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) April
30, 2012
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, 2012 and updated 2012 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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|
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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: |
April 30, 2012 |
INDEX TO EXHIBITS
Exhibit No. |
Description |
|
99 |
Earnings Release and Statistical Pages |
Exhibit 99
Humana Reports First Quarter 2012 Financial Results
LOUISVILLE, Ky.--(BUSINESS WIRE)--April 30, 2012--Humana Inc. (NYSE: HUM) today reported diluted earnings per common share (EPS) for the quarter ended March 31, 2012 (1Q12) of $1.49, compared to $1.86 per share for the quarter ended March 31, 2011 (1Q11). The company had previously anticipated earnings per share in the range of $1.35 to $1.45 for 1Q12. Lower year-over-year earnings in the company’s Retail and Employer Group business segments were partially offset by higher earnings in the company’s Health and Well-Being Services business segment. EPS for 1Q12 and 1Q11 were positively impacted by $0.03 per share and $0.31 per share, respectively, as a result of favorable development of prior-period medical claims reserves.
"Our compelling senior value proposition and favorable demographics have made Humana one of the fastest growing Medicare Advantage and PDP companies in the nation," said Michael B. McCallister, Humana’s Chairman of the Board and Chief Executive Officer. “This growth trajectory has contributed solidly to our results for the first quarter and our continued confidence in our projected results for the full year."
The company raised EPS guidance for the year ending December 31, 2012 (FY12) to a range of $7.55 to $7.75 versus its previous estimate of $7.50 to $7.70. This increase in FY12 EPS guidance primarily reflects favorable prior-period claims development in the first quarter.
Consolidated Highlights
Revenues – 1Q12 consolidated revenues were $10.22 billion, an increase of 11 percent from $9.19 billion in 1Q11, with total premiums and services revenue up 11 percent compared to the prior year’s quarter. The increase in consolidated revenues was primarily due to increases in the Retail and Employer Group segments driven by increases in average membership of the company’s individual and group Medicare Advantage plans.
Benefit expenses – The 1Q12 consolidated benefit ratio (benefit expenses as a percent of premiums) of 85.4 percent increased from 83.8 percent for the prior year’s quarter due primarily to a higher year-over-year benefit ratio for the Retail and Employer Group Segments.
Operating costs – The consolidated operating cost ratio (operating costs as a percent of total revenues less investment income) of 13.7 percent for 1Q12 compares to 13.8 percent in 1Q11. This lower year-over-year ratio primarily reflects improvement in this metric for the Employer Group Segment partially offset by an increase in the Retail Segment operating cost ratio.
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:
Script volume:
Services revenue:
Operating costs:
Balance Sheet
Cash Flows from Operations
Cash flows provided by operations for 1Q12 totaled $2.35 billion compared to cash flows provided by operations of $796 million in 1Q11. The company also evaluates operating cash flows on a non-GAAP(c) basis:
Net cash provided by operating activities
(in millions) |
1Q12
Cash Flows |
1Q11
Cash Flows |
|||||||||
GAAP | $2,346 | $796 | |||||||||
Timing of premium payment from CMS (b) | (2,015) |
- |
|||||||||
Non-GAAP (c) | $331 | $796 | |||||||||
The year over year decrease in the non-GAAP(c) cash flows from operations is due to the effect on cash flows of changes in working capital accounts.
Share Repurchase Program and Cash Dividend
Footnotes
(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. | |
(b) |
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 1Q12 included four monthly Medicare payments compared to only three monthly Medicare payments in 1Q11. | |
(c) |
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. |
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 April 30, 2012
(in accordance with Generally Accepted Accounting Principles) |
For the year ending December 31, 2012 |
Comments (excludes impact of pending SeniorBridge acquisition) |
||||||||||||||
Diluted earnings per common share | Full year 2012: $7.55 to $7.75 | Full year 2012 includes expected $0.05 per | ||||||||||||||
(EPS) | share negative impact associated with | |||||||||||||||
Second quarter 2012: $2.15 to $2.25 | transaction and integration costs of Arcadian | |||||||||||||||
Projections exclude the impact of future share | ||||||||||||||||
repurchases | ||||||||||||||||
Projections anticipate weighted average | ||||||||||||||||
shares outstanding of 166 million | ||||||||||||||||
Revenues | Consolidated revenues: $39.0 billion to $39.5 billion |
Includes expected investment income in the |
||||||||||||||
Total revenues: |
range of $375 million to $395 million |
|||||||||||||||
Retail Segment: $24.5 billion to $25.0 billion |
||||||||||||||||
Employer Group Segment: $10.5 billion to $11.0 billion |
Segment-level revenues include intersegment |
|||||||||||||||
Health and Well-Being Services Segment: $13.25 billion to $13.75 |
amounts that eliminate in consolidation |
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billion |
||||||||||||||||
Other Businesses: $2.50 billion to $2.75 billion |
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Ending medical membership versus | Retail Segment: | Retail Medicare Advantage includes | ||||||||||||||
prior year end | Medicare Advantage: Up 255,000 to 265,000 | approximately 63,000 members related to | ||||||||||||||
Medicare stand-alone PDPs: Up 500,000 to 600,000 | the Arcadian acquisition | |||||||||||||||
HumanaOne: Up 35,000 to 45,000 | ||||||||||||||||
Medicare Supplement: Up 30,000 to 40,000 | ||||||||||||||||
Employer Group Segment: | ||||||||||||||||
Medicare Advantage: Up approximately 75,000 | ||||||||||||||||
Commercial Fully Insured: Up 20,000 to 30,000 | ||||||||||||||||
Commercial ASO: Down 40,000 to 50,000 | ||||||||||||||||
Benefit ratios | Retail Segment: 83.5% to 84.5% | Benefit expenses as a percent of premiums | ||||||||||||||
Employer Group Segment: 85.0% to 86.0% | ||||||||||||||||
Operating cost ratios | Consolidated: 14.25% to 14.75% |
Consolidated operating costs as a percent of
|
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Health & Well-Being Services Segment: 95.75% to 96.25% |
total revenues excluding investment income |
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Consolidated depreciation and | $325 million to $345 million | Approximately $40 million is expected to be | ||||||||||||||
amortization (cash flows) | included in benefits expense on the income | |||||||||||||||
statement | ||||||||||||||||
Consolidated interest expense | Approximately $105 million | |||||||||||||||
Detailed pretax results | Segment-level pretax results and margins | |||||||||||||||
Retail Segment: $1.30 billion to $1.35 billion; 5.2% to 5.4% pretax |
include the impact of net investment income | |||||||||||||||
margin |
Retail Segment margin expectation includes 20 | |||||||||||||||
basis points of negative impact associated | ||||||||||||||||
with transaction and integration costs of | ||||||||||||||||
Employer Group Segment: $125 million to $175 million; 1.3% to 1.5% | Arcadian | |||||||||||||||
pretax margin | ||||||||||||||||
Health and Well-Being Services Segment: $425 million to $475 million; | ||||||||||||||||
3.0% to 3.5% pretax margin | ||||||||||||||||
Effective Tax Rate | Approximately 36.5% | |||||||||||||||
Cash flows from operations | $1.8 billion to $2.0 billion | |||||||||||||||
Capital expenditures | Approximately $350 million | |||||||||||||||
Humana Inc. |
Statistical Schedules |
And |
Supplementary Information |
1Q12 Earnings Release |
S-1 |
Humana Inc. | |||||
Statistical Schedules and Supplementary Information | |||||
1Q12 Earnings Release | |||||
Contents | |||||
Page |
Description |
||||
S-3 | Consolidated Statements of Income | ||||
S-4 | 1Q12 Segment Financial Information | ||||
S-5 | 1Q11 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 | Pharmacy Statistics | ||||
S-10 | Membership Detail | ||||
S-11 | Premiums and Services Revenue Detail | ||||
S-12 | Medicare Summary | ||||
S-13 | Investments | ||||
S-14-16 | Benefits Payable | ||||
S-17 | Footnotes | ||||
S-2 |
Humana Inc. | ||||||||||||||||||||
Consolidated Statements of Income | ||||||||||||||||||||
In millions, except per common share results | ||||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||||
Dollar | Percentage | |||||||||||||||||||
2012 | 2011 | Change | Change | |||||||||||||||||
Revenues: | ||||||||||||||||||||
Premiums | $ | 9,775 | $ | 8,767 | $ | 1,008 | 11.5 | % | ||||||||||||
Services | 350 | 335 | 15 | 4.5 | % | |||||||||||||||
Investment income | 94 | 89 | 5 | 5.6 | % | |||||||||||||||
Total revenues | 10,219 | 9,191 | 1,028 | 11.2 | % | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Benefits | 8,350 | 7,345 | 1,005 | 13.7 | % | |||||||||||||||
Operating costs | 1,383 | 1,256 | 127 | 10.1 | % | |||||||||||||||
Depreciation and amortization | 70 | 66 | 4 | 6.1 | % | |||||||||||||||
Total operating expenses | 9,803 | 8,667 | 1,136 | 13.1 | % | |||||||||||||||
Income from operations | 416 | 524 | (108 | ) | -20.6 | % | ||||||||||||||
Interest expense | 26 | 27 | (1 | ) | -3.7 | % | ||||||||||||||
Income before income taxes | 390 | 497 | (107 | ) | -21.5 | % | ||||||||||||||
Provision for income taxes | 142 | 182 | (40 | ) | -22.0 | % | ||||||||||||||
Net income | $ | 248 | $ | 315 | $ | (67 | ) | -21.3 | % | |||||||||||
Basic earnings per common share | $ | 1.51 | $ | 1.88 | $ | (0.37 | ) | -19.7 | % | |||||||||||
Diluted earnings per common share | $ | 1.49 | $ | 1.86 | $ | (0.37 | ) | -19.9 | % | |||||||||||
Shares used in computing basic earnings per common share (000's) | 163,717 | 167,271 | ||||||||||||||||||
Shares used in computing diluted earnings per common share (000's) | 166,088 | 169,534 | ||||||||||||||||||
S-3
|
Humana Inc. | |||||||||||||||||||||||||||||||||||||
1Q12 Segment Financial Information | |||||||||||||||||||||||||||||||||||||
In millions | |||||||||||||||||||||||||||||||||||||
Health and | |||||||||||||||||||||||||||||||||||||
Employer | Well-Being | Other | Eliminations/ | ||||||||||||||||||||||||||||||||||
Retail | Group | Services | Businesses | Corporate | Consolidated | ||||||||||||||||||||||||||||||||
Revenues - external customers | |||||||||||||||||||||||||||||||||||||
Premiums: | |||||||||||||||||||||||||||||||||||||
Medicare Advantage | $ | 5,093 | $ | 1,025 | $ | - | $ | - | $ | - | $ | 6,118 | |||||||||||||||||||||||||
Medicare stand-alone PDP | 660 | 2 | - | 66 | - | 728 | |||||||||||||||||||||||||||||||
Total Medicare | 5,753 | 1,027 | - | 66 | - | 6,846 | |||||||||||||||||||||||||||||||
Fully-insured | 244 | 1,242 | - | - | - | 1,486 | |||||||||||||||||||||||||||||||
Specialty | 38 | 260 | - | - | - | 298 | |||||||||||||||||||||||||||||||
Military services | - | - | - | 893 | - | 893 | |||||||||||||||||||||||||||||||
Medicaid and other (A) | - | - | - | 252 | - | 252 | |||||||||||||||||||||||||||||||
Total premiums | 6,035 | 2,529 | - | 1,211 | - | 9,775 | |||||||||||||||||||||||||||||||
Services revenue: | |||||||||||||||||||||||||||||||||||||
Provider | - | - | 233 | - | - | 233 | |||||||||||||||||||||||||||||||
ASO and other (B) | 6 | 89 | - | 18 | - | 113 | |||||||||||||||||||||||||||||||
Pharmacy | - | - | 4 | - | - | 4 | |||||||||||||||||||||||||||||||
Total services revenue | 6 | 89 | 237 | 18 | - | 350 | |||||||||||||||||||||||||||||||
Total revenues - external customers | 6,041 | 2,618 | 237 | 1,229 | - | 10,125 | |||||||||||||||||||||||||||||||
Intersegment revenues | |||||||||||||||||||||||||||||||||||||
Services | - | 4 | 2,486 | - | (2,490 | ) | - | ||||||||||||||||||||||||||||||
Products | - | - | 584 | - | (584 | ) | - | ||||||||||||||||||||||||||||||
Total intersegment revenues | - | 4 | 3,070 | - | (3,074 | ) | - | ||||||||||||||||||||||||||||||
Investment income | 19 | 10 | - | 14 | 51 | 94 | |||||||||||||||||||||||||||||||
Total revenues | 6,060 | 2,632 | 3,307 | 1,243 | (3,023 | ) | 10,219 | ||||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||||
Benefits | 5,287 | 2,064 | - | 1,106 | (107 | ) | 8,350 | ||||||||||||||||||||||||||||||
Operating costs | 628 | 427 | 3,154 | 116 | (2,942 | ) | 1,383 | ||||||||||||||||||||||||||||||
Depreciation and amortization | 30 | 20 | 21 | 4 | (5 | ) | 70 | ||||||||||||||||||||||||||||||
Total operating expenses | 5,945 | 2,511 | 3,175 | 1,226 | (3,054 | ) | 9,803 | ||||||||||||||||||||||||||||||
Income from operations | 115 | 121 | 132 | 17 | 31 | 416 | |||||||||||||||||||||||||||||||
Interest expense | - | - | - | - | 26 | 26 | |||||||||||||||||||||||||||||||
Income before income taxes | $ | 115 | $ | 121 | $ | 132 | $ | 17 | $ | 5 | $ | 390 | |||||||||||||||||||||||||
Benefit ratio | 87.6 | % | 81.6 | % | 91.3 | % | 85.4 | % | |||||||||||||||||||||||||||||
Operating cost ratio (c) | 10.4 | % | 16.3 | % | 95.4 | % | 9.4 | % | 13.7 | % | |||||||||||||||||||||||||||
S-4 |
Humana Inc. | |||||||||||||||||||||||||||||||||||||||
1Q11 Segment Financial Information | |||||||||||||||||||||||||||||||||||||||
In millions | |||||||||||||||||||||||||||||||||||||||
Health and | |||||||||||||||||||||||||||||||||||||||
Employer | Well-Being | Other | Eliminations/ | ||||||||||||||||||||||||||||||||||||
Retail | Group | Services | Businesses | Corporate | Consolidated | ||||||||||||||||||||||||||||||||||
Revenues - external customers | |||||||||||||||||||||||||||||||||||||||
Premiums: | |||||||||||||||||||||||||||||||||||||||
Medicare Advantage | $ | 4,525 | $ | 796 | $ | - | $ | - | $ | - | $ | 5,321 | |||||||||||||||||||||||||||
Medicare stand-alone PDP | 557 | 2 | - | 76 | - | 635 | |||||||||||||||||||||||||||||||||
Total Medicare | 5,082 | 798 | - | 76 | - | 5,956 | |||||||||||||||||||||||||||||||||
Fully-insured | 201 | 1,199 | - | - | - | 1,400 | |||||||||||||||||||||||||||||||||
Specialty | 26 | 230 | - | - | - | 256 | |||||||||||||||||||||||||||||||||
Military services | - | - | - | 923 | - | 923 | |||||||||||||||||||||||||||||||||
Medicaid and other (A) | - | - | - | 232 | - | 232 | |||||||||||||||||||||||||||||||||
Total premiums | 5,309 | 2,227 | - | 1,231 | - | 8,767 | |||||||||||||||||||||||||||||||||
Services revenue: | |||||||||||||||||||||||||||||||||||||||
Provider | - | - | 215 | - | - | 215 | |||||||||||||||||||||||||||||||||
ASO and other (B) | 3 | 93 | - | 22 | - | 118 | |||||||||||||||||||||||||||||||||
Pharmacy | - | - | 2 | - | - | 2 | |||||||||||||||||||||||||||||||||
Total services revenue | 3 | 93 | 217 | 22 | - | 335 | |||||||||||||||||||||||||||||||||
Total revenues - external customers | 5,312 | 2,320 | 217 | 1,253 | - | 9,102 | |||||||||||||||||||||||||||||||||
Intersegment revenues | |||||||||||||||||||||||||||||||||||||||
Services | - | 3 | 2,121 | - | (2,124 | ) | - | ||||||||||||||||||||||||||||||||
Products | - | - | 435 | - | (435 | ) | - | ||||||||||||||||||||||||||||||||
Total intersegment revenues | - | 3 | 2,556 | - | (2,559 | ) | - | ||||||||||||||||||||||||||||||||
Investment income | 19 | 12 | - | 12 | 46 | 89 | |||||||||||||||||||||||||||||||||
Total revenues | 5,331 | 2,335 | 2,773 | 1,265 | (2,513 | ) | 9,191 | ||||||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||||||
Benefits | 4,554 | 1,752 | - | 1,109 | (70 | ) | 7,345 | ||||||||||||||||||||||||||||||||
Operating costs | 533 | 424 | 2,656 | 119 | (2,476 | ) | 1,256 | ||||||||||||||||||||||||||||||||
Depreciation and amortization | 27 | 20 | 20 | 2 | (3 | ) | 66 | ||||||||||||||||||||||||||||||||
Total operating expenses | 5,114 | 2,196 | 2,676 | 1,230 | (2,549 | ) | 8,667 | ||||||||||||||||||||||||||||||||
Income from operations | 217 | 139 | 97 | 35 | 36 | 524 | |||||||||||||||||||||||||||||||||
Interest expense | - | - | - | - | 27 | 27 | |||||||||||||||||||||||||||||||||
Income before income taxes | $ | 217 | $ | 139 | $ | 97 | $ | 35 | $ | 9 | $ | 497 | |||||||||||||||||||||||||||
Benefit ratio | 85.8 | % | 78.7 | % | 90.1 | % | 83.8 | % | |||||||||||||||||||||||||||||||
Operating cost ratio (c) | 10.0 | % | 18.3 | % | 95.8 | % | 9.5 | % | 13.8 | % | |||||||||||||||||||||||||||||
S-5 |
Humana Inc. | |||||||||||||||||||||||
Consolidated Balance Sheets | |||||||||||||||||||||||
Dollars in millions, except share amounts | |||||||||||||||||||||||
March 31, | December 31, | Sequential Change | |||||||||||||||||||||
2012 | 2011 | Dollar | Percent | ||||||||||||||||||||
Assets | |||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | 3,656 | $ | 1,377 | |||||||||||||||||||
Investment securities | 7,889 | 7,743 | |||||||||||||||||||||
Receivables, net | 1,330 | 1,034 | |||||||||||||||||||||
Other | 1,181 | 1,027 | |||||||||||||||||||||
Total current assets | 14,056 | 11,181 | $ | 2,875 | 25.7 | % | |||||||||||||||||
Property and equipment, net | 939 | 912 | |||||||||||||||||||||
Long-term investment securities | 1,704 | 1,710 | |||||||||||||||||||||
Goodwill | 2,785 | 2,740 | |||||||||||||||||||||
Other | 1,216 | 1,165 | |||||||||||||||||||||
Total assets | 20,700 | 17,708 | $ | 2,992 | 16.9 | % | |||||||||||||||||
Liabilities and Stockholders' Equity | |||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||
Benefits payable | 4,108 | 3,754 | |||||||||||||||||||||
Trade accounts payable and accrued expenses | 2,123 | 1,783 | |||||||||||||||||||||
Book overdraft | 294 | 306 | |||||||||||||||||||||
Unearned revenues | 2,298 | 213 | |||||||||||||||||||||
Total current liabilities | 8,823 | 6,056 | $ | 2,767 | 45.7 | % | |||||||||||||||||
Long-term debt | 1,621 | 1,659 | |||||||||||||||||||||
Future policy benefits payable | 1,690 | 1,663 | |||||||||||||||||||||
Other long-term liabilities | 332 | 267 | |||||||||||||||||||||
Total liabilities | 12,466 | 9,645 | $ | 2,821 | 29.2 | % | |||||||||||||||||
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; 194,119,768 issued at March 31, 2012 |
32 | 32 | |||||||||||||||||||||
Capital in excess of par value | 2,043 | 1,938 | |||||||||||||||||||||
Retained earnings | 7,032 | 6,825 | |||||||||||||||||||||
Accumulated other comprehensive income | 313 | 303 | |||||||||||||||||||||
Treasury stock, at cost, 30,940,528 shares at March 31, 2012 | (1,186 | ) | (1,035 | ) | |||||||||||||||||||
Total stockholders' equity | 8,234 | 8,063 | $ | 171 | 2.1 | % | |||||||||||||||||
Total liabilities and stockholders' equity | $ | 20,700 | $ | 17,708 | $ | 2,992 | 16.9 | % | |||||||||||||||
Debt-to-total capitalization ratio | 16.4 | % | 17.1 | % | |||||||||||||||||||
S-6 |
Humana Inc. | |||||||||||||||||||||||
Consolidated Statements of Cash Flows | |||||||||||||||||||||||
Dollars in millions | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
Dollar | Percentage | ||||||||||||||||||||||
2012 | 2011 | Change | Change | ||||||||||||||||||||
Cash flows from operating activities | |||||||||||||||||||||||
Net income | $ | 248 | $ | 315 | |||||||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||||||||||||||||
Depreciation and amortization | 78 | 76 | |||||||||||||||||||||
Net realized capital gains | (4 | ) | (4 | ) | |||||||||||||||||||
Stock-based compensation | 40 | 30 | |||||||||||||||||||||
(Benefit from) provision for deferred income taxes | (9 | ) | 27 | ||||||||||||||||||||
Changes in operating assets and liabilities excluding the effects of acquisitions: |
|||||||||||||||||||||||
Receivables | (255 | ) | (260 | ) | |||||||||||||||||||
Other assets | (138 | ) | (111 | ) | |||||||||||||||||||
Benefits payable | 284 | 471 | |||||||||||||||||||||
Other liabilities | 52 | 204 | |||||||||||||||||||||
Unearned revenues | 2,034 | 34 | |||||||||||||||||||||
Other | 16 | 14 | |||||||||||||||||||||
Net cash provided by operating activities | 2,346 | 796 | $ | 1,550 | 194.7 | % | |||||||||||||||||
Cash flows from investing activities | |||||||||||||||||||||||
Acquisitions, net of cash acquired | (56 | ) | (5 | ) | |||||||||||||||||||
Purchases of property and equipment | (86 | ) | (71 | ) | |||||||||||||||||||
Purchases of investment securities | (714 | ) | (1,187 | ) | |||||||||||||||||||
Proceeds from maturities of investment securities | 424 | 418 | |||||||||||||||||||||
Proceeds from sales of investment securities | 242 | 154 | |||||||||||||||||||||
Net cash used in investing activities | (190 | ) | (691 | ) | $ | 501 | 72.5 | % | |||||||||||||||
Cash flows from financing activities | |||||||||||||||||||||||
Receipts (withdrawals) from contract deposits, net | 298 | 183 | |||||||||||||||||||||
Repayment of long-term debt | (36 | ) | - | ||||||||||||||||||||
Change in book overdraft | (12 | ) | (157 | ) | |||||||||||||||||||
Common stock repurchases | (151 | ) | (89 | ) | |||||||||||||||||||
Excess tax benefit from stock-based compensation | 20 | 5 | |||||||||||||||||||||
Dividends paid | (41 | ) | - | ||||||||||||||||||||
Proceeds from stock option exercises and other | 45 | 36 | |||||||||||||||||||||
Net cash provided by (used in) financing activities | 123 | (22 | ) | $ | 145 | 659.1 | % | ||||||||||||||||
Increase in cash and cash equivalents | 2,279 | 83 | |||||||||||||||||||||
Cash and cash equivalents at beginning of period | 1,377 | 1,673 | |||||||||||||||||||||
Cash and cash equivalents at end of period | $ | 3,656 | $ | 1,756 | |||||||||||||||||||
S-7 |
Humana Inc. | |||||||||||||||||||
Key Income Statement Ratios and Segment Operating Results | |||||||||||||||||||
Dollars in millions | |||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||
Percentage | |||||||||||||||||||
2012 | 2011 | Difference | Change | ||||||||||||||||
Benefit ratio | |||||||||||||||||||
Retail | 87.6% | 85.8% | 1.8% | ||||||||||||||||
Employer Group | 81.6% | 78.7% | 2.9% | ||||||||||||||||
Other Businesses | 91.3% | 90.1% | 1.2% | ||||||||||||||||
Consolidated | 85.4% | 83.8% | 1.6% | ||||||||||||||||
Operating cost ratio (C) | |||||||||||||||||||
Retail | 10.4% | 10.0% | 0.4% | ||||||||||||||||
Employer Group | 16.3% | 18.3% | -2.0% | ||||||||||||||||
Health and Well-Being Services | 95.4% | 95.8% | -0.4% | ||||||||||||||||
Other Businesses | 9.4% | 9.5% | -0.1% | ||||||||||||||||
Consolidated | 13.7% | 13.8% | -0.1% | ||||||||||||||||
Detail of pretax income | |||||||||||||||||||
Retail | $115 | $217 | ($102) | -47.0% | |||||||||||||||
Employer Group | $121 | $139 | ($18) | -12.9% | |||||||||||||||
Health and Well-Being Services | $132 | $97 | $35 | 36.1% | |||||||||||||||
Other Businesses | $17 | $35 | ($18) | -51.4% | |||||||||||||||
Consolidated | $390 | $497 | ($107) | -21.5% | |||||||||||||||
S-8 |
Humana Inc. | ||||||||||||||||||
Pharmacy Metrics | ||||||||||||||||||
Script volume in thousands | ||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||
2012 | 2011 | Difference | ||||||||||||||||
Generic Dispense Rate | ||||||||||||||||||
Retail | ||||||||||||||||||
Mail-Order | 87.5% | 85.6% | 1.9% | |||||||||||||||
90-Day Retail | 85.7% | 82.9% | 2.8% | |||||||||||||||
All Other | 78.8% | 76.8% | 2.0% | |||||||||||||||
Total | 82.5% | 80.0% | 2.5% | |||||||||||||||
Employer Group | ||||||||||||||||||
Mail-order | 72.0% | 66.9% | 5.1% | |||||||||||||||
90-Day Retail | 80.6% | 75.9% | 4.7% | |||||||||||||||
All Other | 71.9% | 69.1% | 2.8% | |||||||||||||||
Total Employer Group | 74.0% | 70.2% | 3.8% | |||||||||||||||
Percentage | ||||||||||||||||||
Difference | Change | |||||||||||||||||
Script volume | ||||||||||||||||||
Retail | ||||||||||||||||||
Mail-order | 12,072 | 8,554 | 3,518 | 41.1% | ||||||||||||||
90-Day Retail | 12,363 | 9,874 | 2,489 | 25.2% | ||||||||||||||
All Other | 27,705 | 24,459 | 3,246 | 13.3% | ||||||||||||||
Total Retail | 52,140 | 42,887 | 9,253 | 21.6% | ||||||||||||||
Employer Group | ||||||||||||||||||
Mail-order | 985 | 959 | 26 | 2.7% | ||||||||||||||
90-Day Retail | 1,492 | 1,297 | 195 | 15.0% | ||||||||||||||
All Other | 3,818 | 3,925 | (107) | -2.7% | ||||||||||||||
Total Employer Group | 6,295 | 6,181 | 114 | 1.8% | ||||||||||||||
Total Retail and Employer Group | 58,435 | 49,068 | 9,367 | 19.1% | ||||||||||||||
S-9 |
Humana Inc. | ||||||||||||||||||||||||||
Membership Detail | ||||||||||||||||||||||||||
In thousands | ||||||||||||||||||||||||||
Ending |
Average 1Q12 |
Ending | Year-over-year Change | Ending | Sequential Change | |||||||||||||||||||||
March 31, 2012 | March 31, 2011 | Amount | Percent | December 31, 2011 | Amount | Percent | ||||||||||||||||||||
Medical Membership: | ||||||||||||||||||||||||||
Retail | ||||||||||||||||||||||||||
Medicare Advantage | 1,883.8 | 1,838.1 | 1,594.8 | 289.0 | 18.1 | % | 1,640.3 | 243.5 | 14.8 | % | ||||||||||||||||
Medicare stand-alone PDPs | 2,863.9 | 2,844.8 | 2,353.1 | 510.8 | 21.7 | % | 2,540.4 | 323.5 | 12.7 | % | ||||||||||||||||
Individual commercial | 442.0 | 438.1 | 382.9 | 59.1 | 15.4 | % | 433.6 | 8.4 | 1.9 | % | ||||||||||||||||
Medicare Supplement | 67.3 | 66.5 | 49.9 | 17.4 | 34.9 | % | 59.6 | 7.7 | 12.9 | % | ||||||||||||||||
Total Retail | 5,257.0 | 5,187.5 | 4,380.7 | 876.3 | 20.0 | % | 4,673.9 | 583.1 | 12.5 | % | ||||||||||||||||
Employer Group | ||||||||||||||||||||||||||
Medicare Advantage | 357.7 | 357.4 | 280.7 | 77.0 | 27.4 | % | 290.6 | 67.1 | 23.1 | % | ||||||||||||||||
Medicare Advantage ASO | 28.1 | 28.1 | 27.9 | 0.2 | 0.7 | % | 27.6 | 0.5 | 1.8 | % | ||||||||||||||||
Medicare stand-alone PDPs | 4.2 | 4.2 | 4.1 | 0.1 | 2.4 | % | 4.2 | - | 0.0 | % | ||||||||||||||||
Fully-insured medical commercial | 1,182.8 | 1,184.9 | 1,178.5 | 4.3 | 0.4 | % | 1,180.2 | 2.6 | 0.2 | % | ||||||||||||||||
ASO commercial | 1,236.6 | 1,239.2 | 1,319.3 | (82.7 | ) | -6.3 | % | 1,292.3 | (55.7 | ) | -4.3 | % | ||||||||||||||
Total Employer Group | 2,809.4 | 2,813.8 | 2,810.5 | (1.1 | ) | 0.0 | % | 2,794.9 | 14.5 | 0.5 | % | |||||||||||||||
Other Businesses | ||||||||||||||||||||||||||
Military Services | 3,021.7 | 3,020.7 | 3,012.9 | 8.8 | 0.3 | % | 3,028.1 | (6.4 | ) | -0.2 | % | |||||||||||||||
Medicaid and other | 602.8 | 600.7 | 619.3 | (16.5 | ) | -2.7 | % | 614.2 | (11.4 | ) | -1.9 | % | ||||||||||||||
LI-NET (D) | 76.7 | 75.2 | 98.5 | (21.8 | ) | -22.1 | % | 73.5 | 3.2 | 4.4 | % | |||||||||||||||
Total Other Businesses | 3,701.2 | 3,696.6 | 3,730.7 | (29.5 | ) | -0.8 | % | 3,715.8 | (14.6 | ) | -0.4 | % | ||||||||||||||
Total Medical Membership | 11,767.6 | 11,697.9 | 10,921.9 | 845.7 | 7.7 | % | 11,184.6 | 583.0 | 5.2 | % | ||||||||||||||||
Specialty Membership: | ||||||||||||||||||||||||||
Retail | ||||||||||||||||||||||||||
Dental - fully-insured | 626.0 | 606.5 | 444.4 | 181.6 | 40.9 | % | 579.6 | 46.4 | 8.0 | % | ||||||||||||||||
Vision | 90.2 | 87.3 | 61.2 | 29.0 | 47.4 | % | 83.8 | 6.4 | 7.6 | % | ||||||||||||||||
Other supplemental benefits (E) | 131.7 | 127.3 | 84.9 | 46.8 | 55.1 | % | 119.1 | 12.6 | 10.6 | % | ||||||||||||||||
Total Retail | 847.9 | 821.1 | 590.5 | 257.4 | 43.6 | % | 782.5 | 65.4 | 8.4 | % | ||||||||||||||||
Employer Group | ||||||||||||||||||||||||||
Dental - fully-insured | 2,386.2 | 2,390.7 | 2,252.5 | 133.7 | 5.9 | % | 2,283.9 | 102.3 | 4.5 | % | ||||||||||||||||
Dental - ASO | 852.4 | 853.2 | 1,229.8 | (377.4 | ) | -30.7 | % | 869.9 | (17.5 | ) | -2.0 | % | ||||||||||||||
Vision | 2,418.3 | 2,422.8 | 2,194.1 | 224.2 | 10.2 | % | 2,329.6 | 88.7 | 3.8 | % | ||||||||||||||||
Other supplemental benefits (E) | 1,192.4 | 1,188.0 | 960.4 | 232.0 | 24.2 | % | 1,049.2 | 143.2 | 13.6 | % | ||||||||||||||||
Total Employer Group | 6,849.3 | 6,854.7 | 6,636.8 | 212.5 | 3.2 | % | 6,532.6 | 316.7 | 4.8 | % | ||||||||||||||||
Total Specialty Membership | 7,697.2 | 7,675.8 | 7,227.3 | 469.9 | 6.5 | % | 7,315.1 | 382.1 | 5.2 | % | ||||||||||||||||
S-10 |
Humana Inc. | ||||||||||||||||||||||||||||||||||
Premiums and Services Revenue Detail | ||||||||||||||||||||||||||||||||||
Dollars in millions, except per member per month | ||||||||||||||||||||||||||||||||||
Per Member per Month (F) | ||||||||||||||||||||||||||||||||||
Three Months Ended March 31, | Three Months Ended March 31, | |||||||||||||||||||||||||||||||||
Dollar | Percentage | |||||||||||||||||||||||||||||||||
2012 | 2011 | Change | Change | 2012 | 2011 | |||||||||||||||||||||||||||||
Premiums and Services Revenue | ||||||||||||||||||||||||||||||||||
Retail: | ||||||||||||||||||||||||||||||||||
Medicare Advantage | $ | 5,093 | $ | 4,525 | $ | 568 | 12.6 | % | $ | 924 | $ | 947 | ||||||||||||||||||||||
Medicare stand-alone PDPs | 660 | 557 | 103 | 18.5 | % | $ | 77 | $ | 80 | |||||||||||||||||||||||||
Individual commercial | 211 | 177 | 34 | 19.2 | % | $ | 161 | $ | 157 | |||||||||||||||||||||||||
Medicare Supplemental | 33 | 24 | 9 | 37.5 | % | $ | 165 | $ | 163 | |||||||||||||||||||||||||
Specialty | 38 | 26 | 12 | 46.2 | % | $ | 15 | $ | 15 | |||||||||||||||||||||||||
ASO & other services (B) | 6 | 3 | 3 | 100.0 | % | |||||||||||||||||||||||||||||
Total Retail | 6,041 | 5,312 | 729 | 13.7 | % | |||||||||||||||||||||||||||||
Employer Group: | ||||||||||||||||||||||||||||||||||
Medicare Advantage | 1,025 | 796 | 229 | 28.8 | % | $ | 956 | $ | 948 | |||||||||||||||||||||||||
Medicare stand-alone PDPs | 2 | 2 | - | 0.0 | % | |||||||||||||||||||||||||||||
Fully-insured medical commercial | 1,242 | 1,199 | 43 | 3.6 | % | $ | 349 | $ | 340 | |||||||||||||||||||||||||
Specialty | 260 | 230 | 30 | 13.0 | % | $ | 14 | $ | 14 | |||||||||||||||||||||||||
ASO & other services (B) | 93 | 96 | (3 | ) | -3.1 | % | ||||||||||||||||||||||||||||
Total Employer Group | 2,622 | 2,323 | 299 | 12.9 | % | |||||||||||||||||||||||||||||
Health and Well-Being Services: | ||||||||||||||||||||||||||||||||||
Pharmacy solutions | 2,933 | 2,457 | 476 | 19.4 | % | |||||||||||||||||||||||||||||
Primary care services | 281 | 255 | 26 | 10.2 | % | |||||||||||||||||||||||||||||
Home care services | 36 | 16 | 20 | 125.0 | % | |||||||||||||||||||||||||||||
Integrated wellness services | 57 | 45 | 12 | 26.7 | % | |||||||||||||||||||||||||||||
Total Health and Well-Being Services | 3,307 | 2,773 | 534 | 19.3 | % | |||||||||||||||||||||||||||||
Other Businesses: | ||||||||||||||||||||||||||||||||||
Military services (G) | 906 | 942 | (36 | ) | -3.8 | % | $ | 174 | $ | 176 | ||||||||||||||||||||||||
LI-NET (D) | 66 | 76 | (10 | ) | -13.2 | % | $ | 293 | $ | 254 | ||||||||||||||||||||||||
Medicaid and other (H) | 257 | 235 | 22 | 9.4 | % | $ | 140 | $ | 125 | |||||||||||||||||||||||||
Total Other Businesses | 1,229 | 1,253 | (24 | ) | -1.9 | % | ||||||||||||||||||||||||||||
S-11 |
Humana Inc. | ||||||||||||||||||||||||||||||||||
Medicare Summary | ||||||||||||||||||||||||||||||||||
Premiums in millions | ||||||||||||||||||||||||||||||||||
Membership in thousands | ||||||||||||||||||||||||||||||||||
Per Member per Month (F) | ||||||||||||||||||||||||||||||||||
Three Months Ended March 31, | Year-over-year Change | Three Months Ended March 31, | ||||||||||||||||||||||||||||||||
2012 | 2011 | Amount | Percent | 2012 | 2011 | |||||||||||||||||||||||||||||
Premiums | ||||||||||||||||||||||||||||||||||
Medicare Advantage | $ | 6,118 | $ | 5,321 | $ | 797 | 15.0 | % | $ | 929 | $ | 947 | ||||||||||||||||||||||
Medicare stand-alone PDPs | 728 | 635 | 93 | 14.6 | % | $ | 83 | $ | 87 | |||||||||||||||||||||||||
Total Medicare | $ | 6,846 | $ | 5,956 | $ | 890 | 14.9 | % | ||||||||||||||||||||||||||
Ending | Ending | Year-over-year Change | ||||||||||||||||||||||||||||||||
March 31, 2012 | March 31, 2011 | Amount | Percent | |||||||||||||||||||||||||||||||
Fully-Insured Membership | ||||||||||||||||||||||||||||||||||
Medicare Advantage | 2,241.5 | 1,875.5 | 366.0 | 19.5 | % | |||||||||||||||||||||||||||||
Medicare stand-alone PDPs | 2,944.8 | 2,455.7 | 489.1 | 19.9 | % | |||||||||||||||||||||||||||||
Total Medicare | 5,186.3 | 4,331.2 | 855.1 | 19.7 | % | |||||||||||||||||||||||||||||
S-12 |
Humana Inc. | Fair value | ||||||||||
Investments | |||||||||||
Dollars in millions | |||||||||||
3/31/2012 | 12/31/2011 | ||||||||||
Investment Portfolio: | |||||||||||
Cash & cash equivalents | $3,656 | $1,377 | |||||||||
Investment securities | 7,889 | 7,743 | |||||||||
Long-term investments | 1,704 | 1,710 | |||||||||
Total investment portfolio | $13,249 | $10,830 | |||||||||
Duration (I) | 3.33 | 3.94 | |||||||||
Average Credit Rating | AA- | AA- | |||||||||
Investment Portfolio Detail: | |||||||||||
Cash and cash equivalents | $3,656 | $1,377 | |||||||||
U.S. Government and agency obligations | |||||||||||
U.S. Treasury and agency obligations | 550 | 725 | |||||||||
U.S. Government residential mortgage-backed | 1,725 | 1,751 | |||||||||
U.S. Government commercial mortgage-backed | 33 | 33 | |||||||||
Total U.S. Government and agency obligations | 2,308 | 2,509 | |||||||||
Tax-exempt municipal securities | |||||||||||
Pre-refunded | 304 | 332 | |||||||||
Insured | 645 | 634 | |||||||||
Other | 1,928 | 1,874 | |||||||||
Auction rate securities | 15 | 16 | |||||||||
Total tax-exempt municipal securities | 2,892 | 2,856 | |||||||||
Residential mortgage-backed | |||||||||||
Prime residential mortgages | 38 | 41 | |||||||||
Alt-A residential mortgages | 2 | 2 | |||||||||
Sub-prime residential mortgages | 1 | 1 | |||||||||
Total residential mortgage-backed | 41 | 44 | |||||||||
Commercial mortgage-backed | 437 | 381 | |||||||||
Asset-backed securities | 74 | 83 | |||||||||
Corporate securities | |||||||||||
Financial services | 867 | 692 | |||||||||
Other | 2,974 | 2,888 | |||||||||
Total corporate securities | 3,841 | 3,580 | |||||||||
Redeemable preferred stocks | - | - | |||||||||
Total investment portfolio | $13,249 | $10,830 | |||||||||
S-13 |
Humana Inc. | |||||||||||||
Detail of Benefits Payable Balance and Year-to-Date Changes | |||||||||||||
Dollars in millions | |||||||||||||
March 31, | March 31, | December 31, | |||||||||||
2012 | 2011 | 2011 | |||||||||||
Detail of benefits payable | |||||||||||||
IBNR and other benefits payable (J) | $2,918 | $2,770 | $2,759 | ||||||||||
Unprocessed claim inventories (K) | 376 | 482 | 280 | ||||||||||
Processed claim inventories (L) | 262 | 226 | 209 | ||||||||||
Payable to pharmacy benefit administrator (M) | 199 | 161 | 167 | ||||||||||
Benefits payable, excluding military services | 3,755 | 3,639 | 3,415 | ||||||||||
Military services benefits payable (N) | 353 | 301 | 339 | ||||||||||
Total Benefits Payable | $4,108 | $3,940 | $3,754 | ||||||||||
Three Months Ended | Three Months Ended | Year Ended | |||||||||||
March 31, 2012 | March 31, 2011 | December 31, 2011 | |||||||||||
Year-to-date changes in benefits payable, excluding military services (O) |
|||||||||||||
Balances at January 1 | $3,415 | $3,214 | $3,214 | ||||||||||
Acquisitions | 70 | 29 | |||||||||||
Incurred related to: | |||||||||||||
Current year | 7,650 | 6,731 | 25,821 | ||||||||||
Prior years (P) | (141) | (251) | (372) | ||||||||||
Total incurred | 7,509 | 6,480 | 25,449 | ||||||||||
Paid related to: | |||||||||||||
Current year | (4,793) | (3,878) | (22,729) | ||||||||||
Prior years | (2,446) | (2,177) | (2,548) | ||||||||||
Total paid | (7,239) | (6,055) | (25,277) | ||||||||||
Balances at end of period | $3,755 | $3,639 | $3,415 | ||||||||||
Three Months Ended | Three Months Ended | Year Ended | |||||||||||
March 31, 2012 | March 31, 2011 | December 31, 2011 | |||||||||||
Summary of Consolidated Benefit Expense: | |||||||||||||
Total benefit expense incurred, per above | $7,509 | $6,480 | $25,449 | ||||||||||
Military services benefit expense | 813 | 826 | 3,247 | ||||||||||
Future policy benefit expense (Q) | 28 | 39 | 127 | ||||||||||
Consolidated Benefit Expense | $8,350 | $7,345 | $28,823 | ||||||||||
S-14 |
Humana Inc. | |||||||||||||||||
Benefits Payable Statistics (R) | |||||||||||||||||
Receipt Cycle Time (S) | |||||||||||||||||
2012 | 2011 | Change |
Percentage Change |
||||||||||||||
1st Quarter Average | 13.0 | 13.8 | (0.8) | -5.8% | |||||||||||||
2nd Quarter Average | 13.8 | n/a | n/a | ||||||||||||||
3rd Quarter Average | 13.6 | n/a | n/a | ||||||||||||||
4th Quarter Average | 14.0 | n/a | n/a | ||||||||||||||
Full Year Average | 13.0 | 13.8 | (0.8) | -5.8% | |||||||||||||
Unprocessed Claims Inventories | |||||||||||||||||
Date |
Estimated Valuation (millions) |
Claim Item Counts (000s) |
Number of Days on Hand |
||||||||||||||
3/31/2010 | $426 | 1,092 | 5.6 | ||||||||||||||
6/30/2010 | $434 | 1,009 | 4.9 | ||||||||||||||
9/30/2010 | $429 | 1,064 | 5.2 | ||||||||||||||
12/31/2010 | $374 | 981 | 5.0 | ||||||||||||||
3/31/2011 | $482 | 1,197 | 6.0 | ||||||||||||||
6/30/2011 | $410 | 1,093 | 5.1 | ||||||||||||||
9/30/2011 | $419 | 1,272 | 5.7 | ||||||||||||||
12/31/2011 | $280 | 599 | 2.8 | ||||||||||||||
3/31/2012 | $376 | 1,028 | 4.2 | ||||||||||||||
S-15 |
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 |
||||||||||||||
3/31/2010 | 54.2 | (0.4) | -0.7% | ||||||||||||||
6/30/2010 | 57.0 | 0.9 | 1.6% | ||||||||||||||
9/30/2010 | 57.8 | 1.6 | 2.8% | ||||||||||||||
12/31/2010 | 53.5 | (1.9) | -3.4% | ||||||||||||||
3/31/2011 | 55.5 | 1.3 | 2.4% | ||||||||||||||
6/30/2011 | 56.0 | (1.0) | -1.8% | ||||||||||||||
9/30/2011 | 54.2 | (3.6) | -6.2% | ||||||||||||||
12/31/2011 | 52.5 | (1.0) | -1.9% | ||||||||||||||
3/31/2012 | 50.1 | (5.4) | -9.7% | ||||||||||||||
Year-to-Date Change in Days in Claims Payable (U) | |||||||||||||||||
2012 | 2011 | ||||||||||||||||
DCP - beginning of period | 52.5 | 53.5 | |||||||||||||||
Components of change in DCP: | |||||||||||||||||
Change in unprocessed claims inventories | (0.4) | (2.3) | |||||||||||||||
Change in processed claims inventories | 0.6 | 1.4 | |||||||||||||||
Change in pharmacy payment cutoff | 0.1 | 0.6 | |||||||||||||||
Change in capitation/Medicare HMO member growth | (2.5) | (0.7) | |||||||||||||||
All other | (0.2) | - | |||||||||||||||
DCP - end of period | 50.1 | 52.5 | |||||||||||||||
S-16 |
Humana Inc.
Footnotes to Statistical Schedules and Supplementary Information 1Q12 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 fixed income 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 93% 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. |
(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-17 |
CONTACT:
Humana Investor Relations
Regina Nethery, 502-580-3644
Rnethery@humana.com
or
Humana
Corporate Communications
Tom Noland, 502-580-3674
Tnoland@humana.com