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) October
31, 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 financial results for the period ended September 30, 2011, updated 2011 earnings guidance, and financial projections for 2012, 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. |
||||
|
||||
|
|
BY: |
/s/ Steven E. McCulley |
|
Steven E. McCulley |
||||
Vice President and Controller |
||||
(Principal Accounting Officer) |
||||
Dated: |
October 31, 2011 |
INDEX TO EXHIBITS
Exhibit No. |
Description |
|
99 |
Earnings Release and Statistical Pages |
Exhibit 99
Humana Reports Third Quarter 2011 Financial Results, Provides 2012 Financial Guidance
LOUISVILLE, Ky.--(BUSINESS WIRE)--October 31, 2011--Humana Inc. (NYSE: HUM) today reported diluted earnings per common share (EPS) for the quarter ended September 30, 2011 (3Q11) of $2.67, compared to $2.32 per share for the quarter ended September 30, 2010 (3Q10). For the nine months ended September 30, 2011 (YTD11) the company reported $7.24 in EPS compared to $5.84 for the nine months ended September 30, 2010 (YTD10). Comparison of operating results for these periods is affected by the items noted below:
Consolidated Results of Operations
($ in millions except EPS) |
3Q11 Pretax Income |
3Q10 Pretax Income |
3Q11 EPS | 3Q10 EPS | ||||||||||||
GAAP | $ | 698.7 | $ | 622.3 | $ | 2.67 | $ | 2.32 | ||||||||
Favorable prior-period medical claims reserve development (a) | (33.9 | ) | (83.8 | ) | (0.13 | ) | (0.31 | ) | ||||||||
Non-GAAP (b) | $ | 664.8 | $ | 538.5 | $ | 2.54 | $ | 2.01 | ||||||||
Consolidated Results of Operations
($ in millions except EPS) |
YTD11 Pretax Income |
YTD10 Pretax Income |
YTD11 EPS | YTD10 EPS | ||||||||||||
GAAP | $ | 1,922.0 | $ | 1,575.1 | $ | 7.24 | $ | 5.84 | ||||||||
Write-down of certain DAC (c) | - | 147.5 | - | 0.55 | ||||||||||||
Favorable prior-year medical claims reserve development (a) | (150.7 | ) | (193.5 | ) | (0.57 | ) | (0.72 | ) | ||||||||
Non-GAAP (b) | $ | 1,771.3 | $ | 1,529.1 | $ | 6.67 | $ | 5.67 | ||||||||
The company anticipates EPS of approximately $8.35 to $8.40 for the year ending December 31, 2011 (FY11) versus its previous estimate of $7.50 to $7.60. This increase in FY11 EPS guidance primarily reflects lower projected benefit expense ratios in the company’s Retail and Employer Group Segments and higher average Medicare membership.
Looking ahead to the year ending December 31, 2012 (FY12), the company projects EPS to be in the range of $7.40 to $7.60, exclusive of any future share repurchases. The company has strengthened the value proposition to the Medicare beneficiaries it serves through stable premiums and benefits in its Medicare Advantage and stand-alone PDP offerings in FY12 through its usual Medicare bid margin reset. As a result of improving its Medicare value proposition membership gains in these Medicare offerings are anticipated to be strong in the coming year.
“Our favorable results in the third quarter and year to date reflect strong operating performance across multiple businesses,” said Michael B. McCallister, Humana’s chairman of the board and chief executive officer. “In Medicare, our clear focus on strong financial protection and higher quality coordinated health care for seniors represents a powerful value proposition, and continues to drive membership growth, now nearly 4.5 million people.”
Consolidated Highlights
Revenues – 3Q11 consolidated revenues were $9.30 billion, an increase of 11 percent from $8.35 billion in 3Q10, with total premiums and services revenue also up 11 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 the company’s Retail and Health and Well-Being Services segments.
YTD11 consolidated revenues rose 10 percent to $27.78 billion from $25.32 billion in YTD10 with total premiums and services revenue also up 10 percent compared to the prior year’s period, driven primarily by increases in the same segments as the third quarter year-over-year increase.
Benefit expenses – The 3Q11 consolidated benefit ratio (benefit expenses as a percent of premiums) of 80.7 percent decreased by 90 basis points from 81.6 percent for the prior year’s quarter due primarily to a decline in the Retail segment benefit ratio as described below. The consolidated benefit ratio for YTD11 of 82.2 percent decreased by 20 basis points from the YTD10 consolidated benefit ratio of 82.4 percent primarily due to the declines in the benefit ratios for the Retail and Employer Group Segments.
Favorable prior-period medical claims reserve development impacted the consolidated benefit ratio year-over-year comparisons as follows:
Consolidated Benefit Ratio | 3Q11 | 3Q10 | YTD11 | YTD10 | ||||||||
GAAP | 80.7 | % | 81.6 | % | 82.2 | % | 82.4 | % | ||||
Favorable prior-period medical claims reserve development (a) | 0.4 | % | 1.1 | % | 0.6 | % | 0.8 | % | ||||
Non-GAAP (b) | 81.1 | % | 82.7 | % | 82.8 | % | 83.2 | % | ||||
Operating costs – The consolidated operating cost ratio (operating costs as a percent of total revenues less investment income) of 14.8 percent for 3Q11 compares to 12.1 percent in 3Q10 primarily reflecting the company’s December 2010 acquisition of Concentra Inc. (Concentra) and increased expenses associated with the Medicare sales season for 2012 offerings which began a month earlier than in the prior year.
The YTD11 consolidated operating cost ratio of 13.9 percent increased 130 basis points from that for YTD10 of 12.6 percent primarily due to the same factors impacting the third quarter year-over-year comparison.
The write-down of certain DAC during the second quarter of 2010 impacted the consolidated year-over-year operating cost ratio comparisons as follows:
Consolidated operating cost ratio | 3Q11 | 3Q10 | YTD11 | YTD10 | ||||||||
GAAP | 14.8 | % | 12.1 | % | 13.9 | % | 12.6 | % | ||||
Write-down of certain DAC (c) | - | - | - | (0.6 | %) | |||||||
Non-GAAP (b) | 14.8 | % | 12.1 | % | 13.9 | % | 12.0 | % | ||||
Retail Segment Highlights
Pretax results:
Retail Segment Results
($ in millions) |
3Q11 Pretax Income |
3Q10 Pretax Income |
YTD11 Pretax Income |
YTD10 Pretax Income |
||||||||||||
GAAP | $ | 541.4 | $ | 447.9 | $ | 1,261.5 | $ | 1,038.6 | ||||||||
Write-down of certain DAC (c) | - | - | - | 147.5 | ||||||||||||
Favorable prior-period medical claims reserve development (a) | (32.0 | ) | (62.9 | ) | (103.7 | ) | (164.9 | ) | ||||||||
Non-GAAP (b) | $ | 509.4 | $ | 385.0 | $ | 1,157.8 | $ | 1,021.2 | ||||||||
Enrollment:
Premiums and services revenue:
Benefit expenses:
Retail Segment Benefit Ratio | 3Q11 | 3Q10 | ||||
GAAP | 78.7 | % | 81.0 | % | ||
Favorable prior-period medical claims reserve development (a) | 0.6 | % | 1.3 | % | ||
Non-GAAP (b) | 79.3 | % | 82.3 | % | ||
Operating costs:
Employer Group Segment Highlights
Pretax results:
Employer Group Segment Results
($ in millions) |
3Q11 Pretax Income |
3Q10 Pretax Income |
YTD11 Pretax Income |
YTD10 Pretax Income |
||||
GAAP | $45.9 | $79.0 | $293.0 | $260.2 | ||||
Favorable prior-period medical claims reserve development (a) | (8.7) | (20.9) | (41.7) | (28.6) | ||||
Non-GAAP (b) | $37.2 | $58.1 | $251.3 | $231.6 | ||||
Enrollment:
Premiums and services revenue:
Benefit expenses:
Employer Group Segment Benefit Ratio | 3Q11 | 3Q10 | ||||
GAAP | 83.5 | % | 82.0 | % | ||
Favorable prior-period medical claims reserve development (a) | 0.3 | % | 1.0 | % | ||
Non-GAAP (b) | 83.8 | % | 83.0 | % | ||
Operating costs:
Health and Well-Being Services Segment Highlights
Pretax results:
Revenues:
Operating costs:
Balance Sheet
Cash Flows from Operations
Net cash provided by operating activities
(in millions) |
3Q11 Cash Flows |
3Q10
Cash Flows |
YTD11
Cash Flows |
YTD10
Cash Flows |
||||||||||
GAAP | $ | 2,919.3 | $ | 1,209.2 | $ | 3,876.0 | $ | 2,289.2 | ||||||
Timing of premium payment from CMS (e) | (1,795.6 | ) |
- |
(1,795.6 | ) |
- |
||||||||
Non-GAAP (b) | $ | 1,123.7 | $ | 1,209.2 | $ | 2,080.4 | $ | 2,289.2 | ||||||
The year over year decrease in the non-GAAP cash flows from operations is due to the negative effect on cash flows of changes in working capital accounts, partially offset by higher net income year over year.
Share Repurchase Program and Cash Dividend
Footnotes
(a) Actuarial standards require the use of assumptions based on moderately adverse experience, which generally results in favorable reserve development, or reserves that are considered redundant. When the Company recognizes a release of the redundancy, we disclose the amount that is not in the ordinary course of business.
(b) The Company has included certain financial measures that are not in accordance with Generally Accepted Accounting Principles (GAAP) in its summary of financial results within this earnings press release. The company believes that these non-GAAP measures, when presented in conjunction with 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.
(c) During the second quarter of 2010, the company recognized an impairment of deferred acquisition cost (DAC) assets associated with its Individual Major Medical line of business of $147.5 million. The related DAC included amounts associated with commissions, underwriting and other policy issuance costs. Given then impending changes to this business associated with health insurance reform, a substantial portion of the DAC was determined to be not recoverable from future income.
(d) The company provides a full range of insured specialty products including dental, vision and other supplemental health and financial protection 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.
(e) Generally, when the first day of a month falls on a weekend or holiday, with the exception of January 1 (New Year’s Day), the company receives this payment at the end of the previous month. Therefore the year-to-date 2011 period included ten monthly Medicare payments compared to only nine monthly Medicare payments during the 2010 period.
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:
(in accordance with | For the year ending December 31, 2011 | For the year ending December 31, 2012 | Comments | ||
Generally Accepted | (see key assumptions below) | (excludes impact of pending | |||
Accounting Principles) | acquisitions) | ||||
Diluted earnings per | Full year 2011: $8.35 to $8.40 | Full year 2012: $7.40 to $7.60 | Excludes the impact of future share | ||
common share (EPS) |
repurchases | ||||
Anticipates weighted average | |||||
shares outstanding of 168 million | |||||
for 2011 and 166 million for 2012 | |||||
Revenues | Consolidated revenues: $36.5 billion to $37.0 | Consolidated revenues: $38.25 billion to | Includes expected investment | ||
billion | $38.75 billion | income in the range of $360 | |||
million to $365 million for 2011 | |||||
and $375 million to $395 million | |||||
for 2012 | |||||
Total revenues: | Total revenues: | Segment-level revenues include | |||
Retail Segment: $21.0 billion to $21.5 billion | Retail Segment: $23.75 billion to $24.25 | intersegment amounts that | |||
billion | eliminate in consolidation | ||||
Employer Group Segment: $9.0 billion to | Employer Group Segment: $10.25 billion to | ||||
$9.5 billion | $10.75 billion | ||||
Health and Well-Being Services Segment: | Health and Well-Being Services Segment: | ||||
$11.0 billion to $11.3 billion | $13.5 billion to $14.0 billion | ||||
Other Businesses: $4.75 billion to $5.25 | Other Businesses: $2.5 billion to $2.75 billion | Assumes new TRICARE South | |||
billion | Region contract will be accounted | ||||
for on an ASO basis | |||||
Ending medical membership | Retail Segment: | Retail Segment: | |||
versus prior year end | Medicare Advantage: Up 145,000 to | Medicare Advantage: Up 145,000 to | |||
155,000 |
155,000 |
||||
Medicare stand-alone PDPs: Up 880,000 to | Medicare stand-alone PDPs: Up 500,000 to | ||||
885,000 |
600,000 |
||||
HumanaOne: Up approximately 65,000 | HumanaOne: Up approximately 65,000 | ||||
Employer Group Segment: | Employer Group Segment: | ||||
Medicare Advantage: Up approximately | Medicare Advantage: Up approximately | ||||
15,000 |
55,000 to 75,000 | ||||
Commercial medical fully-insured: Down | Commercial medical fully-insured: Up | ||||
75,000 to 85,000 |
50,000 to 60,000 |
||||
Commercial medical ASO: Down 160,000 | Commercial medical ASO: Down 40,000 to | ||||
to 170,000 |
50,000 |
||||
Benefit ratios | Retail Segment: 81.5% to 82.0% | Retail Segment: 83.5 % to 84.5% | Benefit expenses as a percent of | ||
Employer Group Segment: 82.5% to 83.0% | Employer Group Segment: 84.5% to 85.5% | premiums | |||
Operating cost ratios | Consolidated: Approximately 14.5% | Consolidated: 14.5% to 15.0% | Operating costs as a percent of total | ||
Health & Well-Being Services Segment: | Health & Well-Being Services Segment: | revenues excluding investment | |||
96.0% to 96.5% | 96.0% to 96.5% | income | |||
Consolidated ratio assumes new | |||||
TRICARE South Region contract | |||||
will be accounted for on an ASO | |||||
basis | |||||
Consolidated depreciation | $300 million to $310 million | $310 million to $320 million | Approximately $35 million for 2011 | ||
and amortization (cash |
and $40 million for 2012 is | ||||
flows statement) |
expected to be included in | ||||
benefits expense on the income | |||||
statement | |||||
Consolidated interest |
Approximately $110 million | $105 million to $110 million | |||
expense |
|||||
Detailed pretax results and | Retail Segment: $1.5 billion to $1.52 billion; | Retail Segment: $1.3 billion to $1.35 billion; | |||
margins | approximately 7% pretax margin | 5.4% to 5.6% pretax margin | |||
Employer Group Segment: $235 million to | Employer Group Segment: $100 million to | ||||
$240 million; approximately 2.5% pretax | $150 million; 1.0% to 1.5% pretax margin | ||||
margin | |||||
Health and Well-Being Services Segment: | Health and Well-Being Services Segment: | ||||
$340 million to $350 million; | $425 million to $475 million; 3.0% to 3.5% | ||||
approximately 3% pretax margin | pretax margin | ||||
Effective Tax Rate |
Approximately 36.5% | Approximately 36.5% to 37.0% | |||
Cash flows from operations | $2.0 billion to $2.2 billion | $1.8 billion to $2.0 billion | |||
Capital expenditures | Approximately $305 million | Approximately $350 million |
Key Assumptions Affecting 2012 Guidance | ||||||||||
(guidance midpoints used for simplicity) | ||||||||||
Current FY11 EPS Guidance | $ | 8.37 | ||||||||
Favorable prior year medical claims reserve development (all segments) (a) | (0.57 | ) | ||||||||
Current FY11 EPS Guidance (non-GAAP) (b) | 7.80 | |||||||||
Retail Segment: | ||||||||||
Reset of Medicare margins | ($0.80 | ) | ||||||||
Impact of changes in average medical membership | 0.45 | |||||||||
Total Retail Segment changes |
(0.35 | ) | ||||||||
Employer Group Segment: | ||||||||||
Increase in Commercial medical cost trends | (0.35 | ) | ||||||||
Impact of changes in average medical membership | 0.10 | |||||||||
Total Employer Group Segment changes | (0.25 | ) | ||||||||
Health and Well-Being Services Segment: | ||||||||||
Growth in Humana Pharmacy Solutions and other businesses | 0.40 | |||||||||
Other Businesses and Corporate: | ||||||||||
New TRICARE South Region contract | (0.20 | ) | ||||||||
Lower weighted average shares outstanding | 0.10 | |||||||||
FY12 EPS Guidance | $ | 7.50 | ||||||||
(a) |
Actuarial standards require the use of assumptions based on moderately adverse experience, which generally results in favorable reserve development, or reserves that are considered redundant. When the Company recognizes a release of the redundancy, we disclose the amount that is not in the ordinary course of business. | |
(b) |
The Company has included certain financial measures that are not in accordance with Generally Accepted Accounting Principles (GAAP) in its summary of financial results within this earnings press release. The company believes that these non-GAAP measures, when presented in conjunction with 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. |
Humana Inc. |
Statistical Schedules |
And |
Supplementary Information |
3Q11 Earnings Release |
S-1 |
Humana Inc. | |||
Statistical Schedules and Supplementary Information | |||
3Q11 Earnings Release | |||
Contents | |||
Page |
Description |
||
S-3-4 | Consolidated Statements of Income | ||
S-5 | 3Q11 Segment Financial Information | ||
S-6 | YTD11 Segment Financial Information | ||
S-7 | 3Q10 Segment Financial Information | ||
S-8 | YTD10 Segment Financial Information | ||
S-9 | Consolidated Balance Sheets | ||
S-10-11 | Consolidated Statements of Cash Flows | ||
S-12 | Key Income Statement Ratios and Segment Operating Results | ||
S-13 | Membership Detail | ||
S-14-15 | Premiums and Services Revenue Detail | ||
S-16 | Medicare Summary | ||
S-17 | Investments | ||
S-18-20 | Benefits Payable | ||
S-21 | Footnotes | ||
S-2 |
Humana Inc. | |||||||||||||
Consolidated Statements of Income | |||||||||||||
In thousands, except per common share results | |||||||||||||
Three Months Ended September 30, | |||||||||||||
Dollar | Percentage | ||||||||||||
2011 | 2010 | Change | Change | ||||||||||
Revenues: | |||||||||||||
Premiums | $ | 8,852,536 | $ | 8,134,645 | $ | 717,891 | 8.8 | % | |||||
Services | 356,212 | 128,917 | 227,295 | 176.3 | % | ||||||||
Investment income | 91,895 | 87,250 | 4,645 | 5.3 | % | ||||||||
Total revenues | 9,300,643 | 8,350,812 | 949,831 | 11.4 | % | ||||||||
Operating expenses: | |||||||||||||
Benefits | 7,146,530 | 6,641,264 | 505,266 | 7.6 | % | ||||||||
Operating costs | 1,361,657 | 1,002,398 | 359,259 | 35.8 | % | ||||||||
Depreciation and amortization | 66,671 | 58,717 | 7,954 | 13.5 | % | ||||||||
Total operating expenses | 8,574,858 | 7,702,379 | 872,479 | 11.3 | % | ||||||||
Income from operations | 725,785 | 648,433 | 77,352 | 11.9 | % | ||||||||
Interest expense | 27,065 | 26,143 | 922 | 3.5 | % | ||||||||
Income before income taxes | 698,720 | 622,290 | 76,430 | 12.3 | % | ||||||||
Provision for income taxes | 253,960 | 229,069 | 24,891 | 10.9 | % | ||||||||
Net income | $ | 444,760 | $ | 393,221 | $ | 51,539 | 13.1 | % | |||||
Basic earnings per common share | $ | 2.71 | $ | 2.35 | $ | 0.36 | 15.3 | % | |||||
Diluted earnings per common share | $ | 2.67 | $ | 2.32 | $ | 0.35 | 15.1 | % | |||||
Shares used in computing basic earnings per common share (000's) | 164,121 | 167,574 | |||||||||||
Shares used in computing diluted earnings per common share (000's) | 166,580 | 169,582 | |||||||||||
S-3 |
Humana Inc. | ||||||||||||||
Consolidated Statements of Income | ||||||||||||||
In thousands, except per common share results | ||||||||||||||
Nine Months Ended September 30, | ||||||||||||||
Dollar | Percentage | |||||||||||||
2011 | 2010 | Change | Change | |||||||||||
Revenues: | ||||||||||||||
Premiums | $ | 26,468,203 | $ | 24,673,259 | $ | 1,794,944 | 7.3 | % | ||||||
Services | 1,034,663 | 394,639 | 640,024 | 162.2 | % | |||||||||
Investment income | 272,626 | 252,495 | 20,131 | 8.0 | % | |||||||||
Total revenues | 27,775,492 | 25,320,393 | 2,455,099 | 9.7 | % | |||||||||
Operating expenses: | ||||||||||||||
Benefits | 21,761,052 | 20,327,742 | 1,433,310 | 7.1 | % | |||||||||
Operating costs | 3,809,905 | 3,156,945 | 652,960 | 20.7 | % | |||||||||
Depreciation and amortization | 200,561 | 181,957 | 18,604 | 10.2 | % | |||||||||
Total operating expenses | 25,771,518 | 23,666,644 | 2,104,874 | 8.9 | % | |||||||||
Income from operations | 2,003,974 | 1,653,749 | 350,225 | 21.2 | % | |||||||||
Interest expense | 81,956 | 78,679 | 3,277 | 4.2 | % | |||||||||
Income before income taxes | 1,922,018 | 1,575,070 | 346,948 | 22.0 | % | |||||||||
Provision for income taxes | 701,795 | 583,005 | 118,790 | 20.4 | % | |||||||||
Net income | $ | 1,220,223 | $ | 992,065 | $ | 228,158 | 23.0 | % | ||||||
Basic earnings per common share | $ | 7.34 | $ | 5.90 | $ | 1.44 | 24.4 | % | ||||||
Diluted earnings per common share | $ | 7.24 | $ | 5.84 | $ | 1.40 | 24.0 | % | ||||||
Shares used in computing basic earnings per common share (000's) | 166,138 | 168,082 | ||||||||||||
Shares used in computing diluted earnings per common share (000's) | 168,558 | 169,964 | ||||||||||||
S-4 |
Humana Inc. | ||||||||||||||||||||||||||||||
3Q11 Segment Financial Information | ||||||||||||||||||||||||||||||
In thousands | ||||||||||||||||||||||||||||||
Health and | ||||||||||||||||||||||||||||||
Employer | Well-Being | Other | Eliminations/ | |||||||||||||||||||||||||||
Retail | Group | Services | Businesses | Corporate | Consolidated | |||||||||||||||||||||||||
Revenues - external customers | ||||||||||||||||||||||||||||||
Premiums: | ||||||||||||||||||||||||||||||
Medicare Advantage | $ | 4,566,087 | $ | 802,957 | $ | - | $ | - | $ | - | $ | 5,369,044 | ||||||||||||||||||
Medicare stand-alone PDP | 578,786 | 1,910 | - | 42,524 | - | 623,220 | ||||||||||||||||||||||||
Total Medicare | 5,144,873 | 804,867 | - | 42,524 | - | 5,992,264 | ||||||||||||||||||||||||
Fully-insured | 221,632 | 1,185,285 | - | - | - | 1,406,917 | ||||||||||||||||||||||||
Specialty | 33,149 | 235,050 | - | - | - | 268,199 | ||||||||||||||||||||||||
Military services | - | - | - | 943,984 | - | 943,984 | ||||||||||||||||||||||||
Medicaid and other (A) | - | - | - | 241,172 | - | 241,172 | ||||||||||||||||||||||||
Total premiums | 5,399,654 | 2,225,202 | - | 1,227,680 | - | 8,852,536 | ||||||||||||||||||||||||
Services revenue: | ||||||||||||||||||||||||||||||
Provider | - | - | 233,608 | - | - | 233,608 | ||||||||||||||||||||||||
ASO and other (B) | 4,597 | 88,699 | - | 26,444 | - | 119,740 | ||||||||||||||||||||||||
Pharmacy | - | - | 2,864 | - | - | 2,864 | ||||||||||||||||||||||||
Total services revenue | 4,597 | 88,699 | 236,472 | 26,444 | - | 356,212 | ||||||||||||||||||||||||
Total revenues - external customers | 5,404,251 | 2,313,901 | 236,472 | 1,254,124 | - | 9,208,748 | ||||||||||||||||||||||||
Intersegment revenues | ||||||||||||||||||||||||||||||
Services | - | 3,715 | 2,129,915 | - | (2,133,630 | ) | - | |||||||||||||||||||||||
Products | - | - | 461,213 | - | (461,213 | ) | - | |||||||||||||||||||||||
Total intersegment revenues | - | 3,715 | 2,591,128 | - | (2,594,843 | ) | - | |||||||||||||||||||||||
Investment income | 19,023 | 11,879 | - | 14,324 | 46,669 | 91,895 | ||||||||||||||||||||||||
Total revenues | 5,423,274 | 2,329,495 | 2,827,600 | 1,268,448 | (2,548,174 | ) | 9,300,643 | |||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||
Benefits | 4,249,209 | 1,856,934 | - | 1,116,702 | (76,315 | ) | 7,146,530 | |||||||||||||||||||||||
Operating costs | 602,878 | 405,853 | 2,723,334 | 121,574 | (2,491,982 | ) | 1,361,657 | |||||||||||||||||||||||
Depreciation and amortization | 29,738 | 20,851 | 20,701 | 2,450 | (7,069 | ) | 66,671 | |||||||||||||||||||||||
Total operating expenses | 4,881,825 | 2,283,638 | 2,744,035 | 1,240,726 | (2,575,366 | ) | 8,574,858 | |||||||||||||||||||||||
Income from operations | 541,449 | 45,857 | 83,565 | 27,722 | 27,192 | 725,785 | ||||||||||||||||||||||||
Interest expense | - | - | - | - | 27,065 | 27,065 | ||||||||||||||||||||||||
Income before income taxes | $ | 541,449 | $ | 45,857 | $ | 83,565 | $ | 27,722 | $ | 127 | $ | 698,720 | ||||||||||||||||||
Benefit ratio | 78.7 | % | 83.5 | % | 91.0 | % | 80.7 | % | ||||||||||||||||||||||
Operating cost ratio | 11.2 | % | 17.5 | % | 96.3 | % | 9.7 | % | 14.8 | % | ||||||||||||||||||||
S-5 |
Humana Inc. | ||||||||||||||||||||||||||||||
YTD11 Segment Financial Information | ||||||||||||||||||||||||||||||
In thousands | ||||||||||||||||||||||||||||||
Health and | ||||||||||||||||||||||||||||||
Employer | Well-Being | Other | Eliminations/ | |||||||||||||||||||||||||||
Retail | Group | Services | Businesses | Corporate | Consolidated | |||||||||||||||||||||||||
Revenues - external customers | ||||||||||||||||||||||||||||||
Premiums: | ||||||||||||||||||||||||||||||
Medicare Advantage | $ | 13,645,876 | $ | 2,364,306 | $ | - | $ | - | $ | - | $ | 16,010,182 | ||||||||||||||||||
Medicare stand-alone PDP | 1,737,603 | 5,638 | - | 195,604 | - | 1,938,845 | ||||||||||||||||||||||||
Total Medicare | 15,383,479 | 2,369,944 | - | 195,604 | - | 17,949,027 | ||||||||||||||||||||||||
Fully-insured | 628,811 | 3,600,476 | - | - | - | 4,229,287 | ||||||||||||||||||||||||
Specialty | 88,504 | 697,934 | - | - | - | 786,438 | ||||||||||||||||||||||||
Military services | - | - | - | 2,801,999 | - | 2,801,999 | ||||||||||||||||||||||||
Medicaid and other (A) | - | - | - | 701,452 | - | 701,452 | ||||||||||||||||||||||||
Total premiums | 16,100,794 | 6,668,354 | - | 3,699,055 | - | 26,468,203 | ||||||||||||||||||||||||
Services revenue: | ||||||||||||||||||||||||||||||
Provider | - | - | 671,055 | - | - | 671,055 | ||||||||||||||||||||||||
ASO and other (B) | 11,364 | 267,902 | - | 76,659 | - | 355,925 | ||||||||||||||||||||||||
Pharmacy | - | - | 7,683 | - | - | 7,683 | ||||||||||||||||||||||||
Total services revenue | 11,364 | 267,902 | 678,738 | 76,659 | - | 1,034,663 | ||||||||||||||||||||||||
Total revenues - external customers | 16,112,158 | 6,936,256 | 678,738 | 3,775,714 | - | 27,502,866 | ||||||||||||||||||||||||
Intersegment revenues | ||||||||||||||||||||||||||||||
Services | - | 10,313 | 6,324,992 | - | (6,335,305 | ) | - | |||||||||||||||||||||||
Products | - | - | 1,329,722 | - | (1,329,722 | ) | - | |||||||||||||||||||||||
Total intersegment revenues | - | 10,313 | 7,654,714 | - | (7,665,027 | ) | - | |||||||||||||||||||||||
Investment income | 56,968 | 35,287 | - | 39,999 | 140,372 | 272,626 | ||||||||||||||||||||||||
Total revenues | 16,169,126 | 6,981,856 | 8,333,452 | 3,815,713 | (7,524,655 | ) | 27,775,492 | |||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||
Benefits | 13,193,598 | 5,408,049 | - | 3,375,461 | (216,056 | ) | 21,761,052 | |||||||||||||||||||||||
Operating costs | 1,625,423 | 1,216,685 | 8,004,784 | 351,145 | (7,388,132 | ) | 3,809,905 | |||||||||||||||||||||||
Depreciation and amortization | 88,598 | 64,101 | 60,927 | 6,802 | (19,867 | ) | 200,561 | |||||||||||||||||||||||
Total operating expenses | 14,907,619 | 6,688,835 | 8,065,711 | 3,733,408 | (7,624,055 | ) | 25,771,518 | |||||||||||||||||||||||
Income from operations | 1,261,507 | 293,021 | 267,741 | 82,305 | 99,400 | 2,003,974 | ||||||||||||||||||||||||
Interest expense | - | - | - | - | 81,956 | 81,956 | ||||||||||||||||||||||||
Income before income taxes | $ | 1,261,507 | $ | 293,021 | $ | 267,741 | $ | 82,305 | $ | 17,444 | $ | 1,922,018 | ||||||||||||||||||
Benefit ratio | 81.9 | % | 81.1 | % | 91.3 | % | 82.2 | % | ||||||||||||||||||||||
Operating cost ratio | 10.1 | % | 17.5 | % | 96.1 | % | 9.3 | % | 13.9 | % | ||||||||||||||||||||
S-6 |
Humana Inc. | ||||||||||||||||||||||||||||||
3Q10 Segment Financial Information | ||||||||||||||||||||||||||||||
In thousands | ||||||||||||||||||||||||||||||
Health and | ||||||||||||||||||||||||||||||
Employer | Well-Being | Other | Eliminations/ | |||||||||||||||||||||||||||
Retail | Group | Services | Businesses | Corporate | Consolidated | |||||||||||||||||||||||||
Revenues - external customers | ||||||||||||||||||||||||||||||
Premiums: | ||||||||||||||||||||||||||||||
Medicare Advantage | $ | 4,075,532 | $ | 723,378 | $ | - | $ | - | $ | - | $ | 4,798,910 | ||||||||||||||||||
Medicare stand-alone PDP | 504,929 | 1,153 | - | 73,501 | - | 579,583 | ||||||||||||||||||||||||
Total Medicare | 4,580,461 | 724,531 | - | 73,501 | - | 5,378,493 | ||||||||||||||||||||||||
Fully-insured | 189,503 | 1,275,945 | - | - | - | 1,465,448 | ||||||||||||||||||||||||
Specialty | 21,663 | 216,814 | - | - | - | 238,477 | ||||||||||||||||||||||||
Military services | - | - | - | 873,588 | - | 873,588 | ||||||||||||||||||||||||
Medicaid and other (A) | - | - | - | 178,639 | - | 178,639 | ||||||||||||||||||||||||
Total premiums | 4,791,627 | 2,217,290 | - | 1,125,728 | - | 8,134,645 | ||||||||||||||||||||||||
Services revenue: | ||||||||||||||||||||||||||||||
Provider | - | - | 3,815 | - | - | 3,815 | ||||||||||||||||||||||||
ASO and other (B) | 3,116 | 94,884 | - | 27,102 | - | 125,102 | ||||||||||||||||||||||||
Pharmacy | - | - | - | - | - | - | ||||||||||||||||||||||||
Total services revenue | 3,116 | 94,884 | 3,815 | 27,102 | - | 128,917 | ||||||||||||||||||||||||
Total revenues - external customers | 4,794,743 | 2,312,174 | 3,815 | 1,152,830 | - | 8,263,562 | ||||||||||||||||||||||||
Intersegment revenues | ||||||||||||||||||||||||||||||
Services | - | 3,224 | 1,843,235 | - | (1,846,459 | ) | - | |||||||||||||||||||||||
Products | - | - | 342,777 | - | (342,777 | ) | - | |||||||||||||||||||||||
Total intersegment revenues | - | 3,224 | 2,186,012 | - | (2,189,236 | ) | - | |||||||||||||||||||||||
Investment income | 21,265 | 11,165 | - | 11,482 | 43,338 | 87,250 | ||||||||||||||||||||||||
Total revenues | 4,816,008 | 2,326,563 | 2,189,827 | 1,164,312 | (2,145,898 | ) | 8,350,812 | |||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||
Benefits | 3,879,424 | 1,818,752 | - | 1,021,082 | (77,994 | ) | 6,641,264 | |||||||||||||||||||||||
Operating costs | 461,038 | 407,117 | 2,106,079 | 118,551 | (2,090,387 | ) | 1,002,398 | |||||||||||||||||||||||
Depreciation and amortization | 27,625 | 21,704 | 8,211 | 2,664 | (1,487 | ) | 58,717 | |||||||||||||||||||||||
Total operating expenses | 4,368,087 | 2,247,573 | 2,114,290 | 1,142,297 | (2,169,868 | ) | 7,702,379 | |||||||||||||||||||||||
Income from operations | 447,921 | 78,990 | 75,537 | 22,015 | 23,970 | 648,433 | ||||||||||||||||||||||||
Interest expense | - | - | - | - | 26,143 | 26,143 | ||||||||||||||||||||||||
Income (loss) before income taxes | $ | 447,921 | $ | 78,990 | $ | 75,537 | $ | 22,015 | $ | (2,173 | ) | $ | 622,290 | |||||||||||||||||
Benefit ratio | 81.0 | % | 82.0 | % | 90.7 | % | 81.6 | % | ||||||||||||||||||||||
Operating cost ratio | 9.6 | % | 17.6 | % | 96.2 | % | 10.3 | % | 12.1 | % | ||||||||||||||||||||
S-7 |
Humana Inc. | ||||||||||||||||||||||||||||||
YTD10 Segment Financial Information | ||||||||||||||||||||||||||||||
In thousands | ||||||||||||||||||||||||||||||
Health and | ||||||||||||||||||||||||||||||
Employer | Well-Being | Other | Eliminations/ | |||||||||||||||||||||||||||
Retail | Group | Services | Businesses | Corporate | Consolidated | |||||||||||||||||||||||||
Revenues - external customers | ||||||||||||||||||||||||||||||
Premiums: | ||||||||||||||||||||||||||||||
Medicare Advantage | $ | 12,241,366 | $ | 2,259,733 | $ | - | $ | - | $ | - | $ | 14,501,099 | ||||||||||||||||||
Medicare stand-alone PDP | 1,512,738 | 3,443 | - | 342,649 | - | 1,858,830 | ||||||||||||||||||||||||
Total Medicare | 13,754,104 | 2,263,176 | - | 342,649 | - | 16,359,929 | ||||||||||||||||||||||||
Fully-insured | 551,581 | 3,904,705 | - | - | - | 4,456,286 | ||||||||||||||||||||||||
Specialty | 58,853 | 663,055 | - | - | - | 721,908 | ||||||||||||||||||||||||
Military services | - | - | - | 2,603,950 | - | 2,603,950 | ||||||||||||||||||||||||
Medicaid and other (A) | - | - | - | 531,186 | - | 531,186 | ||||||||||||||||||||||||
Total premiums | 14,364,538 | 6,830,936 | - | 3,477,785 | - | 24,673,259 | ||||||||||||||||||||||||
Services revenue: | ||||||||||||||||||||||||||||||
Provider | - | - | 9,869 | - | - | 9,869 | ||||||||||||||||||||||||
ASO and other (B) | 8,457 | 294,241 | - | 82,072 | - | 384,770 | ||||||||||||||||||||||||
Pharmacy | - | - | - | - | - | - | ||||||||||||||||||||||||
Total services revenue | 8,457 | 294,241 | 9,869 | 82,072 | - | 394,639 | ||||||||||||||||||||||||
Total revenues - external customers | 14,372,995 | 7,125,177 | 9,869 | 3,559,857 | - | 25,067,898 | ||||||||||||||||||||||||
Intersegment revenues | ||||||||||||||||||||||||||||||
Services | - | 9,892 | 5,674,965 | - | (5,684,857 | ) | - | |||||||||||||||||||||||
Products | - | - | 936,673 | - | (936,673 | ) | - | |||||||||||||||||||||||
Total intersegment revenues | - | 9,892 | 6,611,638 | - | (6,621,530 | ) | - | |||||||||||||||||||||||
Investment income | 62,002 | 32,412 | - | 31,363 | 126,718 | 252,495 | ||||||||||||||||||||||||
Total revenues | 14,434,997 | 7,167,481 | 6,621,507 | 3,591,220 | (6,494,812 | ) | 25,320,393 | |||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||
Benefits | 11,796,751 | 5,586,593 | - | 3,125,564 | (181,166 | ) | 20,327,742 | |||||||||||||||||||||||
Operating costs | 1,512,779 | 1,250,446 | 6,427,167 | 348,611 | (6,382,058 | ) | 3,156,945 | |||||||||||||||||||||||
Depreciation and amortization | 86,826 | 70,219 | 19,703 | 8,684 | (3,475 | ) | 181,957 | |||||||||||||||||||||||
Total operating expenses | 13,396,356 | 6,907,258 | 6,446,870 | 3,482,859 | (6,566,699 | ) | 23,666,644 | |||||||||||||||||||||||
Income from operations | 1,038,641 | 260,223 | 174,637 | 108,361 | 71,887 | 1,653,749 | ||||||||||||||||||||||||
Interest expense | - | - | - | - | 78,679 | 78,679 | ||||||||||||||||||||||||
Income (loss) before income taxes | $ | 1,038,641 | $ | 260,223 | $ | 174,637 | $ | 108,361 | $ | (6,792 | ) | $ | 1,575,070 | |||||||||||||||||
Benefit ratio | 82.1 | % | 81.8 | % | 89.9 | % | 82.4 | % | ||||||||||||||||||||||
Operating cost ratio | 10.5 | % | 17.5 | % | 97.1 | % | 9.8 | % | 12.6 | % | ||||||||||||||||||||
S-8 |
Humana Inc. | ||||||||||||||
Consolidated Balance Sheets | ||||||||||||||
Dollars in thousands, except share amounts | ||||||||||||||
September 30, | December 31, | Sequential Change | ||||||||||||
2011 | 2010 | Dollar | Percent | |||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 4,019,405 | $ | 1,673,137 | ||||||||||
Investment securities | 7,864,637 | 6,872,767 | ||||||||||||
Receivables, net | 1,036,317 | 959,018 | ||||||||||||
Securities lending invested collateral | 5,486 | 49,636 | ||||||||||||
Other | 706,493 | 583,141 | ||||||||||||
Total current assets | 13,632,338 | 10,137,699 | $ | 3,494,639 | 34.5 | % | ||||||||
Property and equipment, net | 850,888 | 815,337 | ||||||||||||
Long-term investment securities | 1,695,943 | 1,499,672 | ||||||||||||
Goodwill | 2,579,916 | 2,567,809 | ||||||||||||
Other | 1,140,644 | 1,082,736 | ||||||||||||
Total assets | 19,899,729 | 16,103,253 | $ | 3,796,476 | 23.6 | % | ||||||||
Liabilities and Stockholders' Equity | ||||||||||||||
Current liabilities: | ||||||||||||||
Benefits payable | 3,868,428 | 3,469,306 | ||||||||||||
Trade accounts payable and accrued expenses | 2,332,638 | 1,624,832 | ||||||||||||
Book overdraft | 298,587 | 409,385 | ||||||||||||
Securities lending payable | 11,482 | 55,693 | ||||||||||||
Unearned revenues | 2,005,366 | 185,410 | ||||||||||||
Total current liabilities | 8,516,501 | 5,744,626 | $ | 2,771,875 | 48.3 | % | ||||||||
Long-term debt | 1,661,552 | 1,668,849 | ||||||||||||
Future policy benefits payable | 1,580,585 | 1,492,855 | ||||||||||||
Other long-term liabilities | 283,121 | 272,867 | ||||||||||||
Total liabilities | 12,041,759 | 9,179,197 | $ | 2,862,562 | 31.2 | % | ||||||||
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; 192,804,649 issued at September 30, 2011 |
32,133 | 31,707 | ||||||||||||
Capital in excess of par value | 1,913,665 | 1,737,207 | ||||||||||||
Retained earnings | 6,667,005 | 5,529,001 | ||||||||||||
Accumulated other comprehensive income | 279,844 | 120,584 | ||||||||||||
Treasury stock, at cost, 29,300,843 shares at September 30, 2011 | (1,034,677 | ) | (494,443 | ) | ||||||||||
Total stockholders' equity | 7,857,970 | 6,924,056 | $ | 933,914 | 13.5 | % | ||||||||
Total liabilities and stockholders' equity | $ | 19,899,729 | $ | 16,103,253 | $ | 3,796,476 | 23.6 | % | ||||||
Debt-to-total capitalization ratio | 17.5 | % | 19.4 | % | ||||||||||
S-9 |
Humana Inc. | ||||||||||||||||
Consolidated Statements of Cash Flows | ||||||||||||||||
Dollars in thousands | ||||||||||||||||
Three Months Ended September 30, | ||||||||||||||||
Dollar | Percentage | |||||||||||||||
2011 | 2010 | Change | Change | |||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net income | $ | 444,760 | $ | 393,221 | ||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||||||
Depreciation and amortization | 74,581 | 64,557 | ||||||||||||||
Net realized capital gains | (2,146 | ) | (4,310 | ) | ||||||||||||
Stock-based compensation | 11,800 | 12,477 | ||||||||||||||
Benefit from deferred income taxes | (9,316 | ) | (34,656 | ) | ||||||||||||
Changes in operating assets and liabilities excluding the effects of acquisitions: |
||||||||||||||||
Receivables | 510,075 | 517,074 | ||||||||||||||
Other assets | (30,292 | ) | 46,045 | |||||||||||||
Benefits payable | (84,757 | ) | (102,812 | ) | ||||||||||||
Other liabilities | 189,823 | 301,608 | ||||||||||||||
Unearned revenues | 1,800,482 | 4,398 | ||||||||||||||
Other | 14,305 | 11,607 | ||||||||||||||
Net cash provided by operating activities | 2,919,315 | 1,209,209 | $ | 1,710,106 | 141.4 | % | ||||||||||
Cash flows from investing activities | ||||||||||||||||
Acquisitions, net of cash acquired | (2,700 | ) | (8,451 | ) | ||||||||||||
Purchases of property and equipment | (86,745 | ) | (61,005 | ) | ||||||||||||
Purchases of investment securities | (765,270 | ) | (823,184 | ) | ||||||||||||
Proceeds from maturities of investment securities | 352,858 | 478,569 | ||||||||||||||
Proceeds from sales of investment securities | 193,455 | 207,630 | ||||||||||||||
Change in securities lending collateral | 24,054 | 13,512 | ||||||||||||||
Net cash used in investing activities | (284,348 | ) | (192,929 | ) | ($91,419 | ) | -47.4 | % | ||||||||
Cash flows from financing activities | ||||||||||||||||
Receipts from CMS contract deposits | 880,474 | 439,622 | ||||||||||||||
Withdrawals from CMS contract deposits | (843,397 | ) | (473,679 | ) | ||||||||||||
Change in book overdraft | 81,300 | 1,313 | ||||||||||||||
Change in securities lending payable | (24,054 | ) | (13,512 | ) | ||||||||||||
Common stock repurchases | (239,446 | ) | (50,301 | ) | ||||||||||||
Excess tax benefit from stock-based compensation | 959 | 142 | ||||||||||||||
Dividends paid | (41,494 | ) | - | |||||||||||||
Proceeds from stock option exercises and other | 2,272 | 4,005 | ||||||||||||||
Net cash used in financing activities | (183,386 | ) | (92,410 | ) | ($90,976 | ) | -98.4 | % | ||||||||
Increase in cash and cash equivalents | 2,451,581 | 923,870 | ||||||||||||||
Cash and cash equivalents at beginning of period | 1,567,824 | 1,998,982 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 4,019,405 | $ | 2,922,852 | ||||||||||||
S-10 |
Humana Inc. | ||||||||||||||||
Consolidated Statements of Cash Flows | ||||||||||||||||
Dollars in thousands | ||||||||||||||||
Nine Months Ended September 30, | ||||||||||||||||
Dollar | Percentage | |||||||||||||||
2011 | 2010 | Change | Change | |||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net income | $ | 1,220,223 | $ | 992,065 | ||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||||||
Depreciation and amortization | 225,164 | 196,603 | ||||||||||||||
Net realized capital gains | (7,255 | ) | (12,286 | ) | ||||||||||||
Stock-based compensation | 52,778 | 52,104 | ||||||||||||||
Provision for (benefit from) deferred income taxes | 12,102 | (115,923 | ) | |||||||||||||
Changes in operating assets and liabilities excluding the effects of acquisitions: |
||||||||||||||||
Receivables | (77,299 | ) | 15,592 | |||||||||||||
Other assets | (205,092 | ) | 119,728 | |||||||||||||
Benefits payable | 399,122 | 504,337 | ||||||||||||||
Other liabilities | 391,892 | 520,771 | ||||||||||||||
Unearned revenues | 1,819,931 | (15,073 | ) | |||||||||||||
Other | 44,414 | 31,253 | ||||||||||||||
Net cash provided by operating activities | 3,875,980 | 2,289,171 | $ | 1,586,809 | 69.3 | % | ||||||||||
Cash flows from investing activities | ||||||||||||||||
Acquisitions, net of cash acquired | (13,652 | ) | (10,120 | ) | ||||||||||||
Purchases of property and equipment | (215,926 | ) | (152,432 | ) | ||||||||||||
Purchases of investment securities | (2,667,353 | ) | (3,582,352 | ) | ||||||||||||
Proceeds from maturities of investment securities | 1,084,062 | 1,492,601 | ||||||||||||||
Proceeds from sales of investment securities | 625,461 | 1,298,912 | ||||||||||||||
Change in securities lending collateral | 44,211 | 88,321 | ||||||||||||||
Net cash used in investing activities | (1,143,197 | ) | (865,070 | ) | ($278,127 | ) | -32.2 | % | ||||||||
Cash flows from financing activities | ||||||||||||||||
Receipts from CMS contract deposits | 2,135,321 | 1,319,874 | ||||||||||||||
Withdrawals from CMS contract deposits | (1,909,875 | ) | (1,117,655 | ) | ||||||||||||
Change in book overdraft | (110,798 | ) | (133,235 | ) | ||||||||||||
Change in securities lending payable | (44,211 | ) | (88,321 | ) | ||||||||||||
Common stock repurchases | (540,234 | ) | (108,170 | ) | ||||||||||||
Excess tax benefit from stock-based compensation | 12,246 | 1,406 | ||||||||||||||
Dividends paid | (41,494 | ) | - | |||||||||||||
Proceeds from stock option exercises and other | 112,530 | 11,264 | ||||||||||||||
Net cash used in financing activities | (386,515 | ) | (114,837 | ) | ($271,678 | ) | -236.6 | % | ||||||||
Increase in cash and cash equivalents | 2,346,268 | 1,309,264 | ||||||||||||||
Cash and cash equivalents at beginning of period | 1,673,137 | 1,613,588 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 4,019,405 | $ | 2,922,852 | ||||||||||||
S-11 |
Humana Inc. | |||||||||||||||||||||||||||||||||
Key Income Statement Ratios and Segment Operating Results | |||||||||||||||||||||||||||||||||
Dollars in thousands | |||||||||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||
Percentage | Percentage | ||||||||||||||||||||||||||||||||
2011 | 2010 | Difference | Change | 2011 | 2010 | Difference | Change | ||||||||||||||||||||||||||
Benefit ratio | |||||||||||||||||||||||||||||||||
Retail | 78.7 | % | 81.0 | % | -2.3 | % | 81.9 | % | 82.1 | % | -0.2 | % | |||||||||||||||||||||
Employer Group | 83.5 | % | 82.0 | % | 1.5 | % | 81.1 | % | 81.8 | % | -0.7 | % | |||||||||||||||||||||
Other Businesses | 91.0 | % | 90.7 | % | 0.3 | % | 91.3 | % | 89.9 | % | 1.4 | % | |||||||||||||||||||||
Consolidated | 80.7 | % | 81.6 | % | -0.9 | % | 82.2 | % | 82.4 | % | -0.2 | % | |||||||||||||||||||||
Operating cost ratio (C) | |||||||||||||||||||||||||||||||||
Retail | 11.2 | % | 9.6 | % | 1.6 | % | 10.1 | % | 10.5 | % | -0.4 | % | |||||||||||||||||||||
Employer Group | 17.5 | % | 17.6 | % | -0.1 | % | 17.5 | % | 17.5 | % | 0.0 | % | |||||||||||||||||||||
Health and Well-Being Services | 96.3 | % | 96.2 | % | 0.1 | % | 96.1 | % | 97.1 | % | -1.0 | % | |||||||||||||||||||||
Other Businesses | 9.7 | % | 10.3 | % | -0.6 | % | 9.3 | % | 9.8 | % | -0.5 | % | |||||||||||||||||||||
Consolidated | 14.8 | % | 12.1 | % | 2.7 | % | 13.9 | % | 12.6 | % | 1.3 | % | |||||||||||||||||||||
Detail of pretax income | |||||||||||||||||||||||||||||||||
Retail | $ | 541,449 | $ | 447,921 | $ | 93,528 | 20.9 | % | $ | 1,261,507 | $ | 1,038,641 | $ | 222,866 | 21.5 | % | |||||||||||||||||
Employer Group | $ | 45,857 | $ | 78,990 | ($33,133 | ) | -41.9 | % | $ | 293,021 | $ | 260,223 | $ | 32,798 | 12.6 | % | |||||||||||||||||
Health and Well-Being Services | $ | 83,565 | $ | 75,537 | $ | 8,028 | 10.6 | % | $ | 267,741 | $ | 174,637 | $ | 93,104 | 53.3 | % | |||||||||||||||||
Other Businesses | $ | 27,722 | $ | 22,015 | $ | 5,707 | 25.9 | % | $ | 82,305 | $ | 108,361 | ($26,056 | ) | -24.0 | % | |||||||||||||||||
Consolidated |
$ |
698,720 |
$ |
622,290 | $ | 76,430 | 12.3 | % |
$ |
1,922,018 |
$ |
1,575,070 | $ | 346,948 | 22.0 | % | |||||||||||||||||
S-12 |
Humana Inc. | ||||||||||||||||||||||
Membership Detail | ||||||||||||||||||||||
In thousands | ||||||||||||||||||||||
Ending | Average 3Q11 | Ending | Year-over-year Change | Ending | Sequential Change | |||||||||||||||||
September 30, 2011 | September 30, 2010 | Amount | Percent | June 30, 2011 | Amount | Percent | ||||||||||||||||
Medical Membership: | ||||||||||||||||||||||
Retail | ||||||||||||||||||||||
Medicare Advantage | 1,613.4 | 1,610.2 | 1,462.2 | 151.2 | 10.3 | % | 1,602.5 | 10.9 | 0.7 | % | ||||||||||||
Medicare stand-alone PDPs | 2,478.1 | 2,456.0 | 1,688.2 | 789.9 | 46.8 | % | 2,408.7 | 69.4 | 2.9 | % | ||||||||||||
Individual commercial | 424.0 | 417.5 | 374.9 | 49.1 | 13.1 | % | 403.7 | 20.3 | 5.0 | % | ||||||||||||
Medicare Supplement | 56.7 | 55.5 | 37.8 | 18.9 | 50.0 | % | 52.9 | 3.8 | 7.2 | % | ||||||||||||
Total Retail | 4,572.2 | 4,539.2 | 3,563.1 | 1,009.1 | 28.3 | % | 4,467.8 | 104.4 | 2.3 | % | ||||||||||||
Employer Group | ||||||||||||||||||||||
Medicare Advantage | 287.9 | 287.0 | 274.2 | 13.7 | 5.0 | % | 282.0 | 5.9 | 2.1 | % | ||||||||||||
Medicare Advantage ASO | 27.6 | 27.6 | 28.4 | (0.8 | ) | -2.8 | % | 27.7 | (0.1 | ) | -0.4 | % | ||||||||||
Medicare stand-alone PDPs | 4.2 | 4.2 | 2.4 | 1.8 | 75.0 | % | 4.1 | 0.1 | 2.4 | % | ||||||||||||
Fully-insured medical commercial | 1,181.3 | 1,179.2 | 1,257.9 | (76.6 | ) | -6.1 | % | 1,186.2 | (4.9 | ) | -0.4 | % | ||||||||||
ASO commercial | 1,287.0 | 1,292.3 | 1,460.3 | (173.3 | ) | -11.9 | % | 1,313.6 | (26.6 | ) | -2.0 | % | ||||||||||
Total Employer Group | 2,788.0 | 2,790.3 | 3,023.2 | (235.2 | ) | -7.8 | % | 2,813.6 | (25.6 | ) | -0.9 | % | ||||||||||
Other Businesses | ||||||||||||||||||||||
Military Services | 3,025.9 | 3,024.9 | 3,031.1 | (5.2 | ) | -0.2 | % | 3,015.2 | 10.7 | 0.4 | % | |||||||||||
Medicaid and other | 621.5 | 619.8 | 457.1 | 164.4 | 36.0 | % | 619.2 | 2.3 | 0.4 | % | ||||||||||||
LI-NET (D) | 74.6 | 75.6 | 95.0 | (20.4 | ) | -21.5 | % | 87.0 | (12.4 | ) | -14.3 | % | ||||||||||
Total Other Businesses | 3,722.0 | 3,720.3 | 3,583.2 | 138.8 | 3.9 | % | 3,721.4 | 0.6 | 0.0 | % | ||||||||||||
Total Medical Membership | 11,082.2 | 11,049.8 | 10,169.5 | 912.7 | 9.0 | % | 11,002.8 | 79.4 | 0.7 | % | ||||||||||||
Specialty Membership: | ||||||||||||||||||||||
Retail | ||||||||||||||||||||||
Dental - fully-insured | 564.7 | 547.8 | 363.6 | 201.1 | 55.3 | % | 512.5 | 52.2 | 10.2 | % | ||||||||||||
Vision | 79.3 | 76.4 | 49.2 | 30.1 | 61.2 | % | 70.8 | 8.5 | 12.0 | % | ||||||||||||
Other supplemental benefits (E) | 111.6 | 106.8 | 74.2 | 37.4 | 50.4 | % | 97.2 | 14.4 | 14.8 | % | ||||||||||||
Total Retail | 755.6 | 731.0 | 487.0 | 268.6 | 55.2 | % | 680.5 | 75.1 | 11.0 | % | ||||||||||||
Employer Group | ||||||||||||||||||||||
Dental - fully-insured | 2,259.5 | 2,264.5 | 2,242.2 | 17.3 | 0.8 | % | 2,250.3 | 9.2 | 0.4 | % | ||||||||||||
Dental - ASO | 876.9 | 868.9 | 1,236.5 | (359.6 | ) | -29.1 | % | 1,220.7 | (343.8 | ) | -28.2 | % | ||||||||||
Vision | 2,272.8 | 2,262.1 | 2,159.2 | 113.6 | 5.3 | % | 2,227.0 | 45.8 | 2.1 | % | ||||||||||||
Other supplemental benefits (E) | 1,010.1 | 993.7 | 864.8 | 145.3 | 16.8 | % | 971.6 | 38.5 | 4.0 | % | ||||||||||||
Total Employer Group | 6,419.3 | 6,389.2 | 6,502.7 | (83.4 | ) | -1.3 | % | 6,669.6 | (250.3 | ) | -3.8 | % | ||||||||||
Total Specialty Membership | 7,174.9 | 7,120.2 | 6,989.7 | 185.2 | 2.6 | % | 7,350.1 | (175.2 | ) | -2.4 | % | |||||||||||
S-13 |
Humana Inc. | ||||||||||||||||||||||
Premiums and Services Revenue Detail | ||||||||||||||||||||||
Dollars in thousands, except per member per month | ||||||||||||||||||||||
Per Member per Month (F) | ||||||||||||||||||||||
Three Months Ended September 30, | Three Months Ended September 30, | |||||||||||||||||||||
Dollar | Percentage | |||||||||||||||||||||
2011 | 2010 | Change | Change | 2011 | 2010 | |||||||||||||||||
Premiums and Services Revenue | ||||||||||||||||||||||
Retail: | ||||||||||||||||||||||
Medicare Advantage | $ | 4,566,087 | $ | 4,075,532 | $ | 490,555 | 12.0 | % | $ | 945 | $ | 929 | ||||||||||
Medicare stand-alone PDPs | 578,786 | 504,929 | 73,857 | 14.6 | % | $ | 79 | $ | 99 | |||||||||||||
Individual commercial | 194,364 | 171,382 | 22,982 | 13.4 | % | $ | 155 | $ | 153 | |||||||||||||
Medicare Supplemental | 27,268 | 18,121 | 9,147 | 50.5 | % | $ | 164 | $ | 162 | |||||||||||||
Specialty | 33,149 | 21,663 | 11,486 | 53.0 | % | $ | 15 | $ | 15 | |||||||||||||
ASO & other services (B) | 4,597 | 3,116 | 1,481 | 47.5 | % | |||||||||||||||||
Total Retail | 5,404,251 | 4,794,743 | 609,508 | 12.7 | % | |||||||||||||||||
Employer Group: | ||||||||||||||||||||||
Medicare Advantage | 802,957 | 723,378 | 79,579 | 11.0 | % | $ | 933 | $ | 881 | |||||||||||||
Medicare stand-alone PDPs | 1,910 | 1,153 | 757 | 65.7 | % | $ | 152 | $ | 160 | |||||||||||||
Fully-insured medical commercial | 1,185,285 | 1,275,945 | (90,660 | ) | -7.1 | % | $ | 335 | $ | 336 | ||||||||||||
Specialty | 235,050 | 216,814 | 18,236 | 8.4 | % | $ | 14 | $ | 14 | |||||||||||||
ASO & other services (B) | 92,414 | 98,108 | (5,694 | ) | -5.8 | % | ||||||||||||||||
Total Employer Group | 2,317,616 | 2,315,398 | 2,218 | 0.1 | % | |||||||||||||||||
Health and Well-Being Services: | ||||||||||||||||||||||
Pharmacy solutions | 2,484,186 | 2,079,329 | 404,857 | 19.5 | % | |||||||||||||||||
Primary care services | 277,030 | 56,746 | 220,284 | 388.2 | % | |||||||||||||||||
Home care services | 20,904 | 9,413 | 11,491 | 122.1 | % | |||||||||||||||||
Integrated wellness services | 45,480 | 44,339 | 1,141 | 2.6 | % | |||||||||||||||||
Total Health and Well-Being Services | 2,827,600 | 2,189,827 | 637,773 | 29.1 | % | |||||||||||||||||
Other Businesses: | ||||||||||||||||||||||
Military services (G) | 967,863 | 895,756 | 72,107 | 8.0 | % | $ | 181 | $ | 165 | |||||||||||||
LI-NET (D) | 42,524 | 73,501 | (30,977 | ) | -42.1 | % | $ | 187 | $ | 265 | ||||||||||||
Medicaid and other (H) | 243,737 | 183,573 | 60,164 | 32.8 | % | $ | 130 | $ | 131 | |||||||||||||
Total Other Businesses | 1,254,124 | 1,152,830 | 101,294 | 8.8 | % | |||||||||||||||||
S-14 |
Humana Inc. | ||||||||||||||||||||||
Premiums and Services Revenue Detail | ||||||||||||||||||||||
Dollars in thousands, except per member per month | ||||||||||||||||||||||
Per Member per Month (F) | ||||||||||||||||||||||
Nine Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
Dollar | Percentage | |||||||||||||||||||||
2011 | 2010 | Change | Change | 2011 | 2010 | |||||||||||||||||
Premiums and Services Revenue | ||||||||||||||||||||||
Retail: | ||||||||||||||||||||||
Medicare Advantage | $ | 13,645,876 | $ | 12,241,366 | $ | 1,404,510 | 11.5 | % | $ | 947 | $ | 935 | ||||||||||
Medicare stand-alone PDPs | 1,737,603 | 1,512,738 | 224,865 | 14.9 | % | $ | 81 | $ | 98 | |||||||||||||
Individual commercial | 553,191 | 499,817 | 53,374 | 10.7 | % | $ | 155 | $ | 150 | |||||||||||||
Medicare Supplemental | 75,620 | 51,764 | 23,856 | 46.1 | % | $ | 161 | $ | 163 | |||||||||||||
Specialty | 88,504 | 58,853 | 29,651 | 50.4 | % | $ | 15 | $ | 15 | |||||||||||||
ASO & other services (B) | 11,364 | 8,457 | 2,907 | 34.4 | % | |||||||||||||||||
Total Retail | 16,112,158 | 14,372,995 | 1,739,163 | 12.1 | % | |||||||||||||||||
Employer Group: | ||||||||||||||||||||||
Medicare Advantage | 2,364,306 | 2,259,733 | 104,573 | 4.6 | % | $ | 929 | $ | 933 | |||||||||||||
Medicare stand-alone PDPs | 5,638 | 3,443 | 2,195 | 63.8 | % | $ | 152 | $ | 159 | |||||||||||||
Fully-insured medical commercial | 3,600,476 | 3,904,705 | (304,229 | ) | -7.8 | % | $ | 339 | $ | 331 | ||||||||||||
Specialty | 697,934 | 663,055 | 34,879 | 5.3 | % | $ | 14 | $ | 13 | |||||||||||||
ASO & other services (B) | 278,215 | 304,133 | (25,918 | ) | -8.5 | % | ||||||||||||||||
Total Employer Group | 6,946,569 | 7,135,069 | (188,500 | ) | -2.6 | % | ||||||||||||||||
Health and Well-Being Services: | ||||||||||||||||||||||
Pharmacy solutions | 7,346,561 | 6,336,725 | 1,009,836 | 15.9 | % | |||||||||||||||||
Primary care services | 795,952 | 126,736 | 669,216 | 528.0 | % | |||||||||||||||||
Home care services | 55,829 | 24,652 | 31,177 | 126.5 | % | |||||||||||||||||
Integrated wellness services | 135,110 | 133,394 | 1,716 | 1.3 | % | |||||||||||||||||
Total Health and Well-Being Services | 8,333,452 | 6,621,507 | 1,711,945 | 25.9 | % | |||||||||||||||||
Other Businesses: | ||||||||||||||||||||||
Military services (G) | 2,868,630 | 2,670,959 | 197,671 | 7.4 | % | $ | 179 | $ | 165 | |||||||||||||
LI-NET (D) | 195,604 | 342,649 | (147,045 | ) | -42.9 | % | $ | 243 | $ | 331 | ||||||||||||
Medicaid and other (H) | 711,480 | 546,249 | 165,231 | 30.2 | % | $ | 126 | $ | 131 | |||||||||||||
Total Other Businesses | 3,775,714 | 3,559,857 | 215,857 | 6.1 | % | |||||||||||||||||
S-15 |
Humana Inc. | |||||||||||||||||||||||||
Medicare Summary | |||||||||||||||||||||||||
In thousands, except per member per month | |||||||||||||||||||||||||
Per Member per Month (F) | |||||||||||||||||||||||||
Three Months Ended September 30, | Year-over-year Change | Three Months Ended September 30, | |||||||||||||||||||||||
2011 | 2010 | Amount | Percent | 2011 | 2010 | ||||||||||||||||||||
Premiums | |||||||||||||||||||||||||
Medicare Advantage | $ | 5,369,044 | $ | 4,798,910 | $ | 570,134 | 11.9 | % | $ | 943 |
|
$ |
921 |
||||||||||||
Medicare stand-alone PDPs | 623,220 | 579,583 | 43,637 | 7.5 | % | $ | 82 |
|
$ |
108 |
|||||||||||||||
Total Medicare | $ | 5,992,264 | $ | 5,378,493 | $ | 613,771 | 11.4 | % | |||||||||||||||||
Per Member per Month (F) | |||||||||||||||||||||||||
Nine Months Ended September 30, | Year-over-year Change | Nine Months Ended September 30, | |||||||||||||||||||||||
2011 | 2010 | Amount | Percent | 2011 | 2010 | ||||||||||||||||||||
Premiums and Services Revenue | |||||||||||||||||||||||||
Medicare Advantage | $ | 16,010,182 | $ | 14,501,099 | $ | 1,509,083 | 10.4 | % | $ | 944 |
|
$ |
934 |
||||||||||||
Medicare stand-alone PDPs | 1,938,845 | 1,858,830 | 80,015 | 4.3 | % | $ | 87 |
|
$ |
113 |
|||||||||||||||
Total Medicare | $ | 17,949,027 | $ | 16,359,929 | $ | 1,589,098 | 9.7 | % | |||||||||||||||||
Ending | Ending | Year-over-year Change | Ending | Year-to-date Change | |||||||||||||||||||||
September 30, 2011 | September 30, 2010 | Amount | Percent | December 31, 2010 | Amount | Percent | |||||||||||||||||||
Fully-Insured Membership | |||||||||||||||||||||||||
Medicare Advantage | 1,901.3 | 1,736.4 | 164.9 | 9.5 | % | 1,733.8 | 167.5 | 9.7 | % | ||||||||||||||||
Medicare stand-alone PDPs | 2,556.9 | 1,785.6 | 771.3 | 43.2 | % | 1,758.8 | 798.1 | 45.4 | % | ||||||||||||||||
Total Medicare | 4,458.2 | 3,522.0 | 936.2 | 26.6 | % | 3,492.6 | 965.6 | 27.6 | % | ||||||||||||||||
S-16 |
Humana Inc. | Fair value | |||||||||||
Investments | ||||||||||||
Dollars in thousands | ||||||||||||
9/30/2011 | 6/30/2011 | 12/31/2010 | ||||||||||
Investment Portfolio: | ||||||||||||
Cash & cash equivalents | $ | 4,019,405 | $ | 1,567,824 | $ | 1,673,137 | ||||||
Investment securities | 7,864,637 | 7,609,737 | 6,872,767 | |||||||||
Long-term investments | 1,695,943 | 1,592,919 | 1,499,672 | |||||||||
Total investment portfolio | $ | 13,579,985 | $ | 10,770,480 | $ | 10,045,576 | ||||||
Duration (I) | 3.10 | 3.84 | 3.96 | |||||||||
Average Credit Rating | AA | AA- | AA | |||||||||
Securities Lending Invested Collateral Portfolio: | ||||||||||||
Cash & cash equivalents | $ | 5,486 | $ | 29,737 | $ | 24,638 | ||||||
Asset-backed securities | - | - | 24,998 | |||||||||
$ | 5,486 | $ | 29,737 | $ | 49,636 | |||||||
Average Credit Rating | AAA | AAA | AAA | |||||||||
Investment Portfolio Detail: | ||||||||||||
Cash and cash equivalents | $ | 4,019,405 | $ | 1,567,824 | $ | 1,673,137 | ||||||
U.S. Government and agency obligations | ||||||||||||
U.S. Treasury and agency obligations | 880,719 | 822,787 | 711,613 | |||||||||
U.S. Government residential mortgage-backed | 1,768,245 | 1,794,099 | 1,634,014 | |||||||||
U.S. Government commercial mortgage-backed | 33,407 | 29,937 | 29,165 | |||||||||
Total U.S. Government and agency obligations | 2,682,371 | 2,646,823 | 2,374,792 | |||||||||
Tax-exempt municipal securities | ||||||||||||
Pre-refunded | 329,005 | 329,598 | 343,913 | |||||||||
Insured | 633,319 | 628,344 | 597,165 | |||||||||
Other | 1,741,925 | 1,510,888 | 1,440,450 | |||||||||
Auction rate securities | 21,440 | 21,053 | 51,806 | |||||||||
Total tax-exempt municipal securities | 2,725,689 | 2,489,883 | 2,433,334 | |||||||||
Residential mortgage-backed | ||||||||||||
Prime residential mortgages | 44,512 | 46,684 | 52,474 | |||||||||
Alt-A residential mortgages | 1,946 | 2,002 | 2,178 | |||||||||
Sub-prime residential mortgages | 970 | 1,063 | 1,235 | |||||||||
Total residential mortgage-backed | 47,428 | 49,749 | 55,887 | |||||||||
Commercial mortgage-backed | 387,911 | 414,963 | 321,031 | |||||||||
Asset-backed securities | 107,453 | 117,385 | 149,751 | |||||||||
Corporate securities | ||||||||||||
Financial services | 898,349 | 984,504 | 891,390 | |||||||||
Other | 2,706,046 | 2,494,016 | 2,140,921 | |||||||||
Total corporate securities | 3,604,395 | 3,478,520 | 3,032,311 | |||||||||
Redeemable preferred stocks | 5,333 | 5,333 | 5,333 | |||||||||
Total investment portfolio | $ | 13,579,985 | $ | 10,770,480 | $ | 10,045,576 | ||||||
S-17 |
Humana Inc. | |||||||||||||
Detail of Benefits Payable Balance and Year-to-Date Changes | |||||||||||||
Dollars in thousands | |||||||||||||
September 30, | June 30, | December 31, | |||||||||||
2011 | 2011 | 2010 | |||||||||||
Detail of benefits payable | |||||||||||||
IBNR and other benefits payable (J) | $ | 2,821,687 | $ | 2,907,995 | $ | 2,753,141 | |||||||
Unprocessed claim inventories (K) | 418,800 | 409,900 | 373,800 | ||||||||||
Processed claim inventories (L) | 94,599 | 161,246 | 65,283 | ||||||||||
Payable to pharmacy benefit administrator (M) | 157,476 | 142,046 | 21,902 | ||||||||||
Benefits payable, excluding military services | 3,492,562 | 3,621,187 | 3,214,126 | ||||||||||
Military services benefits payable (N) | 375,866 | 331,998 | 255,180 | ||||||||||
Total Benefits Payable | $ | 3,868,428 | $ | 3,953,185 | $ | 3,469,306 | |||||||
Nine Months Ended | Nine Months Ended | Year Ended | |||||||||||
September 30, 2011 | September 30, 2010 | December 31, 2010 | |||||||||||
Year-to-date changes in benefits payable, excluding military services (O) |
|||||||||||||
Balances at January 1 | $ | 3,214,126 | $ | 2,943,379 | $ | 2,943,379 | |||||||
Incurred related to: | |||||||||||||
Current year | 19,475,885 | 18,330,515 | 24,185,717 | ||||||||||
Prior years (P) | (318,159 | ) | (401,250 | ) | (434,015 | ) | |||||||
Total incurred | 19,157,726 | 17,929,265 | 23,751,702 | ||||||||||
Paid related to: | |||||||||||||
Current year | (17,009,970 | ) | (15,636,696 | ) | (21,671,345 | ) | |||||||
Prior years | (1,869,320 | ) | (1,824,503 | ) | (1,809,610 | ) | |||||||
Total paid | (18,879,290 | ) | (17,461,199 | ) | (23,480,955 | ) | |||||||
Balances at end of period | $ | 3,492,562 | $ | 3,411,445 | $ | 3,214,126 | |||||||
Nine Months Ended | Nine Months Ended | Year Ended | |||||||||||
September 30, 2011 | September 30, 2010 | December 31, 2010 | |||||||||||
Summary of Consolidated Benefit Expense: | |||||||||||||
Total benefit expense incurred, per above | $ | 19,157,726 | $ | 17,929,265 | $ | 23,751,702 | |||||||
Military services benefit expense | 2,512,201 | 2,307,618 | 3,059,492 | ||||||||||
Future policy benefit expense (Q) | 91,125 | 90,859 | 305,875 | ||||||||||
Consolidated Benefit Expense | $ | 21,761,052 | $ | 20,327,742 | $ | 27,117,069 | |||||||
S-18 |
Humana Inc. | ||||||||||||
Benefits Payable Statistics (R) | ||||||||||||
Receipt Cycle Time (S) | ||||||||||||
2011 | 2010 | Change |
Percentage Change |
|||||||||
1st Quarter Average | 13.8 | 13.8 | 0.0 | 0.0 | % | |||||||
2nd Quarter Average | 13.8 | 13.9 | (0.1 | ) | -0.7 | % | ||||||
3rd Quarter Average | 13.6 | 13.9 | (0.3 | ) | -2.2 | % | ||||||
4th Quarter Average | - | 13.6 | n/a | n/a | ||||||||
Full Year Average | 13.7 | 13.8 | (0.1 | ) | -0.7 | % | ||||||
Unprocessed Claims Inventories | ||||||||||||
Date |
Estimated Valuation (000's) |
Claim Item Counts |
Number of Days on Hand |
|||||||||
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 | ||||||||
6/30/2011 | $ | 409,900 | 1,092,600 | 5.1 | ||||||||
9/30/2011 | $ | 418,800 | 1,272,300 | 5.7 | ||||||||
S-19 |
Humana Inc. | ||||||||||||||||||
Benefits Payable Statistics (Continued) (R) | ||||||||||||||||||
Days in Claims Payable (T) | ||||||||||||||||||
Quarter Ended |
Days in Claims Payable (DCP) |
Change Last 4 Quarters |
Percentage Change |
DCP Excluding Capitation |
Change Last 4 Quarters |
Percentage Change |
||||||||||||
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 | % | ||||||||||
6/30/2011 | 56.0 | (1.0 | ) | -1.8 | % | 62.0 | (2.3 | ) | -3.6 | % | ||||||||
9/30/2011 | 54.2 | (3.6 | ) | -6.2 | % | 59.5 | (5.0 | ) | -7.8 | % | ||||||||
Year-to-Date Change in Days in Claims Payable (U) | ||||||||||||||||||
2011 | 2010 | |||||||||||||||||
DCP - beginning of period | 53.5 | 55.4 | ||||||||||||||||
Components of change in DCP: | ||||||||||||||||||
Change in unprocessed claims inventories | (0.1 | ) | 0.8 | |||||||||||||||
Change in processed claims inventories | 0.4 | 0.3 | ||||||||||||||||
Change in pharmacy payment cutoff | 0.5 | (2.9 | ) | |||||||||||||||
All other | (0.1 | ) | (0.1 | ) | ||||||||||||||
DCP - end of period | 54.2 | 53.5 | ||||||||||||||||
S-20 |
Humana Inc. |
Footnotes to Statistical Schedules and Supplementary Information |
3Q11 Earnings Release |
(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 primarily comprised of ASO fees and other ancillary services fees. |
(C) The operating cost ratio is defined as operating costs as a percent of total revenues excluding investment income. |
(D) LI-NET is the CMS Limited Income Newly Eligible Transition program, operated by Humana, to provide Part D prescription drug coverage for all uncovered |
Full Duals and SSI-only beneficiaries on a retroactive basis and all uncovered LIS eligible beneficiaries on a current basis. |
(E) Other supplemental benefits include life, disability, and fixed benefit products including cancer and critical illness policies. |
(F) 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). |
(G) Military services revenues are generally not contracted on a per-member basis. |
(H) Includes premiums associated with Medicaid and the closed block of long-term care as well as services revenue. |
(I) Duration is the time-weighted average of the present value of the bond portfolio cash flows. |
(J) 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. |
(K) Unprocessed claim inventories represent the estimated valuation of claims received but not yet fully processed. |
(L) 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. |
(M) 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 (8(th), 16(th), and 24th of month) and the last day of the month. |
(N) 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. |
(O) 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. |
(P) 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. |
(Q) Future policy benefit expense has a related liability classified as a long-term liability on the balance sheet. |
(R) Benefits reserves statistics represents fully-insured medical claims data and excludes military services claims data and specialty benefits. |
(S) 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 92% 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. |
(T) 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. |
(U) 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-21 |
CONTACT:
Humana Inc.
Investor Relations:
Regina Nethery,
502-580-3644
Rnethery@humana.com
or
Corporate
Communications:
Tom Noland, 502-580-3674
Tnoland@humana.com