LOUISVILLE, Ky.--(BUSINESS WIRE)--Humana Inc. (NYSE: HUM) announced today that it has priced a public
offering of $1.0 billion in senior notes. These senior notes are
comprised of $600 million of the company’s 3.950 percent senior notes,
due March 15, 2027 at 99.877 percent of the principal amount and $400
million of the company’s 4.800 percent senior notes, due March 15, 2047,
at 99.905 percent of the principal amount (collectively, “Senior Notes
Offerings”). The offering is expected to close on March 16, 2017,
subject to customary closing conditions.
The company expects net proceeds from the Senior Notes Offerings will be
approximately $990 million, after deducting underwriters’ discounts and
estimated offering expenses. The company intends to use the net proceeds
for general corporate purposes.
J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Morgan Stanley & Co. LLC and U.S. Bancorp Investments,
Inc. are acting as active joint book-running managers for the Senior
The Senior Notes Offerings are being made pursuant to an effective shelf
registration statement (including a base prospectus) filed with the
Securities and Exchange Commission (the “SEC”). The Senior Notes
Offerings may be made only by means of a prospectus and related
prospectus supplement, copies of which may be obtained by calling J.P.
Morgan Securities LLC at 1-212-834-4533, Merrill Lynch, Pierce, Fenner &
Smith Incorporated toll-free at 1-800-294-1322, Morgan Stanley & Co. LLC
toll-free at (866) 718-1649 or U.S. Bancorp Investments, Inc. toll-free
at (877) 558-2607. An electronic copy of the registration statement and
prospectus supplement, together with the base prospectus, is available
on the SEC’s website at www.sec.gov.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy the securities described herein, nor
shall there be any sale of these securities in any state or jurisdiction
in which such an offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
This news release includes forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. When used in
investor presentations, press releases, Securities and Exchange
Commission (SEC) filings, and in oral statements made by or with the
approval of one of Humana’s executive officers, the words or phrases
like “expects,” “believes,” “anticipates,” “intends,” “likely will
result,” “estimates,” “projects” or variations of such words and similar
expressions are intended to identify such forward-looking statements.
These forward-looking statements are not guarantees of future
performance and are subject to risks, uncertainties, and assumptions,
including, among other things, information set forth in the “Risk
Factors” section of the company’s SEC filings, a summary of which
includes but is not limited to the following:
If Humana does not design and price its products properly and
competitively, if the premiums Humana receives are insufficient to
cover the cost of health care services delivered to its members, if
the company is unable to implement clinical initiatives to provide a
better health care experience for its members, lower costs and
appropriately document the risk profile of its members, or if its
estimates of benefits expense are inadequate, Humana’s profitability
could be materially adversely affected. Humana estimates the costs of
its benefit expense payments, and designs and prices its products
accordingly, using actuarial methods and assumptions based upon, among
other relevant factors, claim payment patterns, medical cost
inflation, and historical developments such as claim inventory levels
and claim receipt patterns. We continually review estimates of future
payments relating to benefit expenses for services incurred in the
current and prior periods and make necessary adjustments to our
reserves, including premium deficiency reserves, where appropriate.
These estimates, however, involve extensive judgment, and have
considerable inherent variability because they are extremely sensitive
to changes in claim payment patterns and medical cost trends, so any
reserves we may establish, including premium deficiency reserves, may
be insufficient. In addition, there can be no guarantees that any
reconsideration that Humana may file with respect to certain of the
Company’s Star rating measures for the 2018 bonus year will be
successful, that operational measures Humana may take will
successfully mitigate any negative effects of Star quality ratings for
the 2018 bonus year, or that Humana will not experience a decline in
membership growth for 2017 or 2018 as a result of the Company’s 2018
bonus year Star ratings.
If Humana fails to effectively implement its operational and strategic
initiatives, particularly its Medicare initiatives, state-based
contract strategy, and its participation in the new health insurance
exchanges, the company’s business may be materially adversely
affected, which is of particular importance given the concentration of
the company’s revenues in these products.
If Humana fails to properly maintain the integrity of its data, to
strategically implement new information systems, to protect Humana’s
proprietary rights to its systems, or to defend against cyber-security
attacks, the company’s business may be materially adversely affected.
Humana’s business may be materially adversely impacted by the adoption
of a new coding set for diagnoses (commonly known as ICD-10), the
implementation of which became effective on October 1, 2015. Humana is
involved in various legal actions, or disputes that could lead to
legal actions (such as, among other things, provider contract disputes
relating to rate adjustments resulting from the Balanced Budget and
Emergency Deficit Control Act of 1985, as amended, commonly referred
to as “sequestration”; other provider contract disputes; and qui tam
litigation brought by individuals on behalf of the government) and
governmental and internal investigations, any of which, if resolved
unfavorably to the company, could result in substantial monetary
damages or changes in its business practices. Increased litigation and
negative publicity could also increase the company’s cost of doing
As a government contractor, Humana is exposed to risks that may
materially adversely affect its business or its willingness or ability
to participate in government health care programs including, among
other things, loss of material government contracts, governmental
audits and investigations, potential inadequacy of government
determined payment rates, potential restrictions on profitability,
including by comparison of profitability of the company’s Medicare
Advantage business to non-Medicare Advantage business, or other
changes in the governmental programs in which Humana participates.
The Health Care Reform Law, including The Patient Protection and
Affordable Care Act and The Health Care and Education Reconciliation
Act of 2010, could have a material adverse effect on Humana’s results
of operations, including restricting revenue, enrollment and premium
growth in certain products and market segments, restricting the
company’s ability to expand into new markets, increasing the company’s
medical and operating costs by, among other things, requiring a
minimum benefit ratio on insured products, lowering the company’s
Medicare payment rates and increasing the company’s expenses
associated with a non-deductible health insurance industry fee and
other assessments; the company’s financial position, including the
company’s ability to maintain the value of its goodwill; and the
company’s cash flows. Additionally, potential legislative changes,
including activities to repeal or replace the Health Care Reform Law,
creates uncertainty for the company’s business, and it cannot predict
when, or in what form, such legislative changes may occur.
Humana’s participation in the federal and state health insurance
exchanges, which entail uncertainties associated with mix, volume of
business and the operation of premium stabilization programs that are
subject to federal administrative action, could adversely affect the
company’s results of operations, financial position and cash flows.
Humana’s business activities are subject to substantial government
regulation. New laws or regulations, or changes in existing laws or
regulations or their manner of application could increase the
company’s cost of doing business and may adversely affect the
company’s business, profitability and cash flows.
If Humana fails to develop and maintain satisfactory relationships
with the providers of care to its members, the company’s business may
be adversely affected.
Humana’s pharmacy business is highly competitive and subjects it to
regulations in addition to those the company faces with its core
health benefits businesses.
Changes in the prescription drug industry pricing benchmarks may
adversely affect Humana’s financial performance.
If Humana does not continue to earn and retain purchase discounts and
volume rebates from pharmaceutical manufacturers at current levels,
Humana’s gross margins may decline.
Humana’s ability to obtain funds from certain of its licensed
subsidiaries is restricted by state insurance regulations.
Downgrades in Humana’s debt ratings, should they occur, may adversely
affect its business, results of operations, and financial condition.
The securities and credit markets may experience volatility and
disruption, which may adversely affect Humana’s business.
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
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
• Form 10-K for the year ended December 31, 2016;
• Form 8-Ks filed during 2017.
Humana Inc., headquartered in Louisville, Ky., is a leading health and
well-being company focused on making it easy for people to achieve their
best health with clinical excellence through coordinated care. The
company’s strategy integrates care delivery, the member experience, and
clinical and consumer insights to encourage engagement, behavior change,
proactive clinical outreach and wellness for the millions of people we
serve across the country.
More information regarding Humana is available to investors via the
Investor Relations page of the company’s web site at humana.com,
including copies of:
Annual reports to stockholders
Securities and Exchange Commission filings
Most recent investor conference presentations
Quarterly earnings news releases
Calendar of events
Corporate Governance information