companies that write the same line or lines
of business as the company. On March 1, 2017, a court ordered the
liquidation of Penn Treaty which triggered assessments from the
state guaranty associations.
- Operating earnings of approximately
$193 million pretax, or $0.84 per diluted common share, for the
company’s Individual Commercial segment given the company’s exit on
January 1, 2018, as previously disclosed. GAAP measures affected in
this release include consolidated pretax income, EPS, consolidated
revenues, consolidated benefit ratio and consolidated operating
cost ratio.
- Expense of approximately $148 million
pretax, or $0.64 per diluted common share, associated with
voluntary and involuntary workforce reduction programs; GAAP
measures affected in this release include consolidated pretax, EPS,
and consolidated operating cost ratio.
- Expense of approximately $17 million
pretax, or $.08 per diluted common share, associated with early
retirement of debt in the fourth quarter of 2017; GAAP measures
affected in this release include consolidated pretax income and
EPS.
- The impact of approximately $0.92 per
diluted common share associated with the re-measurement of deferred
tax assets at lower corporate tax rates under the Tax Reform Law.
The only GAAP measure affected in this release is EPS.
(d) FY16 Adjusted results (recast) exclude
the following:
- Transaction and integration costs of
$104 million pretax, or $0.64 per diluted common share, associated
with the then-pending merger agreement; GAAP measures affected in
this release include consolidated pretax income and EPS.
- Amortization expense for identifiable
intangibles of approximately $77 million, or $0.32 per diluted
common share; GAAP measures affected in this release include
consolidated pretax, EPS, and segment pretax results (for each
segment’s amount of such amortization).
- Operating losses of $869 million
pretax, or $3.78 per diluted common share, for the company’s
Individual Commercial segment given the company’s exit on January
1, 2018, as previously disclosed. Includes the write-off of
receivables associated with the risk corridor premium stabilization
program. See related footnote (g). GAAP measures affected in this
release include consolidated pretax income, EPS, consolidated
revenues, consolidated benefit ratio and consolidated operating
cost ratio.
- Pretax expenses of $505 million, or
$2.11 per diluted common share, of reserve strengthening related to
the company’s non-strategic closed block of long-term care
insurance business (included in “Other Businesses” in company’s
consolidating statement of operations); GAAP measures affected in
this release include the consolidated benefit ratio, consolidated
pretax income and EPS. See related footnote (f).
(e) FY18 Adjusted EPS projections exclude
the following:
- Amortization expense for identifiable
intangibles of approximately $77 million pretax, or $0.42 per
diluted common share.
- Operating earnings of approximately $14
million pretax, or $0.08 per diluted common share, for the
company’s Individual Commercial segment given the company’s exit on
January 1, 2018, as previously disclosed.
(f) As noted above, in addition to previously-disclosed
adjustments, EPS for FY16 included a strengthening of reserves for
the company’s non-strategic closed block of long-term care
business. In connection with its acquisition of KMG America in
2007, the company acquired a non-strategic closed block of
long-term care insurance policies. These policies were sold between
1995 and 2005, of which approximately 30,800 remained in force as
of December 31, 2016. During the fourth quarter of 2016, the
company recorded a reserve strengthening for this closed block of
policies as it determined the present value of future premiums,
together with its existing reserves were not adequate to provide
for future policy benefits. This adjustment primarily was driven by
emerging experience indicating longer claims duration, a prolonged
lower interest rate environment and an increase in policyholder
life expectancies. (g)
On November 10, 2016, the U.S. Court of
Federal Claims ruled in favor of the government in one of a series
of cases filed by insurers against the Department of Health and
Human Services (HHS) to collect risk corridor payments, rejecting
all of the insurer’s statutory, contract and Constitutional claims
for payment. Prior to this decision, the company had maintained the
receivable in previous periods in reliance upon the interpretation
previously promulgated by HHS that the risk corridor receivables
were obligations of the U.S. government. Given this court decision,
however, the company’s conclusion with respect to the ultimate
collectability of the receivable shifted, and accounting rules
required that the receivable be written off. Land of Lincoln Mutual
Health Insurance Company v. United States; United States Court of
Federal Claims No. 16-744C. On November 2, 2017, the company filed
suit against the United States of America in the Court of Federal
Claims on behalf of its health plans seeking recovery of
approximately $611 million in payments owed to the company under
the risk corridor program.
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 healthcare services
delivered to its members, if the company is unable to implement
clinical initiatives to provide a better healthcare 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. The company continually reviews estimates of
future payments relating to benefit expenses for services incurred
in the current and prior periods and makes necessary adjustments to
its 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 the company may establish,
including premium deficiency reserves, may be insufficient.
- If Humana fails to effectively
implement its operational and strategic initiatives, particularly
its Medicare initiatives and state-based contract strategy, 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. In addition, there can be no assurances
that the company will be successful in maintaining or improving its
Star ratings in future years.
- Certain proposed transactions,
including the divestiture of Humana’s subsidiary, KMG America
Corporation, and the acquisition of a minority interest in Kindred
Healthcare, Inc.’s Kindred at Home division by Humana, are subject
to various closing conditions, including various regulatory
approvals and customary closing conditions, as well as other
uncertainties, and there can be no assurances as to whether and
when these transactions may be completed.
- 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 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),
governmental and internal investigations, and routine internal
review of business processes 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
healthcare 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 Healthcare Reform Law, including
The Patient Protection and Affordable Care Act and The Healthcare
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, in whole or in part, the Health
Care Reform Law, creates uncertainty for Humana’s business, and
when, or in what form, such legislative changes may occur cannot be
predicted with certainty.
- 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 10-Q for the quarter ended March
31, 2017, June 30, 2017, September 30, 2017; and
- Form 8‐Ks filed during 2017 and
2018.
About Humana
Humana Inc. (NYSE: HUM) is committed to helping our millions of
medical and specialty members achieve their best health. Our
successful history in care delivery and health plan administration
is helping us create a new kind of integrated care with the power
to improve health and well-being and lower costs. Our efforts are
leading to a better quality of life for people with Medicare,
families, individuals, military service personnel, and communities
at large.
To accomplish that, we support physicians and other health care
professionals as they work to deliver the right care in the right
place for their patients, our members. Our range of clinical
capabilities, resources and tools – such as in-home care,
behavioral health, pharmacy services, data analytics and wellness
solutions – combine to produce a simplified experience that makes
health care easier to navigate and more effective.
More information regarding Humana is available to investors via
the Investor Relations page of the company’s website at humana.com,
including copies of:
- Annual reports to stockholders
- Securities and Exchange Commission
filings
- Most recent investor conference
presentations
- Quarterly earnings news releases and
conference calls
- Calendar of events
- Corporate Governance information
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180207005434/en/
Humana Inc.Investor RelationsAmy Smith,
502-580-2811Amysmith@humana.comorCorporate CommunicationsTom
Noland, 502-580-3674Tnoland@humana.com
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