a5529802.htm

n e w s r e l e a s e	Humana Inc.
	500 West Main Street
	P.O. Box 1438
	Louisville, KY 40201-1438
	http://www.humana.com

FOR MORE INFORMATION CONTACT:

Regina Nethery Humana Investor Relations (502) 580-3644 e-mail: Rnethery@humana.com

Tom Noland
Humana Corporate Communications
(502) 580-3674
e-mail: Tnoland@humana.com

Humana Reports Third Quarter 2007 Financial Results

·	EPS for third quarter 2007 of $1.78 including $0.25 per share from items not expected to recur in future periods

·	2007 EPS guidance revised to $4.75 to $4.80 including $0.25 per share described above

·	2008 EPS projected to be $5.30 to $5.50

LOUISVILLE, KY (October 29, 2007) – Humana Inc. (NYSE: HUM) today reported financial results for the quarter ended September 30, 2007 (3Q07) including diluted earnings per common share (EPS) of $1.78, significantly above the company’s previous guidance for 3Q07 EPS of $1.45 to $1.50. The company earned $0.95 per share for the quarter ended September 30, 2006 (3Q06). The company’s 3Q07 EPS included earnings of $0.25 per share^(a) that are not anticipated to recur in future periods. The company’s 3Q07 performance was also $0.05 per share better than expected due to ongoing improvements in the company’s Commercial operations and stand-alone Medicare Prescription Drug Plans (PDPs) that are expected to positively impact fourth quarter 2007 and full-year 2008 results.

The company now estimates EPS for the year ending December 31, 2007 (FY07E) will be in the range of $4.75 to $4.80 versus $2.90 for the year ended December 31, 2006 (FY06). The company also projects its EPS for the year ending December 31, 2008 (FY08E) to be in the range of $5.30 to $5.50, an increase of 10 to 16 percent over FY07E EPS, or 16 to 22 percent^(a)(^c⁾ versus the non-GAAP EPS for FY07E.

“Strong performance in both our business segments fueled a successful third quarter,” said Michael B. McCallister, Humana's president and chief executive officer. “Most importantly, the quarter positioned us well to extend our industry-leading growth in both revenues and earnings through 2008 and beyond.”

For the nine months ended September 30, 2007 (YTD07) the company reported $3.48 in EPS compared to $1.98 for the nine months ended September 30, 2006 (YTD06). Results for YTD07 on a non-GAAP basiswere $3.23 per diluted share^(a)^(c⁾. Results for YTD06 included approximately $0.19 per share of venture capital gains that did not recur in YTD07. The year-over-year increase in YTD07 financial results was primarily due to better operating performance in both business segments.

Revenues– 3Q07 consolidated revenues rose 12 percent to $6.32 billion from $5.65 billion in 3Q06, with total premium and administrative services fees up 11 percent compared to the prior year’s quarter. This year-over-year increase was primarily driven by higher average Medicare membership versus 3Q06.

YTD07 consolidated revenues rose 20 percent to $18.95 billion from $15.76 billion in YTD06 with total premium and administrative services fees up 20 percent compared to the prior year’s period, also primarily driven by higher average enrollment in the company’s Medicare plans.

Medical costs– The 3Q07 consolidated medical expense ratio (medical expenses as a percent of premium revenues or MER) of 81.3 percent was 280 basis points lower than the 3Q06 MER of 84.1 percent, the combined result of a 360 basis point decline in the Government Segment MER (including a 150 basis point benefit from favorable prior year claims development^(a)) and a 70 basis point decline in the Commercial Segment MER.

The consolidated MER for YTD07 of 83.8 percent was 50 basis points lower than the YTD06 consolidated MER of 84.3 percent, substantially due to the same factors driving the year-over-year improvement in 3Q07.

Selling, general, & administrative (SG&A) expenses– The 3Q07 consolidated SG&A expense ratio (SG&A expenses as a percent of premiums, administrative services fees and other revenue) increased 20 basis points to 13.3 percent for 3Q07 from 13.1 percent in 3Q06. The year-over-year increase was primarily the result of a higher SG&A expense ratio in both of the company’s business segments.

The SG&A expense ratio for YTD07 of 13.2 percent was 100 basis points lower than that for YTD06 of 14.2 percent primarily driven by efficiency and productivity gains associated with higher average medical membership year to date.

Government Segment Results

Pretax results:

Government Segment pretax earnings were $416.3 million in 3Q07 compared to $207.0 millionin 3Q06. This segment’s pretax earnings for 3Q07 on a non-GAAP basis were $347.4 million⁽^a⁾^(c⁾. As expected, the year-over-year improvement in segment pretax earnings primarily reflects a more normal MER pattern for the Part D benefit for 2007 as well as administrative cost efficiency associated with higher average Medicare medical membership. The extended enrollment period for this benefit during 2006 distorted the claims pattern associated with the beneficiaries’ progression through the Part D benefit stages in the prior year.

·	For YTD07, pretax earnings for the Government Segment of $723.0 million increased by $396.4 million, or 121 percent versus YTD06 pretax earnings for the segment of $326.6 million, primarily reflecting the same factors impacting the year-over-year comparison for the third quarter.

Enrollment:

Medicare Advantage membership grew to 1,138,000 at September 30, 2007, an increase of 145,000, or 15 percent, from September 30, 2006 and less than 1 percent versus June 30, 2007. Average Medicare Advantage membership for 3Q07 was up 15 percent compared to that for 3Q06. The company’s expanded participation in various Medicare products and markets combined with the company’s increased sales and marketing efforts for these programs led to the higher membership level year over year.

·	Membership in the company’s stand-alone PDPs totaled 3,459,700 at September 30, 2007 compared to 3,521,000 at September 30, 2006 and 3,440,100 at June 30, 2007.

·	TRICARE membership of 2,857,400 at September 30, 2007 was essentially unchanged from both September 30, 2006 and June 30, 2007.

Medicaid membership of 566,600 at September 30, 2007 increased 154,000 from September 30, 2006 due primarily to the award of a new Puerto Rico regional ASO contract during the fourth quarter of 2006, partially offset by eligible Puerto Rico Medicaid members choosing to move into the Medicare Advantage program. Medicaid membership was essentially unchanged compared to the June 30, 2007 total of 567,600.

Premiums and administrative services fees:

·	Medicare Advantage premiums of $2.83 billion in 3Q07 increased 19 percent compared to $2.37 billion in 3Q06, primarily the result of higher average membership.

·	Medicare stand-alone Part D premiums of $890.4 million in 3Q07 increased 5 percent compared to $851.4 million in 3Q06, primarily the result of annual rate increases and changes in premiums associated with Part D risk-share accruals.

·	TRICARE premiums and administrative services fees during 3Q07 increased $81.0 million to $731.8 million compared to $650.8 million in 3Q06.

Medical Expenses:

The Government Segment MER decreased 360 basis points to 81.4 percent in 3Q07 compared to 85.0 percent in the prior year’s quarter. This decrease reflects a more normalized MER pattern for the Medicare Part D benefit for 2007 as well as the impact of favorable prior year claims development. The extended enrollment period for this benefit during the prior year distorted the claims pattern associated with the beneficiaries’ progression through the Part D benefit stages in 2006.

During 3Q07 the company realized approximately $68.9 million in favorable prior year claims development that it does not anticipate recurring in future periods, with approximately $54.0 million related to Medicare Part D claims and the remainder associated with TRICARE claims. The Medicare Part D development primarily related to the resolution of first-year Part D implementation matters including enrollment discrepancies and the related impact on claim estimates. The remainder of this favorable prior year claims development primarily related to the adjustment of certain TRICARE reserves as a result of the settlement of claims payment accuracy provisions for prior option periods.

SG&A Expenses:

The Government Segment’s SG&A expense ratio for 3Q07 of 10.2 percent was 10 basis points higher than that for 3Q06 of 10.1 percent. This segment’s SG&A expense ratio increased 20 basis points on a sequential basis as lower SG&A expenses were slightly outpaced by adjustments to revenues associated with risk adjustment and Part D risk-share accruals.

Commercial Segment Results

Pretax results:

·	Commercial Segment pretax earnings were $62.2 million in 3Q07 compared to $42.4 million in 3Q06. Commercial Segment operating earnings in 3Q07 continue to reflect the company’s commitment to underwriting discipline and strategic growth in select lines of business.

·	For YTD07, pretax earnings for the Commercial Segment of $207.4 million were $13.1 million, or 7 percent higher than YTD06 pretax earnings for the segment of $194.3 million primarily reflecting the same factors driving year-over-year improvement for 3Q07.

Enrollment:

·	Commercial Segment medical membership of 3,299,100 at September 30, 2007 was essentially unchanged from both September 30, 2006 and June 30, 2007.

Membership in strategic areas of commercial growth rose as follows during 3Q07 compared to 3Q06: Individual product membership increased 28 percent, Smart plans and other consumer offerings grew 27 percent, Small Group business membership was up 2 percent, and ASO business was 1 percent higher than the prior year.

Premiums and administrative services fees:

Premiums and administrative services fees for the Commercial Segment increased 2 percent to $1.61 billion in 3Q07 compared to $1.58 billion in the prior year’s quarter, primarily due to the effect of per-member premium increases being partially offset by lower average fully insured group membership.

·	Commercial Segment medical premiums for fully-insured groups increased approximately 6 percent on a per-member basis during 3Q07 compared to 3Q06.

Medical Expenses:

In 3Q07, the Commercial Segment MER of 81.0 percent was 70 basis points lower than the 3Q06 MER of 81.7 percent, primarily reflecting an increase in the percentage of Individual and Small Group members comprising our fully insured book, improving medical cost utilization trends, and the company’s continued commitment to underwriting discipline.

SG&A Expenses:

The Commercial Segment SG&A expense ratio of 21.8 percent for 3Q07 compares to 20.5 percent in 3Q06, primarily the combined result of higher average Individual, and ASO membership and administrative costs associated with increased business for the company’s mail order pharmacy. Average Individual product membership rose 25 percent and average ASO membership increased 2 percent versus the prior year’s quarter.

Balance Sheet

Cash and cash equivalents declined $1.14 billion or 31 percent sequentially. The early receipt of the July Medicare premium payment from the Centers for Medicare and Medicaid Services (CMS) during June 2007 resulted in the receipt of only two months of premium from CMS during the third quarter of 2007. This timing also resulted in a corresponding sequential decline in unearned premium revenues during 3Q07.

·	Unearned revenues of $177.1 million decreased 87 percent from the June 30, 2007 balance of $1.36 billion also due to the timing of the receipts of Medicare premiums from CMS.

·	Debt-to-total capitalization at September 30, 2007 was 25.7 percent, down 40 basis points from June 30, 2007 due primarily to higher capitalization associated with 3Q07 earnings.

The company’s working capital at September 30, 2007 included approximately $721.8 million in net Part D risk-share payables to CMS associated with the company’s Medicare Advantage and stand-alone PDP offerings. Approximately $725.5 million of this net liability related to Part D plan offerings for the year ended December 31, 2006.

·	Days in claims payable excluding the impact of Medicare stand-alone PDPs were up slightly to 63.4 days at September 30, 2007 from 62.4 days at June 30, 2007.

Cash Flows from Operations

Cash flows used in operations for 3Q07 of $637.7 million compared to cash flows used in operations of $391.0 million in 3Q06.

Cash flows from operations ($ in millions)	3Q07			3Q06			YTD07		YTD06
Cash flows provided by operations in accordance with Generally Accepted Accounting Principles (GAAP)	$	(637.7	)	$	(391.0	)	$	1,414.1	$	1,151.8

Timing of premium payment from CMS^(b)		1,175.3			1,031.8			―		―

Non-GAAP cash flows provided by operations^(b)(c)	$	537.6		$	640.8		$	1,414.1	$	1,151.8

The company also evaluates operating cash flows on a non-GAAP basis^(b)(c). Non-GAAP cash flows provided by operations declined to $537.6 million^(b)(c) in 3Q07 from $640.8 million^(b)(c) in 3Q06 driven primarily by changes in working capital more than offsetting the impact of higher operating earnings.

Footnotes

(a)

As described more fully in the “Government Segment Results – Medical Expenses” section of this press release during 3Q07 the company realized pretax earnings of approximately $68.9 million ($0.25 per share) associated with the resolution of favorable claims development in its Government Segment related to prior year issues that are not anticipated to recur in future periods. A reconciliation of GAAP to non-GAAP amounts related to this favorable development and the company’s reason for this non-GAAP disclosure are included in the statistical pages of this earnings press release.

(b)

When reviewing and analyzing Humana’s operating cash flows, company management applies the CMS premium payment in each month to match the corresponding disbursements. To do otherwise distorts meaningful analysis of the company’s operating cash flow. Therefore, decisions such as management’s forecasting and business plans regarding cash flow use this non-GAAP financial measure.

(c)

The company believes that these non-GAAP 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. Internally, management uses these non-GAAP financial measures as indicators of 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.

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 www.humana.com. The company suggests web participants sign on approximately 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 audio-only portion of the conference call are invited to dial 888-625-7430. No password is required. The company suggests participants dial in approximately ten minutes in advance of the call. For those unable to participate in the live event, the virtual presentation archive may be accessed via the Historical Webcasts & Presentations section of the Investor Relations page at www.humana.com.

Cautionary Statement

This news release contains statements and earnings guidance points that are forward-looking. The forward-looking items herein are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking items may be significantly impacted by certain risks and uncertainties described in the following documents filed by Humana with the Securities and Exchange Commission

·	Form 10-K for the year ended December, 31, 2006,

·	Form 10-Qs for the quarters ended March 31, 2007 and June 30, 2007,

·	Form 8-Ks filed during 2007.

About Humana

Humana Inc., headquartered in Louisville, Kentucky, is one of the nation’s largest publicly traded health benefits companies, with approximately 11.3 million medical members. Humana offers a diversified portfolio of health insurance products and related services – through traditional and consumer-choice plans – to employer groups, government-sponsored plans, and individuals.

Over its 46-year history, Humana has consistently seized opportunities to meet changing customer needs. Today, the company is a leader in consumer engagement, providing guidance that leads to lower costs and a better health plan experience throughout its diversified customer portfolio.

More information regarding Humana is available to investors via the Investor Relations page of the company’s web site at www.humana.com, including copies of:

· Annual reports to stockholders;

· Securities and Exchange Commission filings;

· Most recent investor conference presentations;

· Quarterly earnings news releases;

· Replay of most recent earnings release conference calls;

· Calendar of events (includes upcoming earnings conference call dates and times, as well as planned interaction with research analysts and institutional investors);

· Corporate Governance information.

Humana Inc. – Earnings Guidance Points as of October 29, 2007


*(in accordance with* *Generally Accepted* *Accounting Principles)*	For the year ending December 31, 2007	For the year ending December 31, 2008* ***assumes closing of pending KMG America (“KMG”) acquisition in late 2007**	Comments
Diluted earnings per common share (EPS)	Full year 2007: $4.75 to $4.80 4Q07: $1.27 to $1.32	Full year 2008: $5.30 to $5.50	2007 EPS includes $0.25 per share of earnings that are not anticipated to recur in 2008
Revenues	Consolidated revenues: Approximately $25 billion	Consolidated revenues: $28 billion to $30 billion

	Premiums and ASO fees: Medicare Advantage: Approximately $11 billion; Medicare stand-alone PDPs: Approximately $3.5 billion; TRICARE: Approximately $3 billion;	Premiums and ASO fees: Medicare Advantage: $13 billion to $14 billion; Medicare stand-alone PDPs: Approximately $3.4 billion; TRICARE: $3.1 billion to $3.3 billion;
	Commercial: Approximately $6.5 billion	Commercial: $7.2 billion to $7.7 billion	2008 includes $200 million for KMG premiums & fees

	Investment income: Approximately $305 million	Investment income: $360 million to $380 million	2008 includes $20 million for KMG investment income

	Other revenue: $150 million to $155 million	Other revenue: $200 million to $250 million	Other revenue primarily relates to revenues associated with the company’s mail order pharmacy; related administrative costs are in SG&A expenses


(in accordance with *Generally Accepted* *Accounting Principles)*		For the year ending December 31, 2007		For the year ending December 31, 2008* ***assumes closing of pending KMG America (“KMG”) acquisition in late 2007**		Comments

Ending medical membership (fully-insured and ASO combined)	Medicare Advantage: Up approximately 130,000 from prior year	Medicare Advantage: Up 200,000 to 250,000 from prior year

	Medicare stand-alone PDPs: 3.4 million to 3.5 million	Medicare stand-alone PDPs: 3.1 million to 3.2 million

	TRICARE: No material change from prior year	TRICARE: No material change from prior year

	Medicaid: No material change from prior year	Medicaid: No material change from prior year

	Commercial: Up approximately 50,000 from prior year	Commercial: Up approximately 50,000 to 75,000 from prior year
Medical costs	Total Medicare products: MER of approximately 83%	Total Medicare products: MER in the range of 83% to 84%	Medicare Advantage and stand-alone PDP combined

	Commercial fully-insured groups: Medical cost trends in the range of 4.5% to 5.0%; premium yields in line with medical cost trends	Commercial fully-insured groups: Medical cost trends and premium yields in line with prior year

	Secular Commercial medical cost trend components as follows: inpatient hospital utilization – flat to 1 percent; inpatient and outpatient hospital rates – mid to upper single digits; outpatient hospital utilization – low to mid single digits; physician – mid single digits; and pharmacy – high single to low double digits.	Secular Commercial medical cost trend components: no material change from 2007


(in accordance with *Generally Accepted* *Accounting Principles)*		For the year ending December 31, 2007		For the year ending December 31, 2008* ***assumes closing of pending KMG America (“KMG”) acquisition in late 2007**		Comments

Selling, general & administrative expenses	Consolidated SG&A expense ratio of 13.5% to 14%	Consolidated SG&A expense ratio of 13.5% to 14%	SG&A expenses as a percent of premiums, administrative costs, and other revenue
Depreciation & amortization	Approximately $180 million	$215 million to $220 million
Interest expense	Approximately $70 million	$85 million to $90 million
Pretax results	Total Medicare products: Operating margin of approximately 5%	Total Medicare products: Operating margin of approximately 5%	Medicare Advantage and stand-alone PDP combined

	TRICARE: Operating margin of approximately 4%	TRICARE: Operating margin of 2.5% to 3.5%

	Commercial Segment: Pretax earnings of $240 million to $250 million	Commercial Segment: Pretax earnings of $280 million to $300 million	Net investment income is included in segment-level totals only

Cash flows from operations	$1.2 billion to $1.4 billion	$1.5 billion to $1.8 billion
Capital expenditures	Approximately $220 million	Approximately $225 million
Effective tax rate	36% to 37%	36% to 37%
Shares used in computing full-year EPS	Approximately 170 million	Approximately 173 million

Humana Inc.
Footnotes to Statistical Schedules and Supplementary Information
3Q07 Earnings Release

Footnote
(A)	Computed based on average membership for the period (i.e., monthly ending membership during the period divided by the number of months in the period).
(B)	TRICARE revenues are not contracted on a per-member basis.
(C)	In a limited number of circumstances, the company contracts with hospitals and physicians to accept financial risk for a defined set of HMO membership. In transferring this risk, the company prepays these providers a monthly fixed-fee per member to coordinate substantially all of the medical care for their capitated HMO membership, including some health benefit administrative functions and claims processing. For these capitated HMO arrangements, the company generally agrees to reimbursement rates that target a medical expense ratio. Providers participating in hospital-based capitated HMO arrangements generally receive a monthly payment for all of the services within their system for their HMO membership. Providers participating in physician-based capitated HMO arrangements generally have subcontracted specialist physicians and are responsible for reimbursing such physicians and hospitals for services rendered to their HMO membership.
(D)	In some circumstances, the company contracts with physicians under risk-sharing arrangements whereby physicians have assumed some level of risk for all or a portion of the medical costs of their HMO membership. Although these arrangements do include capitation payments for services rendered, the company processes substantially all of the claims under these arrangements.
(E)	IBNR represents an estimate of medical expenses payable for claims incurred but not reported (IBNR) at the balance sheet date. The level of IBNR is primarily impacted by membership levels, medical claim trends and the receipt cycle time, which represents the length of time between when a claim is initially incurred and when the claim form is received (i.e. a shorter time span results in lower reserves for claims IBNR). Other medical expenses payable includes amounts payable to providers under capitation arrangements.
(F)	TRICARE IBNR primarily fluctuates due to medical expense inflation and changes in the utilization of benefits.
(G)	TRICARE other medical expenses payable may include liabilities to subcontractors and/or risk share payables to the Department of Defense. The level of these balances may fluctuate from period to period due to the timing of payment (cutoff) and whether or not the balances are payables or receivables (receivables from the Department of Defense are classified as receivables in the company's balance sheet).
(H)	Unprocessed claim inventories represent the estimated valuation of claims received but not yet fully processed. TRICARE claim inventories are not included in this amount as an independent third party administrator processes all TRICARE medical claims on the company's behalf. Reserves for TRICARE unprocessed claims inventory are included in TRICARE IBNR.
(I)	Processed claim inventories represent the estimated valuation of processed claims that are in the post-claim-adjudication process, which consists of administrative functions such as audit and check batching and handling.
(J)	The balance due to the company's pharmacy benefit administrator fluctuates as a result of the number of business days in the last payment cycle of the month. Payment cycles are every 10 days (10th & 20th of month) and the last day of the month.
(K)	Amounts incurred related to prior years vary from previously estimated liabilities as the claims ultimately are settled. Negative amounts reported for incurred related to prior years result from claims being ultimately settled for amounts less than originally estimated (favorable development). There were no changes in the approach used to determine our estimate of claim reserves during the quarter.
(L)	Changes in estimates of TRICARE incurred claims for prior years result primarily from claim costs and utilization levels developing favorably from the levels originally estimated for the second half of the prior year. As a result of substantial risk-sharing provisions with the Department of Defense and with subcontractors, any resulting impact on operations from the change in estimates of incurred related to prior years is substantially reduced, whether positive or negative.
(M)	The receipt cycle time measures the average length of time between when a claim was initially incurred and when the claim form was received. Receipt cycle time data for our largest claim processing platforms represents 70% to 75% of the company's fully-insured claims volume. Pharmacy claims are excluded from this measurement.
(N)	A common metric for monitoring medical claim reserve levels relative to the medical claims expense is days in claims payable, or DCP, which represents the medical claim liabilities at the end of the period divided by average medical expenses per day in the quarterly period. Since the company has some providers under capitation payment arrangements (which do not require a medical claim IBNR reserve), the company has also summarized this metric excluding capitation expense. In addition, this calculation excludes the impact of the company's stand-alone PDP business.
(O)	DCP fluctuates due to a number of issues, the more significant of which are detailed in the rollforward of DCP from the fourth quarter of the prior year. Growth in certain product lines can also impact DCP for the quarter since a provision for claims would not have been recorded for members that had not yet enrolled earlier in the quarter, yet those members would have a provision and corresponding reserve recorded upon enrollment later in the quarter. This analysis excludes the impact of Medicare stand-alone PDPs upon DCP.
(P)	These non-GAAP numbers exclude favorable development in the Government Segment related to prior year matters of approximately $68.9 million, or $0.25 per diluted share, that are not expected to recur in future periods. The favorable claims development resulted from 1) the resolution of first year (2006) Part D implementation matters including enrollment discrepancies and the related impact on claims estimates ($54.0 million, or $0.20 per share) and 2) the adjustment of TRICARE reserves as a result of the settlement of the claims payment accuracy provision for prior option periods under the South contract ($14.9 million, or $0.05 per share). The company believes that these non-GAAP 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. Internally, management uses these non-GAAP financial measures as indicators of business performance, as well as for operational planning and decision making purposes. These 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.

S-17

1-5975	61-0647538
(Commission File Number)	(IRS Employer Identification No.)

500 West Main Street, Louisville, KY	40202
(Address of Principal Executive Offices)	(Zip Code)

	o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
	o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
	o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
	o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Exhibit No.	Description

99	Earnings Release and Stat Pages

	HUMANA INC.


	BY:	/s/ Kathleen Pellegrino
		Kathleen Pellegrino
		Vice President, Acting General Counsel

Humana Inc.
Statistical Schedules
And
Supplementary Information
3Q07 Earnings Release

	Humana Inc.
	Statistical Schedules and Supplementary Information
	3Q07 Earnings Release

	Contents

	Page	Description

	S-3-4	Consolidated Statements of Income
	S-5	Consolidated Balance Sheets
	S-6-7	Consolidated Statements of Cash Flows
	S-8	Key Income Statement Ratios and Segment Operating Results
	S-9	Membership Detail
	S-10-11	Premiums and Administrative Services Fees Detail
	S-12	Percentage of Ending Membership under Capitation Arrangements
	S-13-15	Medical Claims Reserves
	S-16	GAAP to Non-GAAP Reconciliation
	S-17	Footnotes

Humana Inc.
Consolidated Statements of Income
In thousands, except per common share results

	Three Months Ended September 30,
					Dollar			Percentage
	2007		2006		Change			Change
Revenues:
Premiums	$	6,092,841	$	5,486,368	$	606,473			11.1	%
Administrative services fees		101,531		86,332		15,199			17.6	%
Investment income		82,362		62,474		19,888			31.8	%
Other revenue		42,850		14,610		28,240			193.3	%
Total revenues		6,319,584		5,649,784		669,800			11.9	%
Operating expenses:
Medical		4,953,862		4,616,002		337,860			7.3	%
Selling, general and administrative		829,023		729,722		99,301			13.6	%
Depreciation		37,771		32,562		5,209			16.0	%
Other intangible amortization		4,479		5,115		(636	)		-12.4	%
Total operating expenses		5,825,135		5,383,401		441,734			8.2	%
Income from operations		494,449		266,383		228,066			85.6	%
Interest expense		15,947		17,009		(1,062	)		-6.2	%
Income before income taxes		478,502		249,374		229,128			91.9	%
Provision for income taxes		176,124		90,176		85,948			95.3	%
Net income	$	302,378	$	159,198	$	143,180			89.9	%

Basic earnings per common share	$	1.81	$	0.97	$	0.84			86.6	%
Diluted earnings per common share	$	1.78	$	0.95	$	0.83			87.4	%

Shares used in computing basic earnings per common share		167,188		164,387
Shares used in computing diluted earnings per common share		170,051		168,376

	September 30,			June 30,			December 31,			Sequential Change
	2007			2007			2006			Dollar			Percent
Assets
Current assets:
Cash and cash equivalents	$	2,585,670		$	3,720,769		$	1,740,304
Investment securities		3,475,300			3,323,536			3,192,273
Receivables, net:
Premiums		685,242			685,479			667,657
Administrative services fees		12,556			12,074			13,284
Securities lending collateral		830,589			1,346,065			627,990
Other		1,612,467			1,318,003			1,091,465
Total current assets		9,201,824			10,405,926			7,332,973		$	(1,204,102	)		-11.6	%
Property and equipment, net		570,798			569,412			545,004
Other assets:
Long-term investment securities		420,769			400,775			414,877
Goodwill		1,330,585			1,330,585			1,310,631
Other		548,530			628,267			524,011
Total other assets		2,299,884			2,359,627			2,249,519
Total assets	$	12,072,506		$	13,334,965		$	10,127,496		$	(1,262,459	)		-9.5	%

Liabilities and Stockholders' Equity
Current liabilities:
Medical and other expenses payable	$	2,881,329		$	2,954,146		$	2,488,261
Trade accounts payable and accrued expenses		2,253,504			2,084,463			1,626,658
Book overdraft		253,356			289,646			293,605
Securities lending payable		830,589			1,346,065			627,990
Unearned revenues		177,080			1,355,017			155,298
Total current liabilities		6,395,858			8,029,337			5,191,812		$	(1,633,479	)		-20.3	%
Long-term debt		1,292,858			1,189,570			1,269,100
Other long-term liabilities		644,913			740,560			612,698
Total liabilities		8,333,629			9,959,467			7,073,610		$	(1,625,838	)		-16.3	%
Commitments and contingencies
Stockholders' equity:
Preferred stock, $1 par; 10,000,000 shares authorized, none issued		-			-			-
Common stock, $0.16 2/3 par; 300,000,000 shares
authorized 185,973,713 issued at September 30, 2007		30,995			30,833			30,491
Capital in excess of par value		1,462,953			1,422,370			1,357,077
Retained earnings		2,499,563			2,197,185			1,909,098
Accumulated other comprehensive loss		(11,042	)		(38,112	)		(13,205	)
Treasury stock, at cost, 16,541,384 shares at September 30, 2007		(243,592	)		(236,778	)		(229,575	)
Total stockholders' equity		3,738,877			3,375,498			3,053,886		$	363,379			10.8	%
Total liabilities and stockholders' equity	$	12,072,506		$	13,334,965		$	10,127,496		$	(1,262,459	)		-9.5	%

Debt-to-total capitalization ratio		25.7	%		26.1	%		29.4	%

	Nine Months Ended September 30,
							Dollar			Percentage
	2007			2006			Change			Change
Cash flows from operating activities
Net income	$	590,465		$	332,402
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		136,578			109,179
Stock-based compensation		30,868			24,401
(Benefit) provision for deferred income taxes		(33,179	)		22,269
Changes in operating assets and liabilities excluding
the effects of acquisitions:
Receivables		(16,857	)		(5,509	)
Other assets		(57,072	)		(389,013	)
Medical and other expenses payable		393,068			632,063
Other liabilities		335,155			465,993
Unearned revenues		21,782			20,892
Other		13,286			(60,866	)
Net cash provided by operating activities		1,414,094			1,151,811		$	262,283			22.8	%

Cash flows from investing activities
Acquisitions, net of cash acquired		(27,506	)		(26,362	)
Purchases of property and equipment		(156,056	)		(136,602	)
Proceeds from sales of property and equipment		15,934			9,452
Purchases of investment securities		(2,631,990	)		(3,505,391	)
Proceeds from maturities of investment securities		1,091,260			1,478,017
Proceeds from sales of investment securities		1,254,878			1,219,555
Change in securities lending collateral		(202,599	)		(869,715	)
Net cash used in investing activities		(656,079	)		(1,831,046	)	$	1,174,967			64.2	%

Cash flows from financing activities
Receipts from CMS contract deposits		1,948,062			1,427,849
Withdrawals from CMS contract deposits		(2,109,523	)		(1,370,862	)
Borrowings under credit agreement		1,185,000			250,000
Repayments under credit agreement		(1,160,000	)		(300,000	)
Proceeds from issuance of senior notes		-			498,545
Repayment of senior notes		-			(300,000	)
Debt issue costs		-			(5,796	)
Change in book overdraft		(40,249	)		1,239
Change in securities lending payable		202,599			869,715
Common stock repurchases		(14,017	)		(15,570	)
Tax benefit from stock-based compensation		26,826			30,791
Proceeds from stock option exercises and other		48,653			42,542
Net cash provided by financing activities		87,351			1,128,453		$	(1,041,102	)		-92.3	%

Increase in cash and cash equivalents		845,366			449,218
Cash and cash equivalents at beginning of period		1,740,304			732,016

Cash and cash equivalents at end of period	$	2,585,670		$	1,181,234

	Ending September 30,				Ending September 30,		Year-over-year Change						Ending June 30,		Sequential Change
	2007		Average - 3Q07		2006		Amount			Percent			2007		Amount			Percent
Medical Membership:
Government Segment:
Medicare Advantage - HMO		451.7		452.4		455.4		(3.7	)		-0.8	%		452.4		(0.7	)		-0.2	%
Medicare Advantage - PPO		71.1		69.5		71.1		0.0			0.0	%		66.9		4.2			6.3	%
Medicare Advantage - PFFS		615.2		616.5		466.5		148.7			31.9	%		614.4		0.8			0.1	%
Total Medicare Advantage		1,138.0		1,138.4		993.0		145.0			14.6	%		1,133.7		4.3			0.4	%
Medicare - PDP - Standard		2,148.9		2,146.9		2,081.7		67.2			3.2	%		2,131.0		17.9			0.8	%
Medicare - PDP - Enhanced		1,085.1		1,081.5		1,021.6		63.5			6.2	%		1,075.9		9.2			0.9	%
Medicare - PDP - Complete		225.7		228.0		417.7		(192.0	)		46.0	%		233.2		(7.5	)		-3.2	%
Total Medicare stand-alone PDPs		3,459.7		3,456.4		3,521.0		(61.3	)		1.7	%		3,440.1		19.6			0.6	%
Total Medicare		4,597.7		4,594.8		4,514.0		83.7			1.9	%		4,573.8		23.9			0.5	%
TRICARE insured		1,720.4		1,720.4		1,721.3		(0.9	)		-0.1	%		1,717.6		2.8			0.2	%
TRICARE ASO		1,137.0		1,137.2		1,141.4		(4.4	)		-0.4	%		1,150.6		(13.6	)		-1.2	%
Total TRICARE		2,857.4		2,857.6		2,862.7		(5.3	)		-0.2	%		2,868.2		(10.8	)		-0.4	%
Medicaid insured		383.8		383.8		412.6		(28.8	)		-7.0	%		384.9		(1.1	)		-0.3	%
Medicaid ASO		182.8		184.0		-		182.8			100.0	%		182.7		0.1			0.1	%
Total Medicaid		566.6		567.8		412.6		154.0			37.3	%		567.6		(1.0	)		-0.2	%
Total Government Segment		8,021.7		8,020.2		7,789.3		232.4			3.0	%		8,009.6		12.1			0.2	%
Commercial Segment:
Fully-insured medical:
Group		1,530.2		1,530.1		1,597.1		(66.9	)		-4.2	%		1,533.0		(2.8	)		-0.2	%
Individual		223.7		216.5		175.4		48.3			27.5	%		205.0		18.7			9.1	%
Medicare supplement		11.3		10.2		7.4		3.9			52.7	%		8.3		3.0			36.1	%
Total fully-insured medical		1,765.2		1,756.8		1,779.9		(14.7	)		-0.8	%		1,746.3		18.9			1.1	%
ASO		1,533.9		1,546.1		1,512.0		21.9			1.4	%		1,532.4		1.5			0.1	%
Total Commercial Segment		3,299.1		3,302.9		3,291.9		7.2			0.2	%		3,278.7		20.4			0.6	%

Total medical membership		11,320.8		11,323.1		11,081.2		239.6			2.2	%		11,288.3		32.5			0.3	%


Specialty Membership (all Commercial Segment)
Dental - fully-insured		974.7		975.6		960.5		14.2			1.5	%		978.1		(3.4	)		-0.3	%
Dental - ASO		499.3		503.9		488.2		11.1			2.3	%		499.9		(0.6	)		-0.1	%
Total dental		1,474.0		1,479.5		1,448.7		25.3			1.7	%		1,478.0		(4.0	)		-0.3	%
Group life		444.3		442.7		436.1		8.2			1.9	%		439.8		4.5			1.0	%
Short-term disability		11.8		11.9		14.9		(3.1	)		-20.8	%		12.2		(0.4	)		-3.3	%
Total specialty membership		1,930.1		1,934.1		1,899.7		30.4			1.6	%		1,930.0		0.1			0.0	%

										Per Member per Month (A)
	Three Months Ended September 30,									Three Months Ended September 30,
					Dollar		Percentage
	2007		2006		Change		Change			2007		2006
Premium revenues
Government Segment:
Medicare Advantage	$	2,825,587	$	2,366,206	$	459,381		19.4	%	$	827	$	799
Medicare stand-alone PDPs		890,420		851,398		39,022		4.6	%	$	86	$	82
Total Medicare		3,716,007		3,217,604		498,403		15.5	%
TRICARE insured (B)		714,173		639,657		74,516		11.6	%	$	138	$	124
Medicaid insured		135,609		128,018		7,591		5.9	%	$	118	$	103
Total Government Segment premiums		4,565,789		3,985,279		580,510		14.6	%
Commercial Segment:
Fully-insured medical		1,418,884		1,397,945		20,939		1.5	%	$	269	$	260
Specialty		108,168		103,144		5,024		4.9	%	$	22	$	21
Total Commercial Segment premiums		1,527,052		1,501,089		25,963		1.7	%
Total premium revenues	$	6,092,841	$	5,486,368	$	606,473		11.1	%


Administrative services fees
TRICARE ASO (B)	$	17,675	$	11,136	$	6,539		58.7	%	$	5	$	3
Medicaid ASO		2,165		-		2,165		100.0	%	$	4		-
Total Government Segment		19,840		11,136		8,704		78.2	%
Commercial Segment		81,691		75,196		6,495		8.6	%	$	13	$	12
Total administrative services fees	$	101,531	$	86,332	$	15,199		17.6	%

Humana Inc.
Premiums and Administrative Services Fees Detail
Dollars in thousands, except per member per month

	Government Segment															Commercial Segment
September 30, 2007	Medicare Advantage			Medicare stand-alone PDPs			TRICARE			Medicaid			Total Govt. Segment			Fully-insured			ASO			Total Comm. Segment			Total Medical Membership

Capitated HMO hospital system based (C)		2.4	%		-			-			-			0.3	%		1.4	%		-			0.8	%		0.5	%
Capitated HMO physician group based (C)		2.0	%		-			-			26.5	%		2.2	%		1.5	%		-			0.8	%		1.8	%
Risk-sharing (D)		24.2	%		-			-			40.8	%		6.3	%		1.5	%		-			0.8	%		4.7	%
All other membership		71.4	%		100.0	%		100.0	%		32.7	%		91.2	%		95.6	%		100.0	%		97.6	%		93.0	%
Total medical membership		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

September 30, 2006

Capitated HMO hospital system based (C)		3.1	%		-			-			-			0.4	%		1.9	%		-			1.0	%		0.6	%
Capitated HMO physician group based (C)		2.4	%		-			-			34.8	%		2.2	%		1.8	%		-			1.0	%		1.8	%
Risk-sharing (D)		27.8	%		-			-			64.5	%		7.0	%		1.4	%		-			0.8	%		5.1	%
All other membership		66.7	%		100.0	%		100.0	%		0.7	%		90.4	%		94.9	%		100.0	%		97.2	%		92.5	%
Total medical membership		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

Humana Inc.
Detail of Medical and Other Expenses Payable Balance and Year-to-Date Changes
Dollars in thousands

Receipt Cycle Time (M)
	2007		2006		Change			Percentage Change
1st Quarter Average		15.6		16.1		(0.5	)		-3.1	%
2nd Quarter Average		15.6		15.8		(0.2	)		-1.3	%
3rd Quarter Average		15.9		16.0		(0.1	)		-0.6	%
4th Quarter Average		-		15.8	N/A			N/A
Full Year Average		15.7		15.9		(0.2	)		-1.3	%



Unprocessed Claims Inventories

Date	Estimated Valuation (000's)		Claim Item Counts		Number of Days on Hand
9/30/2005	$	136,700		512,800		4.7
12/31/2005	$	148,200		498,400		4.6
3/31/2006	$	185,300		683,900		5.6
6/30/2006	$	193,700		702,000		4.8
9/30/2006	$	187,900		623,900		5.4
12/31/2006	$	218,400		757,700		6.1
3/31/2007	$	222,300		747,200		5.5
6/30/2007	$	211,300		751,600		4.9
9/30/2007	$	224,000		819,100		6.1

Days in Claims Payable (N)
Quarter Ended	Days in Claim Payable (DCP)		Annual Change			Percentage Change			DCP Excluding Capitation			Annual Change			Percentage Change
9/30/2005		54.0		2.2			4.2	%		60.8			1.7			2.9	%
12/31/2005		60.3		10.8			21.8	%		66.6			11.8			21.5	%
3/31/2006		59.1		8.6			17.0	%		65.5			9.4			16.8	%
6/30/2006		59.5		6.7			12.7	%		65.5			6.9			11.8	%
9/30/2006		61.2		7.2			13.3	%		67.1			6.3			10.4	%
12/31/2006		60.2		(0.1	)		-0.2	%		66.5			(0.1	)		-0.2	%
3/31/2007		62.0		2.9			4.9	%		67.8			2.3			3.5	%
6/30/2007		62.4		2.9			4.9	%		69.7			4.2			6.4	%
9/30/2007		63.4		2.2			3.6	%		70.5			3.4			5.1	%

Year-to-Date Change in Days in Claims Payable (O)
						2007			2006
DCP - 4th quarter of prior year							60.2			60.3
Components of year-to-date change in DCP:
Change in claims receipt cycle time							(0.6	)		(1.6	)
Change in unprocessed claims inventories							0.1			1.7
Change in processed claims inventories							(0.2	)		0.8
Change in TRICARE reserve balances							-			(2.1	)
Change in pharmacy payment cutoff							-			(1.3	)
Change in provider payables under risk arrangements							2.7			1.9
All other							1.2			0.5
DCP - current quarter							63.4			60.2


	3Q07						3Q07 YTD						Forecasted EPS and Growth Rate
	Pretax Income			EPS			Pretax Income			EPS			2007			2008		Growth Rate
Consolidated
GAAP	$	478,502		$	1.78		$	930,313		$	3.48		$	4.75 to $4.80		$	5.30 to $5.50		10%-16	%

Non-GAAP adjustment for favorable prior year claims development	$	(68,878	)	$	(0.25	)	$	(68,878	)	$	(0.25	)	$	(0.25	)		-

Non-GAAP (P)	$	409,624		$	1.53		$	861,435		$	3.23		$	4.50 to $4.55		$	5.30 to $5.50		16%-22	%