UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of report (Date of earliest event reported) May
2, 2011
Humana
Inc.
(Exact
Name of Registrant as Specified in Its Charter)
Delaware
(State
or Other Jurisdiction of Incorporation)
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) |
502-580-1000
(Registrant’s
Telephone Number, Including Area Code)
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions (see General Instruction A.2.
below):
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
Item
7.01 Regulation FD Disclosure.
An earnings release was issued by Humana Inc. this morning reporting detailed financial results for the period ended March 31, 2011 and updated 2011 earnings guidance, a copy of which is attached hereto as Exhibit 99 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
Exhibit No. | Description | ||
99 |
Earnings Release and Statistical Pages |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
HUMANA INC. |
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|
||||
|
|
BY: |
/s/ Steven E. McCulley |
|
Steven E. McCulley |
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Vice President and Controller |
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(Principal Accounting Officer) |
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Dated: |
May 2, 2011 |
INDEX TO EXHIBITS
Exhibit No. |
Description |
|
99 |
Earnings Release and Statistical Pages |
Exhibit 99
Humana Reports Detailed First Quarter 2011 Financial Results
LOUISVILLE, Ky.--(BUSINESS WIRE)--May 2, 2011--Humana Inc. (NYSE: HUM) today reported diluted earnings per common share (EPS) for the quarter ended March 31, 2011 (1Q11) of $1.86, compared to $1.52 per share for the quarter ended March 31, 2010 (1Q10). Higher year-over-year earnings in the company’s Employer Group and Health and Well-Being Services business segments were partially offset by lower earnings in the company’s Retail business segment. EPS for 1Q11 and 1Q10 were positively impacted by $0.31 per share and $0.37 per share, respectively, as a result of favorable development of prior-period medical claims reserves.
“Our favorable first-quarter results reflect operational discipline in our core businesses and a growing focus on a broader array of businesses designed to help people achieve lifelong well-being,” said Michael B. McCallister, Humana’s chairman of the board and chief executive officer. “Humana’s financial strength allows us to begin a more aggressive capital deployment program while still fully supporting the continued execution of our corporate strategy overall.”
On April 26, 2011, the company raised EPS guidance for the year ending December 31, 2011 (FY11) to a range of $6.70 to $6.90 versus its previous estimate of $5.95 to $6.15. This increase in FY11 EPS guidance primarily reflects favorable prior-period claims development in the first quarter, lower projected benefit expense ratios in the company’s Retail and Employer Group Segments and higher projected earnings for the company’s Health and Well-Being Services Segment.
Consolidated Highlights
Revenues – 1Q11 consolidated revenues were $9.19 billion, an increase of 10 percent from $8.38 billion in 1Q10, with total premiums and services revenue up 10 percent compared to the prior year’s quarter. The year-over-year increase in premiums and services revenue primarily reflected an increase in the revenues in both our Retail and Health and Well-Being Services segments, partially offset by a decline in Employer Group revenues. Increases in Retail revenues were driven primarily by an 11 percent increase in average membership in the company’s Medicare Advantage plans. Increases in Health and Well-Being Services revenues were driven primarily by the acquisition of Concentra in December 2010. The decrease in Employer Group revenues resulted from lower average commercial group medical membership.
Benefit expenses – The 1Q11 consolidated benefit ratio (benefit expenses as a percent of premiums) of 83.8 percent increased from 83.5 percent for the prior year’s quarter due primarily to a higher year-over-year benefit ratio for the Retail Segment, partially offset by a lower year-over-year benefit ratio for the Employer Group Segment.
Operating costs – The consolidated operating cost ratio (operating costs as a percent of total revenues less investment income) of 13.8 percent for 1Q11 compares to 12.8 percent in 1Q10. This higher year-over-year ratio primarily reflects the greater percentage of the company’s revenues derived from its Health and Well-Being Services Segment, which carries a higher operating cost ratio than the company’s other business segments.
Retail Segment Highlights
Pretax results:
Enrollment:
Premiums and services revenue:
Benefit expenses:
Operating costs:
Employer Group Segment Highlights
Pretax results:
Enrollment:
Premiums and services revenue:
Benefit expenses:
Operating costs:
Health and Well-Being Services Segment Highlights
Pretax results:
Services revenue:
Operating costs:
Balance Sheet
Cash Flows from Operations
Cash flows provided by operations for 1Q11 totaled $795.5 million compared to cash flows provided by operations of $754.7 million in 1Q10 primarily due to higher net income, year over year.
Share Repurchase Program and Cash Dividend
Footnote
(a) The company provides a full range of insured specialty products including dental, vision and other supplemental products. Members included in these products may not be unique to each product since members have the ability to enroll in multiple products. Other supplemental benefits include life, disability, and fixed benefit products including cancer and critical illness policies.
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 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 audio-only portion of the conference call are invited to dial 888-625-7430. No password is required. The company suggests participants dial in at least 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 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,” “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:
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:
About Humana
Humana Inc., headquartered in Louisville, Kentucky, is a leading health care company that offers a wide range of insurance products and health and wellness services that incorporate an integrated approach to lifelong well-being. By leveraging the strengths of its core businesses, Humana believes it can better explore opportunities for existing and emerging adjacencies in health care that can further enhance wellness opportunities for the millions of people across the nation with whom the company has relationships.
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:
Humana Inc. – Earnings Guidance Points as of May 2, 2011 |
||||||||
(in accordance with Generally Accepted Accounting Principles) |
For the year ending December 31, 2011 | Comments | ||||||
Diluted earnings per common share (EPS) | Full year 2011: $6.70 to $6.90 | EPS estimates: | ||||||
Second quarter 2011: $2.00 to $2.10 | - Exclude the impact of future share | |||||||
repurchases | ||||||||
- Anticipate 171 million shares | ||||||||
outstanding | ||||||||
- Reflect income tax rate of | ||||||||
approximately 37% | ||||||||
Revenues | Consolidated revenues: $36.5 billion to $37.0 billion | Includes expected investment income in the | ||||||
Total revenues: | range of $355 million to $365 million | |||||||
Retail Segment:$20.5 billion to $21.5 billion | ||||||||
Employer Group Segment: $9.0 billion to $10.0 billion | Segment-level revenues include | |||||||
Health and Well-Being Services Segment: $11.0 billion to $12.0 billion | intersegment amounts that eliminate in | |||||||
Other Businesses: $4.5 billion to $5.5 billion | consolidation | |||||||
Ending medical membership versus prior year end | Retail Segment: | |||||||
Medicare Advantage: Up 117,000 to 127,000 | ||||||||
Medicare stand-alone PDPs: Up 720,000 to 730,000 | ||||||||
Employer Group Segment: | ||||||||
Medicare Advantage: Up approximately 8,000 | ||||||||
Commercial Fully Insured: Down 70,000 to 80,000 | ||||||||
Commercial ASO: Down 140,000 to 150,000 | ||||||||
Benefit ratios | Retail Segment: 84.0% to 85.0% | Benefit expenses as a percent of premiums | ||||||
Employer Group Segment: 83.0% to 84.0% | ||||||||
Consolidated operating cost ratio | 13.75% to 14.25% | Operating costs as a percent of total | ||||||
revenues excluding investment income | ||||||||
Consolidated depreciation and amortization (cash | $300 million to $310 million | Approximately $35 million is expected to be | ||||||
flows) | included in benefits expense on the | |||||||
income statement | ||||||||
Consolidated interest expense | $110 million to $115 million | |||||||
Detailed pretax results | Retail Segment: $1.1 billion to $1.2 billion | |||||||
Employer Group Segment: $135 million to $150 million | ||||||||
Health and Well-Being Services Segment: $370 million to $410 million | ||||||||
Cash flows from operations | $1.8 billion to $2.0 billion | |||||||
Capital expenditures | Approximately $280 million |
Humana Inc. |
Statistical Schedules |
And |
Supplementary Information |
1Q11 Earnings Release |
S-1 |
Humana Inc. | |||||||
Statistical Schedules and Supplementary Information | |||||||
1Q11 Earnings Release | |||||||
Contents | |||||||
Page | Description | ||||||
S-3 | Consolidated Statements of Income | ||||||
S-4 | 1Q11 Segment Financial Information | ||||||
S-5 | 1Q10 Segment Financial Information | ||||||
S-6 | Consolidated Balance Sheets | ||||||
S-7 | Consolidated Statements of Cash Flows | ||||||
S-8 | Key Income Statement Ratios and Segment Operating Results | ||||||
S-9 | Membership Detail | ||||||
S-10 | Premiums and Services Revenue Detail | ||||||
S-11 | Investments | ||||||
S-12-14 | Benefits Payable | ||||||
S-15 | Footnotes | ||||||
S-2 |
Humana Inc. | ||||||||||||||||||
Consolidated Statements of Income | ||||||||||||||||||
In thousands, except per common share results | ||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||
Dollar | Percentage | |||||||||||||||||
2011 | 2010 | Change | Change | |||||||||||||||
Revenues: | ||||||||||||||||||
Premiums | $ | 8,766,291 | $ | 8,161,863 | $ | 604,428 | 7.4 | % | ||||||||||
Services | 334,942 | 133,020 | 201,922 | 151.8 | % | |||||||||||||
Investment income | 89,485 | 85,455 | 4,030 | 4.7 | % | |||||||||||||
Total revenues | 9,190,718 | 8,380,338 | 810,380 | 9.7 | % | |||||||||||||
Operating expenses: | ||||||||||||||||||
Benefits | 7,344,754 | 6,817,382 | 527,372 | 7.7 | % | |||||||||||||
Operating costs | 1,255,843 | 1,060,857 | 194,986 | 18.4 | % | |||||||||||||
Depreciation and amortization | 66,109 | 58,859 | 7,250 | 12.3 | % | |||||||||||||
Total operating expenses | 8,666,706 | 7,937,098 | 729,608 | 9.2 | % | |||||||||||||
Income from operations | 524,012 | 443,240 | 80,772 | 18.2 | % | |||||||||||||
Interest expense | 27,228 | 26,314 | 914 | 3.5 | % | |||||||||||||
Income before income taxes | 496,784 | 416,926 | 79,858 | 19.2 | % | |||||||||||||
Provision for income taxes | 181,608 | 158,158 | 23,450 | 14.8 | % | |||||||||||||
Net income | $ | 315,176 | $ | 258,768 | $ | 56,408 | 21.8 | % | ||||||||||
Basic earnings per common share | $ | 1.88 | $ | 1.54 | $ | 0.34 | 22.1 | % | ||||||||||
Diluted earnings per common share | $ | 1.86 | $ | 1.52 | $ | 0.34 | 22.4 | % | ||||||||||
Shares used in computing basic earnings per common share (000's) | 167,271 | 168,200 | ||||||||||||||||
Shares used in computing diluted earnings per common share (000's) | 169,534 | 170,080 | ||||||||||||||||
S-3 |
Humana Inc. | ||||||||||||||||||||||||||||||||||||
1Q11 Segment Financial Information | ||||||||||||||||||||||||||||||||||||
In thousands | ||||||||||||||||||||||||||||||||||||
Health and | ||||||||||||||||||||||||||||||||||||
Employer | Well-Being | Other | Eliminations/ | |||||||||||||||||||||||||||||||||
Retail | Group | Services | Businesses | Corporate | Consolidated | |||||||||||||||||||||||||||||||
Revenues - external customers | ||||||||||||||||||||||||||||||||||||
Premiums: | ||||||||||||||||||||||||||||||||||||
Medicare Advantage | $ | 4,524,626 | $ | 796,754 | $ | - | $ | - | $ | - | $ | 5,321,380 | ||||||||||||||||||||||||
Medicare stand-alone PDP | 557,472 | 1,817 | - | 75,896 | - | 635,185 | ||||||||||||||||||||||||||||||
Total Medicare | 5,082,098 | 798,571 | - | 75,896 | - | 5,956,565 | ||||||||||||||||||||||||||||||
Fully-insured | 200,888 | 1,198,590 | - | - | - | 1,399,478 | ||||||||||||||||||||||||||||||
Specialty | 25,775 | 229,651 | - | - | - | 255,426 | ||||||||||||||||||||||||||||||
Military services | - | - | - | 923,277 | - | 923,277 | ||||||||||||||||||||||||||||||
Medicaid and other (A) | - | - | - | 231,545 | - | 231,545 | ||||||||||||||||||||||||||||||
Total premiums | 5,308,761 | 2,226,812 | - | 1,230,718 | - | 8,766,291 | ||||||||||||||||||||||||||||||
Services revenue: | ||||||||||||||||||||||||||||||||||||
Provider | - | - | 215,046 | - | - | 215,046 | ||||||||||||||||||||||||||||||
ASO and other (B) | 2,873 | 92,546 | - | 22,270 | - | 117,689 | ||||||||||||||||||||||||||||||
Pharmacy | - | - | 2,207 | - | - | 2,207 | ||||||||||||||||||||||||||||||
Total services revenue | 2,873 | 92,546 | 217,253 | 22,270 | - | 334,942 | ||||||||||||||||||||||||||||||
Total revenues - external customers | 5,311,634 | 2,319,358 | 217,253 | 1,252,988 | - | 9,101,233 | ||||||||||||||||||||||||||||||
Intersegment revenues | ||||||||||||||||||||||||||||||||||||
Services | - | 3,281 | 2,121,391 | - | (2,124,672 | ) | - | |||||||||||||||||||||||||||||
Products | - | - | 434,640 | - | (434,640 | ) | - | |||||||||||||||||||||||||||||
Total intersegment revenues | - | 3,281 | 2,556,031 | - | (2,559,312 | ) | - | |||||||||||||||||||||||||||||
Investment income | 18,996 | 11,615 | - | 12,304 | 46,570 | 89,485 | ||||||||||||||||||||||||||||||
Total revenues | 5,330,630 | 2,334,254 | 2,773,284 | 1,265,292 | (2,512,742 | ) | 9,190,718 | |||||||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||||||
Benefits | 4,554,243 | 1,751,404 | - | 1,109,439 | (70,332 | ) | 7,344,754 | |||||||||||||||||||||||||||||
Operating costs | 532,412 | 423,907 | 2,656,282 | 118,954 | (2,475,712 | ) | 1,255,843 | |||||||||||||||||||||||||||||
Depreciation and amortization | 26,985 | 20,188 | 20,629 | 1,708 | (3,401 | ) | 66,109 | |||||||||||||||||||||||||||||
Total operating expenses | 5,113,640 | 2,195,499 | 2,676,911 | 1,230,101 | (2,549,445 | ) | 8,666,706 | |||||||||||||||||||||||||||||
Income from operations | 216,990 | 138,755 | 96,373 | 35,191 | 36,703 | 524,012 | ||||||||||||||||||||||||||||||
Interest expense | - | - | - | - | 27,228 | 27,228 | ||||||||||||||||||||||||||||||
Income before income taxes | $ | 216,990 | $ | 138,755 | $ | 96,373 | $ | 35,191 | $ | 9,475 | $ | 496,784 | ||||||||||||||||||||||||
Benefit ratio | 85.8 | % | 78.7 | % | 90.1 | % | 83.8 | % | ||||||||||||||||||||||||||||
Operating cost ratio | 10.0 | % | 18.3 | % | 95.8 | % | 9.5 | % | 13.8 | % | ||||||||||||||||||||||||||
S-4 |
Humana Inc. | ||||||||||||||||||||||||||||||||||||
1Q10 Segment Financial Information | ||||||||||||||||||||||||||||||||||||
In thousands | ||||||||||||||||||||||||||||||||||||
Health and | ||||||||||||||||||||||||||||||||||||
Employer | Well-Being | Other | Eliminations/ | |||||||||||||||||||||||||||||||||
Retail | Group | Services | Businesses | Corporate | Consolidated | |||||||||||||||||||||||||||||||
Revenues - external customers | ||||||||||||||||||||||||||||||||||||
Premiums: | ||||||||||||||||||||||||||||||||||||
Medicare Advantage | $ | 4,059,167 | $ | 757,813 | $ | - | $ | - | $ | - | $ | 4,816,980 | ||||||||||||||||||||||||
Medicare stand-alone PDP | 503,513 | 1,136 | - | 74,376 | - | 579,025 | ||||||||||||||||||||||||||||||
Total Medicare | 4,562,680 | 758,949 | - | 74,376 | - | 5,396,005 | ||||||||||||||||||||||||||||||
Fully-insured | 178,817 | 1,328,001 | - | - | - | 1,506,818 | ||||||||||||||||||||||||||||||
Specialty | 17,522 | 222,148 | - | - | - | 239,670 | ||||||||||||||||||||||||||||||
Military services | - | - | - | 844,994 | - | 844,994 | ||||||||||||||||||||||||||||||
Medicaid and other (A) | - | - | - | 174,376 | - | 174,376 | ||||||||||||||||||||||||||||||
Total premiums | 4,759,019 | 2,309,098 | - | 1,093,746 | - | 8,161,863 | ||||||||||||||||||||||||||||||
Services revenue: | ||||||||||||||||||||||||||||||||||||
Provider | - | - | 3,163 | - | - | 3,163 | ||||||||||||||||||||||||||||||
ASO and other (B) | 2,801 | 99,123 | - | 27,933 | - | 129,857 | ||||||||||||||||||||||||||||||
Pharmacy | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
Total services revenue | 2,801 | 99,123 | 3,163 | 27,933 | - | 133,020 | ||||||||||||||||||||||||||||||
Total revenues - external customers | 4,761,820 | 2,408,221 | 3,163 | 1,121,679 | - | 8,294,883 | ||||||||||||||||||||||||||||||
Intersegment revenues | ||||||||||||||||||||||||||||||||||||
Services | - | 3,389 | 1,907,928 | - | (1,911,317 | ) | - | |||||||||||||||||||||||||||||
Products | - | - | 286,913 | - | (286,913 | ) | - | |||||||||||||||||||||||||||||
Total intersegment revenues | - | 3,389 | 2,194,841 | - | (2,198,230 | ) | - | |||||||||||||||||||||||||||||
Investment income | 21,208 | 11,040 | - | 9,854 | 43,353 | 85,455 | ||||||||||||||||||||||||||||||
Total revenues | 4,783,028 | 2,422,650 | 2,198,004 | 1,131,533 | (2,154,877 | ) | 8,380,338 | |||||||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||||||
Benefits | 3,994,049 | 1,896,931 | - | 976,606 | (50,204 | ) | 6,817,382 | |||||||||||||||||||||||||||||
Operating costs | 496,706 | 428,824 | 2,144,696 | 114,812 | (2,124,181 | ) | 1,060,857 | |||||||||||||||||||||||||||||
Depreciation and amortization | 27,491 | 23,418 | 5,081 | 2,891 | (22 | ) | 58,859 | |||||||||||||||||||||||||||||
Total operating expenses | 4,518,246 | 2,349,173 | 2,149,777 | 1,094,309 | (2,174,407 | ) | 7,937,098 | |||||||||||||||||||||||||||||
Income from operations | 264,782 | 73,477 | 48,227 | 37,224 | 19,530 | 443,240 | ||||||||||||||||||||||||||||||
Interest expense | - | - | - | - | 26,314 | 26,314 | ||||||||||||||||||||||||||||||
Income before income taxes | $ | 264,782 | $ | 73,477 | $ | 48,227 | $ | 37,224 | $ | (6,784 | ) | $ | 416,926 | |||||||||||||||||||||||
Benefit ratio | 83.9 | % | 82.2 | % | 89.3 | % | 83.5 | % | ||||||||||||||||||||||||||||
Operating cost ratio | 10.4 | % | 17.8 | % | 97.6 | % | 10.2 | % | 12.8 | % | ||||||||||||||||||||||||||
S-5 |
Humana Inc. | |||||||||||||||||||
Consolidated Balance Sheets | |||||||||||||||||||
Dollars in thousands, except share amounts | |||||||||||||||||||
March 31, | December 31, | Sequential Change | |||||||||||||||||
2011 | 2010 | Dollar | Percent | ||||||||||||||||
Assets | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 1,756,041 | $ | 1,673,137 | |||||||||||||||
Investment securities | 7,420,959 | 6,872,767 | |||||||||||||||||
Receivables, net | 1,219,347 | 959,018 | |||||||||||||||||
Securities lending invested collateral | 31,139 | 49,636 | |||||||||||||||||
Other | 669,288 | 583,141 | |||||||||||||||||
Total current assets | 11,096,774 | 10,137,699 | $ | 959,075 | 9.5 | % | |||||||||||||
Property and equipment, net | 819,729 | 815,337 | |||||||||||||||||
Long-term investment securities | 1,568,090 | 1,499,672 | |||||||||||||||||
Goodwill | 2,576,208 | 2,567,809 | |||||||||||||||||
Other | 1,099,259 | 1,082,736 | |||||||||||||||||
Total assets | $ | 17,160,060 | $ | 16,103,253 | $ | 1,056,807 | 6.6 | % | |||||||||||
Liabilities and Stockholders' Equity | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Benefits payable | $ | 3,940,058 | $ | 3,469,306 | |||||||||||||||
Trade accounts payable and accrued expenses | 1,916,602 | 1,624,832 | |||||||||||||||||
Book overdraft | 252,073 | 409,385 | |||||||||||||||||
Securities lending payable | 36,997 | 55,693 | |||||||||||||||||
Unearned revenues | 219,004 | 185,410 | |||||||||||||||||
Total current liabilities | 6,364,734 | 5,744,626 | $ | 620,108 | 10.8 | % | |||||||||||||
Long-term debt | 1,666,447 | 1,668,849 | |||||||||||||||||
Future policy benefits payable | 1,530,064 | 1,492,855 | |||||||||||||||||
Other long-term liabilities | 371,837 | 272,867 | |||||||||||||||||
Total liabilities | 9,933,082 | 9,179,197 | $ | 753,885 | 8.2 | % | |||||||||||||
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; 191,607,107 issued at March 31, 2011 |
31,935 | 31,707 | |||||||||||||||||
Capital in excess of par value | 1,825,405 | 1,737,207 | |||||||||||||||||
Retained earnings | 5,844,177 | 5,529,001 | |||||||||||||||||
Accumulated other comprehensive income | 108,808 | 120,584 | |||||||||||||||||
Treasury stock, at cost, 23,212,730 shares at March 31, 2011 | (583,347 | ) | (494,443 | ) | |||||||||||||||
Total stockholders' equity | 7,226,978 | 6,924,056 | $ | 302,922 | 4.4 | % | |||||||||||||
Total liabilities and stockholders' equity | $ | 17,160,060 | $ | 16,103,253 | $ | 1,056,807 | 6.6 | % | |||||||||||
Debt-to-total capitalization ratio | 18.7 | % | 19.4 | % | |||||||||||||||
S-6 |
Humana Inc. | ||||||||||||||||||||
Consolidated Statements of Cash Flows | ||||||||||||||||||||
Dollars in thousands | ||||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||||
Dollar | Percentage | |||||||||||||||||||
2011 | 2010 | Change | Change | |||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||
Net income | $ | 315,176 | $ | 258,768 | ||||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||||||||||
Depreciation and amortization | 75,491 | 62,756 | ||||||||||||||||||
Net realized capital gains | (3,926 | ) | (8,694 | ) | ||||||||||||||||
Stock-based compensation | 29,775 | 27,339 | ||||||||||||||||||
Provision for (benefit from) deferred income taxes | 27,352 | (20,862 | ) | |||||||||||||||||
Changes in operating assets and liabilities excluding the effects of acquisitions: |
||||||||||||||||||||
Receivables | (260,329 | ) | (280,978 | ) | ||||||||||||||||
Other assets | (110,920 | ) | (29,177 | ) | ||||||||||||||||
Benefits payable | 470,752 | 484,459 | ||||||||||||||||||
Other liabilities | 204,176 | 246,068 | ||||||||||||||||||
Unearned revenues | 33,594 | 6,767 | ||||||||||||||||||
Other | 14,311 | 8,205 | ||||||||||||||||||
Net cash provided by operating activities | 795,452 | 754,651 | $ | 40,801 | 5.4 | % | ||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||
Acquisitions, net of cash acquired | (5,000 | ) | - | |||||||||||||||||
Purchases of property and equipment | (70,481 | ) | (39,028 | ) | ||||||||||||||||
Purchases of investment securities | (1,186,574 | ) | (1,525,349 | ) | ||||||||||||||||
Proceeds from maturities of investment securities | 398,800 | 433,788 | ||||||||||||||||||
Proceeds from sales of investment securities | 153,832 | 545,166 | ||||||||||||||||||
Change in securities lending collateral | 18,696 | 58,206 | ||||||||||||||||||
Net cash used in investing activities | (690,727 | ) | (527,217 | ) |
$ |
(163,510 |
) | -31.0 | % | |||||||||||
Cash flows from financing activities | ||||||||||||||||||||
Receipts from CMS contract deposits | 613,909 | 438,108 | ||||||||||||||||||
Withdrawals from CMS contract deposits | (430,949 | ) | (266,649 | ) | ||||||||||||||||
Change in book overdraft | (157,312 | ) | (138,426 | ) | ||||||||||||||||
Change in securities lending payable | (18,696 | ) | (58,206 | ) | ||||||||||||||||
Common stock repurchases | (88,904 | ) | (7,670 | ) | ||||||||||||||||
Excess tax benefit from stock-based compensation | 5,131 | 734 | ||||||||||||||||||
Proceeds from stock option exercises and other | 55,000 | 5,080 | ||||||||||||||||||
Net cash used in financing activities | (21,821 | ) | (27,029 | ) | $ | 5,208 | 19.3 | % | ||||||||||||
Increase in cash and cash equivalents | 82,904 | 200,405 | ||||||||||||||||||
Cash and cash equivalents at beginning of period | 1,673,137 | 1,613,588 | ||||||||||||||||||
Cash and cash equivalents at end of period | $ | 1,756,041 | $ | 1,813,993 | ||||||||||||||||
S-7 |
Humana Inc. | ||||||||||||||||||||
Key Income Statement Ratios and Segment Operating Results | ||||||||||||||||||||
Dollars in thousands | ||||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||||
Percentage | ||||||||||||||||||||
2011 | 2010 | Difference | Change | |||||||||||||||||
Benefit ratio | ||||||||||||||||||||
Retail | 85.8 | % | 83.9 | % | 1.9 | % | ||||||||||||||
Employer Group | 78.7 | % | 82.2 | % | -3.5 | % | ||||||||||||||
Other Businesses | 90.1 | % | 89.3 | % | 0.8 | % | ||||||||||||||
Consolidated | 83.8 | % | 83.5 | % | 0.3 | % | ||||||||||||||
Operating cost ratio (C) | ||||||||||||||||||||
Retail | 10.0 | % | 10.4 | % | -0.4 | % | ||||||||||||||
Employer Group | 18.3 | % | 17.8 | % | 0.5 | % | ||||||||||||||
Health and Well-Being Services | 95.8 | % | 97.6 | % | -1.8 | % | ||||||||||||||
Other Businesses | 9.5 | % | 10.2 | % | -0.7 | % | ||||||||||||||
Consolidated | 13.8 | % | 12.8 | % | 1.0 | % | ||||||||||||||
Detail of pretax income | ||||||||||||||||||||
Retail | $ | 216,990 | $ | 264,782 |
$ |
(47,792 |
) | -18.0 | % | |||||||||||
Employer Group | $ | 138,755 | $ | 73,477 | $ | 65,278 | 88.8 | % | ||||||||||||
Health and Well-Being Services | $ | 96,373 | $ | 48,227 | $ | 48,146 | 99.8 | % | ||||||||||||
Other Businesses | $ | 35,191 | $ | 37,224 |
$ |
(2,033 |
) | -5.5 | % | |||||||||||
Consolidated | $ | 496,784 | $ | 416,926 | $ | 79,858 | 19.2 | % | ||||||||||||
S-8 |
Humana Inc. | |||||||||||||||||||||||||||||
Membership Detail | |||||||||||||||||||||||||||||
In thousands | |||||||||||||||||||||||||||||
Ending |
Average |
Ending | Year-over-year Change | Ending | Sequential Change | ||||||||||||||||||||||||
March 31, 2011 |
1Q11 |
March 31, 2010 | Amount | Percent | December 31, 2010 | Amount | Percent | ||||||||||||||||||||||
Medical Membership: | |||||||||||||||||||||||||||||
Retail | |||||||||||||||||||||||||||||
Medicare Advantage | 1,594.8 | 1,593.2 | 1,446.1 | 148.7 | 10.3 | % | 1,460.7 | 134.1 | 9.2 | % | |||||||||||||||||||
Medicare stand-alone PDPs | 2,353.1 | 2,328.4 | 1,733.7 | 619.4 | 35.7 | % | 1,670.3 | 682.8 | 40.9 | % | |||||||||||||||||||
Medicare Supplement | 49.9 | 49.0 | 33.7 | 16.2 | 48.1 | % | 38.9 | 11.0 | 28.3 | % | |||||||||||||||||||
Individual | 382.9 | 375.1 | 370.5 | 12.4 | 3.3 | % | 372.3 | 10.6 | 2.8 | % | |||||||||||||||||||
Total Retail | 4,380.7 | 4,345.7 | 3,584.0 | 796.7 | 22.2 | % | 3,542.2 | 838.5 | 23.7 | % | |||||||||||||||||||
Employer Group | |||||||||||||||||||||||||||||
Medicare Advantage | 280.7 | 279.8 | 267.2 | 13.5 | 5.1 | % | 273.1 | 7.6 | 2.8 | % | |||||||||||||||||||
Medicare Advantage ASO | 27.9 | 28.0 | 29.0 | (1.1 | ) | -3.8 | % | 28.2 | (0.3 | ) | -1.1 | % | |||||||||||||||||
Medicare stand-alone PDPs | 4.1 | 4.1 | 2.4 | 1.7 | 70.8 | % | 2.4 | 1.7 | 70.8 | % | |||||||||||||||||||
Fully-insured medical | 1,178.5 | 1,177.1 | 1,338.8 | (160.3 | ) | -12.0 | % | 1,252.2 | (73.7 | ) | -5.9 | % | |||||||||||||||||
ASO | 1,319.3 | 1,320.1 | 1,588.5 | (269.2 | ) | -16.9 | % | 1,453.6 | (134.3 | ) | -9.2 | % | |||||||||||||||||
Total Employer Group | 2,810.5 | 2,809.1 | 3,225.9 | (415.4 | ) | -12.9 | % | 3,009.5 | (199.0 | ) | -6.6 | % | |||||||||||||||||
Other Businesses | |||||||||||||||||||||||||||||
Military Services | 3,012.9 | 3,016.6 | 3,031.4 | (18.5 | ) | -0.6 | % | 3,027.8 | (14.9 | ) | -0.5 | % | |||||||||||||||||
Medicaid | 619.3 | 618.1 | 448.9 | 170.4 | 38.0 | % | 621.0 | (1.7 | ) | -0.3 | % | ||||||||||||||||||
LI-NET | 98.5 | 99.9 | 181.0 | (82.5 | ) | -45.6 | % | 86.1 | 12.4 | 14.4 | % | ||||||||||||||||||
Total Other Businesses | 3,730.7 | 3,734.6 | 3,661.3 | 69.4 | 1.9 | % | 3,734.9 | (4.2 | ) | -0.1 | % | ||||||||||||||||||
Total Medical Membership | 10,921.9 | 10,889.4 | 10,471.2 | 450.7 | 4.3 | % | 10,286.6 | 635.3 | 6.2 | % | |||||||||||||||||||
Specialty Membership: | |||||||||||||||||||||||||||||
Retail | |||||||||||||||||||||||||||||
Dental - fully-insured | 444.4 | 424.8 | 296.0 | 148.4 | 50.1 | % | 383.9 | 60.5 | 15.8 | % | |||||||||||||||||||
Vision | 61.2 | 57.3 | 39.3 | 21.9 | 55.7 | % | 51.7 | 9.5 | 18.4 | % | |||||||||||||||||||
Other supplemental benefits (D) | 84.9 | 81.0 | 63.4 | 21.5 | 33.9 | % | 74.4 | 10.5 | 14.1 | % | |||||||||||||||||||
Total Retail | 590.5 | 563.1 | 398.7 | 191.8 | 48.1 | % | 510.0 | 80.5 | 15.8 | % | |||||||||||||||||||
Employer Group | |||||||||||||||||||||||||||||
Dental - fully-insured | 2,252.5 | 2,250.8 | 2,360.3 | (107.8 | ) | -4.6 | % | 2,254.5 | (2.0 | ) | -0.1 | % | |||||||||||||||||
Dental - ASO | 1,229.8 | 1,230.1 | 1,213.9 | 15.9 | 1.3 | % | 1,242.3 | (12.5 | ) | -1.0 | % | ||||||||||||||||||
Vision | 2,194.1 | 2,189.5 | 2,400.2 | (206.1 | ) | -8.6 | % | 2,134.7 | 59.4 | 2.8 | % | ||||||||||||||||||
Other supplemental benefits (D) | 960.4 | 952.7 | 814.5 | 145.9 | 17.9 | % | 886.0 | 74.4 | 8.4 | % | |||||||||||||||||||
Total Employer Group | 6,636.8 | 6,623.1 | 6,788.9 | (152.1 | ) | -2.2 | % | 6,517.5 | 119.3 | 1.8 | % | ||||||||||||||||||
Total Specialty Membership | 7,227.3 | 7,186.2 | 7,187.6 | 39.7 | 0.6 | % | 7,027.5 | 199.8 | 2.8 | % | |||||||||||||||||||
S-9 |
Humana Inc. | ||||||||||||||||||||||||||||
Premiums and Services Revenue Detail | ||||||||||||||||||||||||||||
Dollars in thousands, except per member per month | ||||||||||||||||||||||||||||
Per Member per Month (E) | ||||||||||||||||||||||||||||
Three Months Ended March 31, | Three Months Ended March 31, | |||||||||||||||||||||||||||
Dollar | Percentage | |||||||||||||||||||||||||||
2011 | 2010 | Change | Change | 2011 | 2010 | |||||||||||||||||||||||
Premiums and Services Revenue | ||||||||||||||||||||||||||||
Retail: | ||||||||||||||||||||||||||||
Medicare Advantage | $ | 4,524,626 | $ | 4,059,167 | $ | 465,459 | 11.5 | % | $ | 947 | $ | 939 | ||||||||||||||||
Medicare stand-alone PDPs | 557,472 | 503,513 | 53,959 | 10.7 | % | $ | 80 | $ | 96 | |||||||||||||||||||
Individual | 177,404 | 162,498 | 14,906 | 9.2 | % | $ | 158 | $ | 147 | |||||||||||||||||||
Medicare Supplemental | 23,484 | 16,319 | 7,165 | 43.9 | % | $ | 160 | $ | 163 | |||||||||||||||||||
Specialty | 25,775 | 17,522 | 8,253 | 47.1 | % | $ | 15 | $ | 15 | |||||||||||||||||||
Services | 2,873 | 2,801 | 72 | 2.6 | % | |||||||||||||||||||||||
Total Retail | 5,311,634 | 4,761,820 | 549,814 | 11.5 | % | |||||||||||||||||||||||
Employer Group: | ||||||||||||||||||||||||||||
Medicare Advantage | 796,754 | 757,813 | 38,941 | 5.1 | % | $ | 949 | $ | 952 | |||||||||||||||||||
Medicare stand-alone PDPs | 1,817 | 1,136 | 681 | 59.9 | % | $ | 148 | $ | 158 | |||||||||||||||||||
Fully-insured medical | 1,201,871 | 1,331,390 | (129,519 | ) | -9.7 | % | $ | 339 | $ | 326 | ||||||||||||||||||
Specialty | 229,651 | 222,148 | 7,503 | 3.4 | % | $ | 14 | $ | 13 | |||||||||||||||||||
Services | 92,546 | 99,123 | (6,577 | ) | -6.6 | % | ||||||||||||||||||||||
Total Employer Group | 2,322,639 | 2,411,610 | (88,971 | ) | -3.7 | % | ||||||||||||||||||||||
Health and Well-Being Services: | ||||||||||||||||||||||||||||
Pharmacy solutions | 2,457,066 | 2,111,226 | 345,840 | 16.4 | % | |||||||||||||||||||||||
Primary care services | 254,706 | 35,328 | 219,378 | 621.0 | % | |||||||||||||||||||||||
Home care services | 16,579 | 7,276 | 9,303 | 127.9 | % | |||||||||||||||||||||||
Integrated wellness services | 44,933 | 44,174 | 759 | 1.7 | % | |||||||||||||||||||||||
Total Health and Well-Being Services | 2,773,284 | 2,198,004 | 575,280 | 26.2 | % | |||||||||||||||||||||||
Other Businesses: | ||||||||||||||||||||||||||||
Military services (F) | 942,205 | 867,292 | 74,913 | 8.6 | % | $ | 176 | $ | 160 | |||||||||||||||||||
LI-NET | 75,896 | 74,376 | 1,520 | 2.0 | % | $ | 253 | $ | 259 | |||||||||||||||||||
Medicaid and other (G) | 234,887 | 180,011 | 54,876 | 30.5 | % | $ | 125 | $ | 130 | |||||||||||||||||||
Total Other Businesses | 1,252,988 | 1,121,679 | 131,309 | 11.7 | % | |||||||||||||||||||||||
S-10 |
Humana Inc. | Fair value | ||||||||||
Investments | |||||||||||
Dollars in thousands | |||||||||||
3/31/2011 | 12/31/2010 | ||||||||||
Investment Portfolio: | |||||||||||
Cash & cash equivalents | $ | 1,756,041 | $ | 1,673,137 | |||||||
Investment securities | 7,420,959 | 6,872,767 | |||||||||
Long-term investment securities | 1,568,090 | 1,499,672 | |||||||||
Total investment portfolio | $ | 10,745,090 | $ | 10,045,576 | |||||||
Duration (H) | 3.88 | 3.96 | |||||||||
Average Credit Rating | AA- | AA | |||||||||
Securities Lending Invested Collateral Portfolio: | |||||||||||
Cash & cash equivalents | $ | 31,139 | $ | 24,638 | |||||||
Asset-backed securities | - | 24,998 | |||||||||
$ | 31,139 | $ | 49,636 | ||||||||
Average Credit Rating | AAA | AAA | |||||||||
Investment Portfolio Detail: | |||||||||||
Cash and cash equivalents | $ | 1,756,041 | $ | 1,673,137 | |||||||
U.S. Government and agency obligations | |||||||||||
U.S. Treasury and agency obligations | 759,581 | 711,613 | |||||||||
U.S. Government residential mortgage-backed | 1,914,896 | 1,634,014 | |||||||||
U.S. Government commercial mortgage-backed | 28,999 | 29,165 | |||||||||
Total U.S. Government and agency obligations | 2,703,476 | 2,374,792 | |||||||||
Tax-exempt municipal securities | |||||||||||
Pre-refunded | 333,889 | 343,913 | |||||||||
Insured | 590,676 | 597,165 | |||||||||
Other | 1,432,022 | 1,440,450 | |||||||||
Auction rate securities | 51,323 | 51,806 | |||||||||
Total tax-exempt municipal securities | 2,407,910 | 2,433,334 | |||||||||
Residential mortgage-backed | |||||||||||
Prime residential mortgages | 49,044 | 52,474 | |||||||||
Alt-A residential mortgages | 2,080 | 2,178 | |||||||||
Sub-prime residential mortgages | 1,147 | 1,235 | |||||||||
Total residential mortgage-backed | 52,271 | 55,887 | |||||||||
Commercial mortgage-backed | 380,174 | 321,031 | |||||||||
Asset-backed securities | 142,605 | 149,751 | |||||||||
Corporate securities | |||||||||||
Financial services | 939,511 | 891,390 | |||||||||
Other | 2,357,769 | 2,140,921 | |||||||||
Total corporate securities | 3,297,280 | 3,032,311 | |||||||||
Redeemable preferred stocks | 5,333 | 5,333 | |||||||||
Total investment portfolio | $ | 10,745,090 | $ | 10,045,576 | |||||||
S-11 |
Humana Inc. | ||||||||||||||||
Detail of Benefits Payable Balance and Year-to-Date Changes | ||||||||||||||||
Dollars in thousands | ||||||||||||||||
March 31, | March 31, | December 31, | ||||||||||||||
2011 | 2010 | 2010 | ||||||||||||||
Detail of benefits payable | ||||||||||||||||
IBNR and other benefits payable (I) | $ | 2,859,977 | $ | 2,755,876 | $ | 2,753,141 | ||||||||||
Unprocessed claim inventories (J) | 481,700 | 426,200 | 373,800 | |||||||||||||
Processed claim inventories (K) | 136,252 | 126,581 | 65,283 | |||||||||||||
Payable to pharmacy benefit administrator (L) | 160,963 | 136,688 | 21,902 | |||||||||||||
Benefits payable, excluding military services | 3,638,892 | 3,445,345 | 3,214,126 | |||||||||||||
Military services benefits payable (M) | 301,166 | 261,688 | 255,180 | |||||||||||||
Total Benefits Payable | $ | 3,940,058 | $ | 3,707,033 | $ | 3,469,306 | ||||||||||
Three Months Ended | Three Months Ended | Year Ended | ||||||||||||||
March 31, 2011 | March 31, 2010 | December 31, 2010 | ||||||||||||||
Year-to-date changes in benefits payable, | ||||||||||||||||
excluding military services (N) | ||||||||||||||||
Balances at January 1 | $ | 3,214,126 | $ | 2,943,379 | $ | 2,943,379 | ||||||||||
Incurred related to: | ||||||||||||||||
Current year | 6,731,524 | 6,354,466 | 24,185,717 | |||||||||||||
Prior years (O) | (251,457 | ) | (307,855 | ) | (434,015 | ) | ||||||||||
Total incurred | 6,480,067 | 6,046,611 | 23,751,702 | |||||||||||||
Paid related to: | ||||||||||||||||
Current year | (4,349,388 | ) | (3,809,389 | ) | (21,671,345 | ) | ||||||||||
Prior years | (1,705,913 | ) | (1,735,256 | ) | (1,809,610 | ) | ||||||||||
Total paid | (6,055,301 | ) | (5,544,645 | ) | (23,480,955 | ) | ||||||||||
Balances at end of period | $ | 3,638,892 | $ | 3,445,345 | $ | 3,214,126 | ||||||||||
Three Months Ended | Three Months Ended | Year Ended | ||||||||||||||
March 31, 2011 | March 31, 2010 | December 31, 2010 | ||||||||||||||
Summary of Consolidated Benefit Expense: | ||||||||||||||||
Total benefit expense incurred, per above | $ | 6,480,067 | $ | 6,046,611 | $ | 23,751,702 | ||||||||||
Military services benefit expense | 826,037 | 749,300 | 3,059,492 | |||||||||||||
Future policy benefit expense (P) | 38,650 | 21,471 | 305,875 | |||||||||||||
Consolidated Benefit Expense | $ | 7,344,754 | $ | 6,817,382 | $ | 27,117,069 | ||||||||||
S-12 |
Humana Inc. | |||||||||||||
Benefits Payable Statistics (Q) | |||||||||||||
Receipt Cycle Time (R) | |||||||||||||
2011 | 2010 | Change | Percentage Change | ||||||||||
1st Quarter Average | 13.8 | 13.8 | 0.0 | 0.0% | |||||||||
2nd Quarter Average | - | 13.9 | n/a | n/a | |||||||||
3rd Quarter Average | - | 13.9 | n/a | n/a | |||||||||
4th Quarter Average | - | 13.6 | n/a | n/a | |||||||||
Full Year Average | 13.8 | 13.8 | 0.0 | 0.0% | |||||||||
Unprocessed Claims Inventories | |||||||||||||
Date |
Estimated Valuation (000's) |
Claim Item Counts |
Number of Days on Hand |
||||||||||
3/31/2009 | $258,800 | 740,600 | 4.2 | ||||||||||
6/30/2009 | $258,000 | 709,900 | 4.0 | ||||||||||
9/30/2009 | $317,100 | 856,500 | 4.9 | ||||||||||
12/31/2009 | $323,000 | 775,500 | 4.3 | ||||||||||
3/31/2010 | $426,200 | 1,091,700 | 5.6 | ||||||||||
6/30/2010 | $433,800 | 1,009,200 | 4.9 | ||||||||||
9/30/2010 | $428,900 | 1,064,200 | 5.2 | ||||||||||
12/31/2010 | $373,800 | 980,900 | 5.0 | ||||||||||
3/31/2011 | $481,700 | 1,196,700 | 6.0 | ||||||||||
S-13 |
Humana Inc. | ||||||||||||||||||||||||
Benefits Payable Statistics (Continued) (Q) | ||||||||||||||||||||||||
Days in Claims Payable (S) | ||||||||||||||||||||||||
Quarter Ended |
Days in Claims Payable (DCP) |
Change Last 4 Quarters |
Percentage Change |
DCP Excluding Capitation |
Change Last 4 Quarters |
Percentage Change |
||||||||||||||||||
3/31/2009 | 54.6 | (2.3 | ) | -4.0 | % | 60.9 | (2.4 | ) | -3.8 | % | ||||||||||||||
6/30/2009 | 56.1 | (1.1 | ) | -1.9 | % | 61.5 | (1.8 | ) | -2.8 | % | ||||||||||||||
9/30/2009 | 56.2 | (1.9 | ) | -3.3 | % | 62.7 | (2.4 | ) | -3.7 | % | ||||||||||||||
12/31/2009 | 55.4 | (4.0 | ) | -6.7 | % | 62.1 | (4.4 | ) | -6.6 | % | ||||||||||||||
3/31/2010 | 54.2 | (0.4 | ) | -0.7 | % | 60.8 | (0.1 | ) | -0.2 | % | ||||||||||||||
6/30/2010 | 57.0 | 0.9 | 1.6 | % | 64.3 | 2.8 | 4.6 | % | ||||||||||||||||
9/30/2010 | 57.8 | 1.6 | 2.8 | % | 64.5 | 1.8 | 2.9 | % | ||||||||||||||||
12/31/2010 | 53.5 | (1.9 | ) | -3.4 | % | 60.0 | (2.1 | ) | -3.4 | % | ||||||||||||||
3/31/2011 | 55.5 | 1.3 | 2.4 | % | 61.8 | 1.0 | 1.6 | % | ||||||||||||||||
Year-to-Date Change in Days in Claims Payable (T) | ||||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||
DCP - beginning of period | 53.5 | 55.4 | ||||||||||||||||||||||
Components of change in DCP: | ||||||||||||||||||||||||
Change in unprocessed claims inventories | 0.4 | 0.8 | ||||||||||||||||||||||
Change in processed claims inventories | 1.1 | 0.3 | ||||||||||||||||||||||
Change in pharmacy payment cutoff | 0.6 | (2.9 | ) | |||||||||||||||||||||
All other | (0.1 | ) | (0.1 | ) | ||||||||||||||||||||
DCP - end of period | 55.5 | 53.5 | ||||||||||||||||||||||
S-14 |
Humana Inc. |
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Footnotes to Statistical Schedules and Supplementary Information |
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1Q11 Earnings Release |
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(A) |
The Medicaid and other category includes the company’s Medicaid business as well as the closed block of long-term care. |
(B) |
The ASO and other category is comprised of approximately 87 percent ASO fees with other ancillary services fees that each constitute one percent or less of the total. |
(C) |
The operating cost ratio is defined as operating costs as a percent of total revenues excluding investment income. |
(D) |
Other supplemental benefits include life, disability, and fixed benefit products including cancer and critical illness policies. |
(E) |
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). |
(F) |
Military services revenues are generally not contracted on a per-member basis. |
(G) |
Includes premiums associated with Medicaid and the closed block of long-term care as well as services revenue. |
(H) |
Duration is the time-weighted average of the present value of the bond portfolio cash flows. |
(I) |
IBNR represents an estimate of benefit expenses payable for claims incurred but not reported (IBNR) at the balance sheet date. The level of IBNR is primarily impacted by membership levels, benefit 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 benefits payable includes amounts payable to providers under capitation arrangements. |
(J) |
Unprocessed claim inventories represent the estimated valuation of claims received but not yet fully processed. |
(K) |
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. |
(L) |
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 8 days (8th, 16th, and 24th of month) and the last day of the month. |
(M) |
Military services benefits payable primarily consist of IBNR and to a lesser extent risk share payables to the Department of Defense and liabilities to subcontractors. |
(N) |
The table excludes activity associated with military services benefits payable, because the federal government bears a substantial portion of the risk associated with financing the cost of health benefits. More specifically, the risk-sharing provisions of the military services contracts with the federal government and with subcontractors effectively limit profits and losses when actual claim experience varies from the targeted claim amount negotiated annually. As a result of these contract provisions, the impact of changes in estimates for prior year military services benefits payable are substantially offset by the associated changes in estimates of revenue from health care services reimbursements. As such, any impact on the company's results of operations is reduced substantially, whether positive or negative. |
(O) |
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 the company's estimate of claim reserves during the quarter. |
(P) |
Future policy benefit expense has a related liability classified as a long-term liability on the balance sheet. |
(Q) |
Benefits reserves statistics represents fully-insured medical claims data and excludes military services claims data and specialty benefits. |
(R) |
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 the company's largest claim processing platforms represent approximately 98% of the company's fully-insured medical claims volume. Pharmacy and specialty claims, including dental, vision and other supplemental benefits, are excluded from this measurement. |
(S) |
A common metric for monitoring benefits payable levels relative to the benefit expense is days in claims payable, or DCP, which represents the benefits payable at the end of the period divided by average benefit expenses per day in the quarterly period. Since the company has some providers under capitation payment arrangements (which do not require a benefits payable IBNR reserve), the company has also summarized this metric excluding capitation expense. In addition, this calculation excludes the impact of the company's military services and stand-alone PDP business. |
(T) |
DCP fluctuates due to a number of issues, the more significant of which are detailed in this rollforward. 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 military services and Medicare stand-alone PDPs upon DCP. |
S-15 |
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CONTACT:
Humana Inc.
Investor Relations:
Regina Nethery,
502-580-3644
Rnethery@humana.com
or
Corporate
Communications:
Tom Noland, 502-580-3674
Tnoland@humana.com