LOUISVILLE, Ky.--(BUSINESS WIRE)--Humana Inc. (NYSE: HUM) today reported diluted earnings per common share (EPS) for the quarter ended September 30, 2012 (3Q12) of $2.62, compared to $2.67 per share for the quarter ended September 30, 2011 (3Q11), above previous guidance of $2.00 to $2.10. For the nine months ended September 30, 2012 (YTD12) the company reported $6.27 in EPS compared to $7.24 for the nine months ended September 30, 2011 (YTD11).
Results for 3Q12 reflect the beneficial impact of certain Part D and operating expenses shifting from the previously expected 3Q12 timing to the fourth quarter 2012 as well as the beneficial impact of favorable prior-year medical claims reserve development of approximately $0.21 per share in 3Q12 compared to $0.13 per share for 3Q11.
YTD12 results primarily were due to lower year-over-year operating results in the Retail Segment, partially offset by improved operating results in the Health and Well-Being Services Segment, as described in the segment-level discussions below. YTD12 results included the beneficial impact of favorable prior-year medical claims reserve development of $0.39 per share as well as $0.18 per share in expenses related to the previously-disclosed settlement of a litigation matter. YTD11 included $0.57 per share from the beneficial impact of favorable prior-year medical claims reserve development.
The company now anticipates EPS of approximately $7.25 to $7.35 for the year ending December 31, 2012 (FY12) versus its previous estimate of $6.90 to $7.10, driven primarily by favorable prior-year medical claims reserve development and improved stand-alone Prescription Drug Plan (PDP) results.
Looking ahead to the year ending December 31, 2013 (FY13), the company projects EPS to be in the range of $7.60 to $7.80, a growth rate of 5 percent at the mid-point versus the mid-point of the company’s FY12 EPS guidance. Results for FY13 are expected to include approximately $0.30 per share as the company accelerates investments in integrated care delivery models in key markets to ready itself for the future health care environment.
“Our third-quarter results demonstrate that the issues which surfaced in the second quarter have stabilized,” said Bruce D. Broussard, President of Humana. “We believe our improving operations and continued Medicare membership growth, together with our integrated care delivery system investments, position Humana well for a dynamic future.”
Chief Executive Officer Transition
As disclosed in November 2011, Michael B. McCallister, Humana’s Chairman and Chief Executive Officer, plans to retire as the company’s Chief Executive Officer. The company’s Board of Directors has appointed Bruce D. Broussard, the company’s President since December 2011, to become President and Chief Executive Officer effective January 1, 2013, completing the company’s year-long transition plan for the CEO position. At that time, Mr. Broussard will also join the company’s Board of Directors and Mr. McCallister will become non-executive Chairman of the Board of Directors.
“Long-term, we believe the company is poised for further growth under the leadership of our incoming CEO, Bruce Broussard,” said McCallister. “Bruce’s focus, energy, and effectiveness have been amply displayed in his tenure as Humana’s president.”
Strategic Transactions
Humana announced the following transactions today, each a strategic step in the company’s continued development of an integrated care delivery model.
“Today we significantly advanced our strategy of aligning physician pay to quality through our investments in Metropolitan and MCCI. Combined with existing capabilities in our CAC and Concentra medical centers, Humana will soon employ or have strategic investments in medical practices that include nearly 2,300 physicians nationwide.” said Broussard. “The Certify acquisition furthers our integrated data platform through the real-time sharing of relevant health information at the point of care.
“Taken together, the three transactions we announced today unite key components of our integrated model, simplifying and enhancing our members’ health care experience.”
The company anticipates the cumulative impact of the transactions described above to be modestly accretive to its earnings for FY13 after giving effect to the related transaction costs.
Consolidated Highlights – Third Quarter 2012 Results
Revenues – 3Q12 consolidated revenues were $9.65 billion, an increase of 4 percent from $9.30 billion in 3Q11, with total premiums and services revenue also up 4 percent compared to the prior year’s quarter. The year-over-year increase in consolidated revenues was primarily due to related increases in the Retail and Employer Group segments primarily driven by higher average individual and group Medicare membership. These increases were partially offset by the company’s new South Region TRICARE contract being accounted for as self-funded versus fully-insured for the previous contract. This new contract became effective on April 1, 2012.
YTD12 consolidated revenues increased 6 percent to $29.57 billion from $27.78 billion in YTD11 with total premiums and services revenue also up 6 percent compared to the prior year’s period, driven primarily by the same factors as the third quarter year-over-year increase.
Benefit expenses – The 3Q12 consolidated benefit ratio (benefit expenses as a percent of premiums) of 82.2 percent increased by 150 basis points from 80.7 percent for the prior year’s quarter due primarily to higher year-over-year benefit ratios for the Retail and Employer Group segments. These increases were partially offset by a decrease in the impact of the benefit ratio for Other Businesses primarily due to the transition to the new administrative services only (ASO) South Region TRICARE contract on April 1, 2012.
The consolidated benefit ratio for YTD12 of 83.7 percent increased by 150 basis points from the YTD11 consolidated benefit ratio of 82.2 percent primarily due to the same factors impacting the year-over-year change for the third quarter.
Operating costs – The consolidated operating cost ratio (operating costs as a percent of total revenues less investment income) of 14.7 percent for 3Q12 compares to 14.8 percent in 3Q11 primarily reflecting substantially improved operating leverage nearly offset by the impact of the accounting for the company’s new South Region TRICARE contract in the company’s Other Businesses.
The YTD12 consolidated operating cost ratio of 14.3 percent increased by 40 basis points from that for YTD11 of 13.9 percent as the negative impact of the accounting for the company’s new South Region TRICARE contract was partially offset by improvements in operating leverage.
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:
Other Businesses Highlights
Balance Sheet
Cash Flows from Operations
Net cash (used in) provided by operating activities (in millions) | 3Q12 Cash Flows | 3Q11 Cash Flows | YTD12 Cash Flows | YTD11 Cash Flows | ||||
GAAP | ($1,334) | $2,919 | $1,718 | $3,876 | ||||
Timing of premium payment from CMS (b) | 2,133 | (1,796) | - | (1,796) | ||||
Non-GAAP (c) | $799 | $1,123 | $1,718 | $2,080 | ||||
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 combined with lower net income year over year.
Share Repurchase Program
Footnotes
(a) | 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. | |
(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 the year-to-date 2012 period included nine monthly Medicare payments compared to ten monthly Medicare payments during the 2011 period. | |
(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.
Biennial Investor Meeting
Humana plans to host its biennial Investor Meeting on November 13, 2012 beginning at 8:30 a.m. eastern time. That meeting will be available to the media and general public via webcast. The company anticipates publishing a detailed agenda for the Investor Meeting no later than November 12, 2012.
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 November 5, 2012
(in accordance with | For the year ending December 31, | Comments Excludes the pending acquisition of | ||||
2012 | 2013 | |||||
Diluted earnings per common share (EPS) | 2013 includes approximately $0.30 per share | |||||
Full Year | $7.25 to $7.35 | $7.60 to $7.80 | ||||
Revenues | ||||||
Consolidated | $39.0 billion to $39.5 billion | $40.8 billion to $41.3 billion | Includes expected investment income of | |||
Retail Segment | $24.5 billion to $25.0 billion | $26.25 billion to $26.75 billion | Segment-level revenues include intersegment | |||
Employer Group Segment | $10.5 billion to $11.0 billion | $11.0 billion to $11.5 billion | ||||
Health and Well-Being Services Segment | $13.1 billion to $13.3 billion | $17.5 billion to $18.0 billion | ||||
Other Businesses | $2.50 billion to $2.75 billion | $1.8 billion to $2.1 billion | ||||
Ending medical membership versus prior year end |
Includes the January 1, 2013 disposition of | |||||
Retail Segment | ||||||
Medicare Advantage | Up 270,000 to 280,000 | Up 100,000 to 120,000 | ||||
Medicare stand-alone PDPs |
Up 440,000 to 460,000 |
Up 125,000 to 175,000 | ||||
HumanaOne | Up 5,000 to 10,000 | Down approximately 45,000 | ||||
Medicare Supplement | Up 15,000 to 25,000 | Up 15,000 to 25,000 | ||||
Employer Group Segment | ||||||
Medicare Advantage | Up approximately 80,000 | Up approximately 20,000 | ||||
Commercial Fully-Insured | Up approximately 30,000 | Down 5,000 to 20,000 | ||||
Commercial ASO | Down 50,000 to 60,000 | Down 25,000 to 45,000 | ||||
Benefit ratios | Benefit expenses as a percent of premiums | |||||
Retail Segment | 84.0% to 84.5% | 84.0% to 84.5% | ||||
Employer Group Segment | 84.0% to 85.0% | 85.0% to 86.0% | ||||
Operating cost ratios | Consolidated operating costs as a percent of | |||||
Consolidated | 14.75% to 15.25% | 15.0% to 15.5% | ||||
Health & Well-Being Services Segment | 95.25% to 95.75% | 96.25% to 96.75% | ||||
Consolidated depreciation and amortization |
|
| Certain D&A is included in benefits expense on | |||
Income statement | $290 million to $310 million | $330 million to $350 million | the income statement but shown as a non- | |||
Cash flows statement | $330 million to $345 million | $380 million to $400 million | cash item on the cash flows statement | |||
Consolidated interest expense | Approximately $105 million | Approximately $105 million | ||||
Detailed pretax results | Segment-level pretax results and margins | |||||
Retail Segment |
$1.10 billion to $1.15 billion |
$1.29 billion to $1.33 billion | ||||
Employer Group Segment |
$200 million to $210 million |
$100 million to $150 million | ||||
Health & Well-Being Services Segment |
$510 million to $520 million |
$460 million to $510 million | ||||
Effective Tax Rate | Approximately 36.8% | Approximately 37% | ||||
Diluted shares | Approximately 163.5 million | Approximately 161.5 million | Projections exclude the impact of future share | |||
Cash flows from operations | $1.7 billion to $1.9 billion | $1.8 billion to $2.0 billion | ||||
Capital expenditures | Approximately $400 million | $425 million to $450 million | ||||
Key Assumptions Affecting 2013 Guidance* | * | Expectation mid-points used for simplicity | |||||||||||||||
Dollars in millions except per share amounts | |||||||||||||||||
Pretax Income | |||||||||||||||||
Retail Segment | Employer Group | Health & Well- | Other | Consolidated | EPS | ||||||||||||
FY12 Guidance | $1,125 | $205 | $515 | $45 | $1,890 | $7.30 | |||||||||||
Changes in operating margins | 150 | (90 | ) | - | (30 | ) | 30 | 0.12 | |||||||||
Changes in membership and volume levels | 25 | 10 | 45 | - | 80 | 0.31 | |||||||||||
Non-recurrence of 2Q12 litigation settlement | - | - | - | 46 | 46 | 0.18 | |||||||||||
Subtotal | $1,300 | $125 | $560 | $61 | $2,046 | ||||||||||||
Change in share count and tax rate | 0.09 | ||||||||||||||||
Subtotal | $8.00 | ||||||||||||||||
Investments in integrated care delivery models | - | - | (75 | ) | - | (75 | ) | (0.30 | ) | ||||||||
FY13 Guidance | $1,300 | $125 | $485 | $61 | $1,971 | $ 7.70 | |||||||||||
Humana Inc. |
Statistical Schedules |
And |
Supplementary Information |
3Q12 Earnings Release |
S-1 |
Humana Inc. | ||
Statistical Schedules and Supplementary Information | ||
3Q12 Earnings Release | ||
Contents | ||
Page | Description | |
S-3-4 | Consolidated Statements of Income | |
S-5-6 | Quarterly Segment Financial Information | |
S-7-8 | YTD 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 | Pharmacy Statistics | |
S-14 | Membership Detail | |
S-15-16 | Premiums and Services Revenue Detail | |
S-17 | Medicare Summary | |
S-18 | Investments | |
S-19-21 | Benefits Payable | |
S-22 | Footnotes | |
S-2 | ||
Humana Inc. | |||||||||||||
Consolidated Statements of Income | |||||||||||||
In millions, except per common share results | |||||||||||||
Three Months Ended September 30, | |||||||||||||
Dollar | Percentage | ||||||||||||
2012 | 2011 | Change | Change | ||||||||||
Revenues: | |||||||||||||
Premiums | $ | 9,088 | $ | 8,852 | $ | 236 | 2.7 | % | |||||
Services | 467 | 356 | 111 | 31.2 | % | ||||||||
Investment income | 96 | 93 | 3 | 3.2 | % | ||||||||
Total revenues | 9,651 | 9,301 | 350 | 3.8 | % | ||||||||
Operating expenses: | |||||||||||||
Benefits | 7,467 | 7,147 | 320 | 4.5 | % | ||||||||
Operating costs | 1,408 | 1,361 | 47 | 3.5 | % | ||||||||
Depreciation and amortization | 75 | 67 | 8 | 11.9 | % | ||||||||
Total operating expenses | 8,950 | 8,575 | 375 | 4.4 | % | ||||||||
Income from operations | 701 | 726 | (25 | ) | -3.4 | % | |||||||
Interest expense | 26 | 27 | (1 | ) | -3.7 | % | |||||||
Income before income taxes | 675 | 699 | (24 | ) | -3.4 | % | |||||||
Provision for income taxes | 249 | 254 | (5 | ) | -2.0 | % | |||||||
Net income | $ | 426 | $ | 445 | $ | (19 | ) | -4.3 | % | ||||
Basic earnings per common share | $ | 2.65 | $ | 2.71 | $ | (0.06 | ) | -2.2 | % | ||||
Diluted earnings per common share | $ | 2.62 | $ | 2.67 | $ | (0.05 | ) | -1.9 | % | ||||
Shares used in computing basic earnings per common share (000's) | 160,639 | 164,121 | |||||||||||
Shares used in computing diluted earnings per common share (000's) | 162,418 | 166,580 | |||||||||||
S-3 | |||||||||||||
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Consolidated Statements of Income | |||||||||||||
In millions, except per common share results | |||||||||||||
Nine Months Ended September 30, | |||||||||||||
Dollar | Percentage | ||||||||||||
2012 | 2011 | Change | Change | ||||||||||
Revenues: | |||||||||||||
Premiums | $ | 28,029 | $ | 26,468 | $ | 1,561 | 5.9 | % | |||||
Services | 1,251 | 1,035 | 216 | 20.9 | % | ||||||||
Investment income | 289 | 273 | 16 | 5.9 | % | ||||||||
Total revenues | 29,569 | 27,776 | 1,793 | 6.5 | % | ||||||||
Operating expenses: | |||||||||||||
Benefits | 23,469 | 21,761 | 1,708 | 7.8 | % | ||||||||
Operating costs | 4,175 | 3,810 | 365 | 9.6 | % | ||||||||
Depreciation and amortization | 218 | 201 | 17 | 8.5 | % | ||||||||
Total operating expenses | 27,862 | 25,772 | 2,090 | 8.1 | % | ||||||||
Income from operations | 1,707 | 2,004 | (297 | ) | -14.8 | % | |||||||
Interest expense | 78 | 82 | (4 | ) | -4.9 | % | |||||||
Income before income taxes | 1,629 | 1,922 | (293 | ) | -15.2 | % | |||||||
Provision for income taxes | 599 | 702 | (103 | ) | -14.7 | % | |||||||
Net income | $ | 1,030 | $ | 1,220 | $ | (190 | ) | -15.6 | % | ||||
Basic earnings per common share | $ | 6.34 | $ | 7.34 | $ | (1.00 | ) | -13.6 | % | ||||
Diluted earnings per common share | $ | 6.27 | $ | 7.24 | $ | (0.97 | ) | -13.4 | % | ||||
Shares used in computing basic earnings per common share (000's) | 162,391 | 166,138 | |||||||||||
Shares used in computing diluted earnings per common share (000's) | 164,382 | 168,558 | |||||||||||
S-4 | |||||||||||||
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3Q12 Segment Financial Information | ||||||||||||||||||||||||
In millions | ||||||||||||||||||||||||
Health and | ||||||||||||||||||||||||
Employer | Well-Being | Other | Eliminations/ | |||||||||||||||||||||
Retail | Group | Services | Businesses | Corporate | Consolidated | |||||||||||||||||||
Revenues - external customers | ||||||||||||||||||||||||
Premiums: | ||||||||||||||||||||||||
Medicare Advantage | $ | 5,203 | $ | 1,023 | $ | - | $ | - | $ | - | $ | 6,226 | ||||||||||||
Medicare stand-alone PDP | 635 | 2 | - | 64 | - | 701 | ||||||||||||||||||
Total Medicare | 5,838 | 1,025 | - | 64 | - | 6,927 | ||||||||||||||||||
Fully-insured | 255 | 1,256 | - | - | - | 1,511 | ||||||||||||||||||
Specialty | 45 | 271 | - | - | - | 316 | ||||||||||||||||||
Military services | - | - | - | 69 | - | 69 | ||||||||||||||||||
Medicaid and other (A) | - | - | - | 265 | - | 265 | ||||||||||||||||||
Total premiums | 6,138 | 2,552 | - | 398 | - | 9,088 | ||||||||||||||||||
Services revenue: | ||||||||||||||||||||||||
Provider | - | - | 271 | - | - | 271 | ||||||||||||||||||
ASO and other (B) | 6 | 88 | - | 99 | - | 193 | ||||||||||||||||||
Pharmacy | - | - | 3 | - | - | 3 | ||||||||||||||||||
Total services revenue | 6 | 88 | 274 | 99 | - | 467 | ||||||||||||||||||
Total revenues - external customers | 6,144 | 2,640 | 274 | 497 | - | 9,555 | ||||||||||||||||||
Intersegment revenues | ||||||||||||||||||||||||
Services | 1 | 3 | 2,324 | - | (2,328 | ) | - | |||||||||||||||||
Products | - | - | 602 | - | (602 | ) | - | |||||||||||||||||
Total intersegment revenues | 1 | 3 | 2,926 | - | (2,930 | ) | - | |||||||||||||||||
Investment income | 19 | 11 | - | 14 | 52 | 96 | ||||||||||||||||||
Total revenues | 6,164 | 2,654 | 3,200 | 511 | (2,878 | ) | 9,651 | |||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Benefits | 5,049 | 2,178 | - | 332 | (92 | ) | 7,467 | |||||||||||||||||
Operating costs | 658 | 413 | 3,028 | 125 | (2,816 | ) | 1,408 | |||||||||||||||||
Depreciation and amortization | 33 | 20 | 24 | 4 | (6 | ) | 75 | |||||||||||||||||
Total operating expenses | 5,740 | 2,611 | 3,052 | 461 | (2,914 | ) | 8,950 | |||||||||||||||||
Income from operations | 424 | 43 | 148 | 50 | 36 | 701 | ||||||||||||||||||
Interest expense | - | - | - | - | 26 | 26 | ||||||||||||||||||
Income before income taxes | $ | 424 | $ | 43 | $ | 148 | $ | 50 | $ | 10 | $ | 675 | ||||||||||||
Benefit ratio | 82.3 | % | 85.3 | % | 83.4 | % | 82.2 | % | ||||||||||||||||
Operating cost ratio (C) | 10.7 | % | 15.6 | % | 94.6 | % | 25.2 | % | 14.7 | % | ||||||||||||||
S-5 | ||||||||||||||||||||||||
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3Q11 Segment Financial Information | ||||||||||||||||||||||||
In millions | ||||||||||||||||||||||||
Health and | ||||||||||||||||||||||||
Employer | Well-Being | Other | Eliminations/ | |||||||||||||||||||||
Retail | Group | Services | Businesses | Corporate | Consolidated | |||||||||||||||||||
Revenues - external customers | ||||||||||||||||||||||||
Premiums: | ||||||||||||||||||||||||
Medicare Advantage | $ | 4,566 | $ | 803 | $ | - | $ | - | $ | - | $ | 5,369 | ||||||||||||
Medicare stand-alone PDP | 579 | 2 | - | 43 | - | 624 | ||||||||||||||||||
Total Medicare | 5,145 | 805 | - | 43 | - | 5,993 | ||||||||||||||||||
Fully-insured | 221 | 1,185 | - | - | - | 1,406 | ||||||||||||||||||
Specialty | 33 | 235 | - | - | - | 268 | ||||||||||||||||||
Military services | - | - | - | 944 | - | 944 | ||||||||||||||||||
Medicaid and other (A) | - | - | - | 241 | - | 241 | ||||||||||||||||||
Total premiums | 5,399 | 2,225 | - | 1,228 | - | 8,852 | ||||||||||||||||||
Services revenue: | ||||||||||||||||||||||||
Provider | - | - | 233 | - | - | 233 | ||||||||||||||||||
ASO and other (B) | 5 | 89 | - | 26 | - | 120 | ||||||||||||||||||
Pharmacy | - | - | 3 | - | - | 3 | ||||||||||||||||||
Total services revenue | 5 | 89 | 236 | 26 | - | 356 | ||||||||||||||||||
Total revenues - external customers | 5,404 | 2,314 | 236 | 1,254 | - | 9,208 | ||||||||||||||||||
Intersegment revenues | ||||||||||||||||||||||||
Services | - | 4 | 2,130 | - | (2,134 | ) | - | |||||||||||||||||
Products | - | - | 461 | - | (461 | ) | - | |||||||||||||||||
Total intersegment revenues | - | 4 | 2,591 | - | (2,595 | ) | - | |||||||||||||||||
Investment income | 19 | 12 | - | 15 | 47 | 93 | ||||||||||||||||||
Total revenues | 5,423 | 2,330 | 2,827 | 1,269 | (2,548 | ) | 9,301 | |||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Benefits | 4,249 | 1,857 | - | 1,117 | (76 | ) | 7,147 | |||||||||||||||||
Operating costs | 603 | 406 | 2,723 | 121 | (2,492 | ) | 1,361 | |||||||||||||||||
Depreciation and amortization | 30 | 21 | 21 | 2 | (7 | ) | 67 | |||||||||||||||||
Total operating expenses | 4,882 | 2,284 | 2,744 | 1,240 | (2,575 | ) | 8,575 | |||||||||||||||||
Income from operations | 541 | 46 | 83 | 29 | 27 | 726 | ||||||||||||||||||
Interest expense | - | - | - | - | 27 | 27 | ||||||||||||||||||
Income before income taxes | $ | 541 | $ | 46 | $ | 83 | $ | 29 | $ | - | $ | 699 | ||||||||||||
Benefit ratio | 78.7 | % | 83.5 | % | 91.0 | % | 80.7 | % | ||||||||||||||||
Operating cost ratio (C) | 11.2 | % | 17.5 | % | 96.3 | % | 9.6 | % | 14.8 | % | ||||||||||||||
S-6 | ||||||||||||||||||||||||
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YTD12 Segment Financial Information | ||||||||||||||||||||||||
In millions | ||||||||||||||||||||||||
Health and | ||||||||||||||||||||||||
Employer | Well-Being | Other | Eliminations/ | |||||||||||||||||||||
Retail | Group | Services | Businesses | Corporate | Consolidated | |||||||||||||||||||
Revenues - external customers | ||||||||||||||||||||||||
Premiums: | ||||||||||||||||||||||||
Medicare Advantage | $ | 15,604 | $ | 3,059 | $ | - | $ | - | $ | - | $ | 18,663 | ||||||||||||
Medicare stand-alone PDP | 1,967 | 6 | - | 203 | - | 2,176 | ||||||||||||||||||
Total Medicare | 17,571 | 3,065 | - | 203 | - | 20,839 | ||||||||||||||||||
Fully-insured | 749 | 3,745 | - | - | - | 4,494 | ||||||||||||||||||
Specialty | 125 | 793 | - | - | - | 918 | ||||||||||||||||||
Military services | - | - | - | 1,006 | - | 1,006 | ||||||||||||||||||
Medicaid and other (A) | - | - | - | 772 | - | 772 | ||||||||||||||||||
Total premiums | 18,445 | 7,603 | - | 1,981 | - | 28,029 | ||||||||||||||||||
Services revenue: | ||||||||||||||||||||||||
Provider | - | - | 749 | - | - | 749 | ||||||||||||||||||
ASO and other (B) | 17 | 266 | - | 208 | - | 491 | ||||||||||||||||||
Pharmacy | - | - | 11 | - | - | 11 | ||||||||||||||||||
Total services revenue | 17 | 266 | 760 | 208 | - | 1,251 | ||||||||||||||||||
Total revenues - external customers | 18,462 | 7,869 | 760 | 2,189 | - | 29,280 | ||||||||||||||||||
Intersegment revenues | ||||||||||||||||||||||||
Services | 2 | 11 | 7,187 | - | (7,200 | ) | - | |||||||||||||||||
Products | - | - | 1,777 | - | (1,777 | ) | - | |||||||||||||||||
Total intersegment revenues | 2 | 11 | 8,964 | - | (8,977 | ) | - | |||||||||||||||||
Investment income | 58 | 31 | - | 43 | 157 | 289 | ||||||||||||||||||
Total revenues | 18,522 | 7,911 | 9,724 | 2,232 | (8,820 | ) | 29,569 | |||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Benefits | 15,609 | 6,316 | - | 1,844 | (300 | ) | 23,469 | |||||||||||||||||
Operating costs | 1,911 | 1,257 | 9,246 | 364 | (8,603 | ) | 4,175 | |||||||||||||||||
Depreciation and amortization | 96 | 60 | 67 | 12 | (17 | ) | 218 | |||||||||||||||||
Total operating expenses | 17,616 | 7,633 | 9,313 | 2,220 | (8,920 | ) | 27,862 | |||||||||||||||||
Income from operations | 906 | 278 | 411 | 12 | 100 | 1,707 | ||||||||||||||||||
Interest expense | - | - | - | - | 78 | 78 | ||||||||||||||||||
Income before income taxes | $ | 906 | $ | 278 | $ | 411 | $ | 12 | $ | 22 | $ | 1,629 | ||||||||||||
Benefit ratio | 84.6 | % | 83.1 | % | 93.1 | % | 83.7 | % | ||||||||||||||||
Operating cost ratio (C) | 10.3 | % | 16.0 | % | 95.1 | % | 16.6 | % | 14.3 | % | ||||||||||||||
S-7 | ||||||||||||||||||||||||
Humana Inc. | ||||||||||||||||||||||||
YTD11 Segment Financial Information | ||||||||||||||||||||||||
In millions | ||||||||||||||||||||||||
Health and | ||||||||||||||||||||||||
Employer | Well-Being | Other | Eliminations/ | |||||||||||||||||||||
Retail | Group | Services | Businesses | Corporate | Consolidated | |||||||||||||||||||
Revenues - external customers | ||||||||||||||||||||||||
Premiums: | ||||||||||||||||||||||||
Medicare Advantage | $ | 13,646 | $ | 2,363 | $ | - | $ | - | $ | - | $ | 16,009 | ||||||||||||
Medicare stand-alone PDP | 1,737 | 6 | - | 196 | - | 1,939 | ||||||||||||||||||
Total Medicare | 15,383 | 2,369 | - | 196 | - | 17,948 | ||||||||||||||||||
Fully-insured | 628 | 3,601 | - | - | - | 4,229 | ||||||||||||||||||
Specialty | 89 | 698 | - | - | - | 787 | ||||||||||||||||||
Military services | - | - | - | 2,802 | - | 2,802 | ||||||||||||||||||
Medicaid and other (A) | - | - | - | 702 | - | 702 | ||||||||||||||||||
Total premiums | 16,100 | 6,668 | - | 3,700 | - | 26,468 | ||||||||||||||||||
Services revenue: | ||||||||||||||||||||||||
Provider | - | - | 670 | - | - | 670 | ||||||||||||||||||
ASO and other (B) | 12 | 269 | - | 76 | - | 357 | ||||||||||||||||||
Pharmacy | - | - | 8 | - | - | 8 | ||||||||||||||||||
Total services revenue | 12 | 269 | 678 | 76 | - | 1,035 | ||||||||||||||||||
Total revenues - external customers | 16,112 | 6,937 | 678 | 3,776 | - | 27,503 | ||||||||||||||||||
Intersegment revenues | ||||||||||||||||||||||||
Services | - | 10 | 6,325 | - | (6,335 | ) | - | |||||||||||||||||
Products | - | - | 1,330 | - | (1,330 | ) | - | |||||||||||||||||
Total intersegment revenues | - | 10 | 7,655 | - | (7,665 | ) | - | |||||||||||||||||
Investment income | 57 | 36 | - | 40 | 140 | 273 | ||||||||||||||||||
Total revenues | 16,169 | 6,983 | 8,333 | 3,816 | (7,525 | ) | 27,776 | |||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Benefits | 13,193 | 5,409 | - | 3,375 | (216 | ) | 21,761 | |||||||||||||||||
Operating costs | 1,626 | 1,217 | 8,004 | 351 | (7,388 | ) | 3,810 | |||||||||||||||||
Depreciation and amortization | 89 | 64 | 61 | 7 | (20 | ) | 201 | |||||||||||||||||
Total operating expenses | 14,908 | 6,690 | 8,065 | 3,733 | (7,624 | ) | 25,772 | |||||||||||||||||
Income from operations | 1,261 | 293 | 268 | 83 | 99 | 2,004 | ||||||||||||||||||
Interest expense | - | - | - | - | 82 | 82 | ||||||||||||||||||
Income before income taxes | $ | 1,261 | $ | 293 | $ | 268 | $ | 83 | $ | 17 | $ | 1,922 | ||||||||||||
Benefit ratio | 81.9 | % | 81.1 | % | 91.2 | % | 82.2 | % | ||||||||||||||||
Operating cost ratio (C) | 10.1 | % | 17.5 | % | 96.1 | % | 9.3 | % | 13.9 | % | ||||||||||||||
S-8 | ||||||||||||||||||||||||
Humana Inc. | ||||||||||||||
Consolidated Balance Sheets | ||||||||||||||
Dollars in millions, except share amounts | ||||||||||||||
September 30, | December 31, | Sequential Change | ||||||||||||
2012 | 2011 | Dollar | Percent | |||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 1,363 | $ | 1,377 | ||||||||||
Investment securities | 8,058 | 7,743 | ||||||||||||
Receivables, net | 642 | 1,034 | ||||||||||||
Other | 1,615 | 1,027 | ||||||||||||
Total current assets | 11,678 | 11,181 | $ | 497 | 4.4 | % | ||||||||
Property and equipment, net | 1,034 | 912 | ||||||||||||
Long-term investment securities | 1,837 | 1,710 | ||||||||||||
Goodwill | 2,962 | 2,740 | ||||||||||||
Other | 1,286 | 1,165 | ||||||||||||
Total assets | 18,797 | 17,708 | $ | 1,089 | 6.1 | % | ||||||||
Liabilities and Stockholders' Equity | ||||||||||||||
Current liabilities: | ||||||||||||||
Benefits payable | 3,958 | 3,754 | ||||||||||||
Trade accounts payable and accrued expenses | 1,962 | 1,783 | ||||||||||||
Book overdraft | 277 | 306 | ||||||||||||
Unearned revenues | 172 | 213 | ||||||||||||
Total current liabilities | 6,369 | 6,056 | $ | 313 | 5.2 | % | ||||||||
Long-term debt | 1,616 | 1,659 | ||||||||||||
Future policy benefits payable | 1,851 | 1,663 | ||||||||||||
Other long-term liabilities | 270 | 267 | ||||||||||||
Total liabilities | 10,106 | 9,645 | $ | 461 | 4.8 | % | ||||||||
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; 194,285,994 issued at September 30, 2012 | 32 | 32 | ||||||||||||
Capital in excess of par value | 2,079 | 1,938 | ||||||||||||
Retained earnings | 7,731 | 6,825 | ||||||||||||
Accumulated other comprehensive income | 397 | 303 | ||||||||||||
Treasury stock, at cost, 36,062,239 shares at September 30, 2012 | (1,548 | ) | (1,035 | ) | ||||||||||
Total stockholders' equity | 8,691 | 8,063 | $ | 628 | 7.8 | % | ||||||||
Total liabilities and stockholders' equity | $ | 18,797 | $ | 17,708 | $ | 1,089 | 6.1 | % | ||||||
Debt-to-total capitalization ratio | 15.7 | % | 17.1 | % | ||||||||||
S-9 | ||||||||||||||
Humana Inc. | ||||||||||||||
Consolidated Statements of Cash Flows | ||||||||||||||
Dollars in millions | ||||||||||||||
Three Months Ended September 30, | ||||||||||||||
Dollar | Percentage | |||||||||||||
2012 | 2011 | Change | Change | |||||||||||
Cash flows from operating activities | ||||||||||||||
Net income | $ | 426 | $ | 445 | ||||||||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||||||||
Depreciation and amortization | 78 | 74 | ||||||||||||
Net realized capital gains | (6 | ) | (2 | ) | ||||||||||
Stock-based compensation | 14 | 12 | ||||||||||||
Provision for (benefit from) deferred income taxes | 3 | (9 | ) | |||||||||||
Changes in operating assets and liabilities excluding the effects of acquisitions: | ||||||||||||||
Receivables | 259 | 510 | ||||||||||||
Other assets | 14 | (30 | ) | |||||||||||
Benefits payable | (39 | ) | (85 | ) | ||||||||||
Other liabilities | 70 | 190 | ||||||||||||
Unearned revenues | (2,172 | ) | 1,800 | |||||||||||
Other | 19 | 14 | ||||||||||||
Net cash (used in) provided by operating activities | (1,334 | ) | 2,919 | ($4,253 | ) | -145.7 | % | |||||||
Cash flows from investing activities | ||||||||||||||
Acquisitions, net of cash acquired | (212 | ) | (3 | ) | ||||||||||
Purchases of property and equipment | (119 | ) | (87 | ) | ||||||||||
Purchases of investment securities | (802 | ) | (765 | ) | ||||||||||
Proceeds from maturities of investment securities | 354 | 378 | ||||||||||||
Proceeds from sales of investment securities | 365 | 193 | ||||||||||||
Net cash used in investing activities | (414 | ) | (284 | ) | ($130 | ) | -45.8 | % | ||||||
Cash flows from financing activities | ||||||||||||||
Receipts (withdrawals) from contract deposits, net | (499 | ) | 37 | |||||||||||
Change in book overdraft | 17 | 82 | ||||||||||||
Common stock repurchases | (235 | ) | (240 | ) | ||||||||||
Excess tax benefit from stock-based compensation | - | 1 | ||||||||||||
Dividends paid | (42 | ) | (41 | ) | ||||||||||
Proceeds from stock option exercises and other | 1 | (23 | ) | |||||||||||
Net cash used in financing activities | (758 | ) | (184 | ) | ($574 | ) | -312.0 | % | ||||||
(Decrease) increase in cash and cash equivalents | (2,506 | ) | 2,451 | |||||||||||
Cash and cash equivalents at beginning of period | 3,869 | 1,568 | ||||||||||||
Cash and cash equivalents at end of period | $ | 1,363 | $ | 4,019 | ||||||||||
S-10 | ||||||||||||||
Humana Inc. | |||||||||||||||
Consolidated Statements of Cash Flows | |||||||||||||||
Dollars in millions | |||||||||||||||
Nine Months Ended September 30, | |||||||||||||||
Dollar | Percentage | ||||||||||||||
2012 | 2011 | Change | Change | ||||||||||||
Cash flows from operating activities | |||||||||||||||
Net income | $ | 1,030 | $ | 1,220 | |||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
Depreciation and amortization | 238 | 225 | |||||||||||||
Net realized capital gains | (20 | ) | (7 | ) | |||||||||||
Stock-based compensation | 68 | 53 | |||||||||||||
(Benefit from) provision for deferred income taxes | (6 | ) | 12 | ||||||||||||
Changes in operating assets and liabilities excluding the effects of acquisitions: | |||||||||||||||
Receivables | 436 | (77 | ) | ||||||||||||
Other assets | (236 | ) | (205 | ) | |||||||||||
Benefits payable | 131 | 399 | |||||||||||||
Other liabilities | 121 | 392 | |||||||||||||
Unearned revenues | (95 | ) | 1,820 | ||||||||||||
Other | 51 | 44 | |||||||||||||
Net cash provided by operating activities | 1,718 | 3,876 | ($2,158 | ) | -55.7 | % | |||||||||
Cash flows from investing activities | |||||||||||||||
Acquisitions, net of cash acquired | (288 | ) | (14 | ) | |||||||||||
Purchases of property and equipment | (304 | ) | (216 | ) | |||||||||||
Purchases of investment securities | (2,166 | ) | (2,667 | ) | |||||||||||
Proceeds from maturities of investment securities | 1,111 | 1,129 | |||||||||||||
Proceeds from sales of investment securities | 894 | 625 | |||||||||||||
Net cash used in investing activities | (753 | ) | (1,143 | ) | $ | 390 | 34.1 | % | |||||||
Cash flows from financing activities | |||||||||||||||
Receipts (withdrawals) from contract deposits, net | (347 | ) | 225 | ||||||||||||
Repayment of long-term debt | (36 | ) | - | ||||||||||||
Change in book overdraft | (29 | ) | (110 | ) | |||||||||||
Common stock repurchases | (513 | ) | (541 | ) | |||||||||||
Excess tax benefit from stock-based compensation | 21 | 12 | |||||||||||||
Dividends paid | (124 | ) | (41 | ) | |||||||||||
Proceeds from stock option exercises and other | 49 | 68 | |||||||||||||
Net cash used in financing activities | (979 | ) | (387 | ) | ($592 | ) | -153.0 | % | |||||||
(Decrease) increase in cash and cash equivalents | (14 | ) | 2,346 | ||||||||||||
Cash and cash equivalents at beginning of period | 1,377 | 1,673 | |||||||||||||
Cash and cash equivalents at end of period | $ | 1,363 | $ | 4,019 | |||||||||||
S-11 | |||||||||||||||
Humana Inc. | ||||||||||||||||
Key Income Statement Ratios and Segment Operating Results | ||||||||||||||||
Dollars in millions | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| ||||||||||||||||
Percentage | Percentage | |||||||||||||||
2012 | 2011 | Difference | Change | 2012 | 2011 | Difference | Change | |||||||||
Benefit ratio | ||||||||||||||||
Retail | 82.3% | 78.7% | 3.6% | 84.6% | 81.9% | 2.7% | ||||||||||
Employer Group | 85.3% | 83.5% | 1.8% | 83.1% | 81.1% | 2.0% | ||||||||||
Other Businesses | 83.4% | 91.0% | -7.6% | 93.1% | 91.2% | 1.9% | ||||||||||
Consolidated | 82.2% | 80.7% | 1.5% | 83.7% | 82.2% | 1.5% | ||||||||||
Operating cost ratio (C) | ||||||||||||||||
Retail | 10.7% | 11.2% | -0.5% | 10.3% | 10.1% | 0.2% | ||||||||||
Employer Group | 15.6% | 17.5% | -1.9% | 16.0% | 17.5% | -1.5% | ||||||||||
Health and Well-Being Services | 94.6% | 96.3% | -1.7% | 95.1% | 96.1% | -1.0% | ||||||||||
Other Businesses | 25.2% | 9.6% | 15.6% | 16.6% | 9.3% | 7.3% | ||||||||||
Consolidated | 14.7% | 14.8% | -0.1% | 14.3% | 13.9% | 0.4% | ||||||||||
Detail of pretax income | ||||||||||||||||
Retail | $424 | $541 | ($117) | -21.6% | $906 | $1,261 | ($355) | -28.2% | ||||||||
Employer Group | $43 | $46 | ($3) | -6.5% | $278 | $293 | ($15) | -5.1% | ||||||||
Health and Well-Being Services | $148 | $83 | $65 | 78.3% | $411 | $268 | $143 | 53.4% | ||||||||
Other Businesses | $50 | $29 | $21 | 72.4% | $12 | $83 | ($71) | -85.5% | ||||||||
Consolidated | $675 | $699 | ($24) | -3.4% | $1,629 | $1,922 | ($293) | -15.2% | ||||||||
S-12 | ||||||||||||||||
Humana Inc. | ||||||||||||||||||||||||
Pharmacy Metrics | ||||||||||||||||||||||||
Script volume in thousands | ||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2012 | 2011 | Difference | 2012 | 2011 | Difference | |||||||||||||||||||
Generic Dispense Rate | ||||||||||||||||||||||||
Retail |
| |||||||||||||||||||||||
Mail-Order | 89.9 | % | 87.2 | % | 2.7 | % | 88.9 | % | 86.5 | % | 2.4 | % | ||||||||||||
90-Day Retail | 87.7 | % | 83.7 | % | 4.0 | % | 86.7 | % | 83.2 | % | 3.5 | % | ||||||||||||
All Other | 82.1 | % | 77.7 | % | 4.4 | % | 80.5 | % | 77.4 | % | 3.1 | % | ||||||||||||
Total | 85.3 | % | 81.1 | % | 4.2 | % | 84.0 | % | 80.6 | % | 3.4 | % | ||||||||||||
Employer Group | ||||||||||||||||||||||||
Mail-order | 76.4 | % | 68.5 | % | 7.9 | % | 74.4 | % | 67.6 | % | 6.8 | % | ||||||||||||
90-Day Retail | 83.1 | % | 77.0 | % | 6.1 | % | 81.9 | % | 76.3 | % | 5.6 | % | ||||||||||||
All Other | 74.7 | % | 69.5 | % | 5.2 | % | 73.3 | % | 69.4 | % | 3.9 | % | ||||||||||||
Total Employer Group | 77.2 | % | 71.1 | % | 6.1 | % | 75.6 | % | 70.7 | % | 4.9 | % | ||||||||||||
Percentage | Percentage | |||||||||||||||||||||||
Difference | Change | Difference | Change | |||||||||||||||||||||
Script volume | ||||||||||||||||||||||||
Retail | ||||||||||||||||||||||||
Mail-order | 12,431 | 9,931 | 2,500 | 25.2 | % | 36,795 | 27,677 | 9,118 | 32.9 | % | ||||||||||||||
90-Day Retail | 13,400 | 10,856 | 2,544 | 23.4 | % | 38,457 | 31,384 | 7,073 | 22.5 | % | ||||||||||||||
All Other | 27,300 | 25,313 | 1,987 | 7.8 | % | 82,320 | 75,720 | 6,600 | 8.7 | % | ||||||||||||||
Total Retail | 53,131 | 46,100 | 7,031 | 15.3 | % | 157,572 | 134,781 | 22,791 | 16.9 | % | ||||||||||||||
Employer Group | ||||||||||||||||||||||||
Mail-order | 1,045 | 966 | 79 | 8.2 | % | 3,034 | 2,893 | 141 | 4.9 | % | ||||||||||||||
90-Day Retail | 1,865 | 1,445 | 420 | 29.1 | % | 4,904 | 4,186 | 718 | 17.2 | % | ||||||||||||||
All Other | 4,013 | 3,744 | 269 | 7.2 | % | 11,561 | 11,562 | (1 | ) | 0.0 | % | |||||||||||||
Total Employer Group | 6,923 | 6,155 | 768 | 12.5 | % | 19,499 | 18,641 | 858 | 4.6 | % | ||||||||||||||
Total Retail and Employer Group | 60,054 | 52,255 | 7,799 | 14.9 | % | 177,071 | 153,422 | 23,649 | 15.4 | % | ||||||||||||||
S-13 | ||||||||||||||||||||||||
Humana Inc. | ||||||||||||||||||||
Membership Detail | ||||||||||||||||||||
In thousands | ||||||||||||||||||||
Ending | Average 2Q12 | Ending | Year-over-year Change | Ending | Sequential Change | |||||||||||||||
September 30, 2012 | September 30, 2011 | Amount | Percent | December 31, 2011 | Amount | Percent | ||||||||||||||
Medical Membership: | ||||||||||||||||||||
Retail | ||||||||||||||||||||
Medicare Advantage | 1,911.8 | 1,907.2 | 1,613.4 | 298.4 | 18.5 | % | 1,640.3 | 271.5 | 16.6 | % | ||||||||||
Medicare stand-alone PDPs | 2,947.2 | 2,929.8 | 2,478.1 | 469.1 | 18.9 | % | 2,540.4 | 406.8 | 16.0 | % | ||||||||||
Individual commercial | 443.4 | 443.5 | 424.0 | 19.4 | 4.6 | % | 433.6 | 9.8 | 2.3 | % | ||||||||||
Medicare Supplement | 75.2 | 74.0 | 56.7 | 18.5 | 32.6 | % | 59.6 | 15.6 | 26.2 | % | ||||||||||
Total Retail | 5,377.6 | 5,354.5 | 4,572.2 | 805.4 | 17.6 | % | 4,673.9 | 703.7 | 15.1 | % | ||||||||||
Employer Group | ||||||||||||||||||||
Medicare Advantage | 367.9 | 366.9 | 287.9 | 80.0 | 27.8 | % | 290.6 | 77.3 | 26.6 | % | ||||||||||
Medicare Advantage ASO | 27.8 | 27.8 | 27.6 | 0.2 | 0.7 | % | 27.6 | 0.2 | 0.7 | % | ||||||||||
Medicare stand-alone PDPs | 4.4 | 4.4 | 4.2 | 0.2 | 4.8 | % | 4.2 | 0.2 | 4.8 | % | ||||||||||
Fully-insured medical commercial | 1,204.5 | 1,203.0 | 1,181.3 | 23.2 | 2.0 | % | 1,180.2 | 24.3 | 2.1 | % | ||||||||||
ASO commercial | 1,231.1 | 1,231.7 | 1,287.0 | (55.9 | ) | -4.3 | % | 1,292.3 | (61.2 | ) | -4.7 | % | ||||||||
Total Employer Group | 2,835.7 | 2,833.8 | 2,788.0 | 47.7 | 1.7 | % | 2,794.9 | 40.8 | 1.5 | % | ||||||||||
Other Businesses | ||||||||||||||||||||
Military Services | 3,124.6 | 3,120.1 | 3,025.9 | 98.7 | 3.3 | % | 3,028.1 | 96.5 | 3.2 | % | ||||||||||
Medicaid and other | 607.1 | 606.2 | 621.5 | (14.4 | ) | -2.3 | % | 614.2 | (7.1 | ) | -1.2 | % | ||||||||
LI-NET (D) | 73.9 | 73.5 | 74.6 | (0.7 | ) | -0.9 | % | 73.5 | 0.4 | 0.5 | % | |||||||||
Total Other Businesses | 3,805.6 | 3,799.8 | 3,722.0 | 83.6 | 2.2 | % | 3,715.8 | 89.8 | 2.4 | % | ||||||||||
Total Medical Membership | 12,018.9 | 11,988.1 | 11,082.2 | 936.7 | 8.5 | % | 11,184.6 | 834.3 | 7.5 | % | ||||||||||
Specialty Membership: | ||||||||||||||||||||
Retail | ||||||||||||||||||||
Dental - fully-insured | 685.3 | 675.4 | 564.7 | 120.6 | 21.4 | % | 579.6 | 105.7 | 18.2 | % | ||||||||||
Vision | 113.8 | 110.0 | 79.3 | 34.5 | 43.5 | % | 83.8 | 30.0 | 35.8 | % | ||||||||||
Other supplemental benefits (E) | 141.7 | 141.5 | 111.6 | 30.1 | 27.0 | % | 119.1 | 22.6 | 19.0 | % | ||||||||||
Total Retail | 940.8 | 926.9 | 755.6 | 185.2 | 24.5 | % | 782.5 | 158.3 | 20.2 | % | ||||||||||
Employer Group | ||||||||||||||||||||
Dental - fully-insured | 2,431.0 | 2,426.9 | 2,259.5 | 171.5 | 7.6 | % | 2,283.9 | 147.1 | 6.4 | % | ||||||||||
Dental - ASO | 863.1 | 854.5 | 876.9 | (13.8 | ) | -1.6 | % | 869.9 | (6.8 | ) | -0.8 | % | ||||||||
Vision | 2,515.5 | 2,496.6 | 2,272.8 | 242.7 | 10.7 | % | 2,329.6 | 185.9 | 8.0 | % | ||||||||||
Other supplemental benefits (E) | 1,279.0 | 1,270.0 | 1,010.1 | 268.9 | 26.6 | % | 1,049.2 | 229.8 | 21.9 | % | ||||||||||
Total Employer Group | 7,088.6 | 7,048.0 | 6,419.3 | 669.3 | 10.4 | % | 6,532.6 | 556.0 | 8.5 | % | ||||||||||
Total Specialty Membership | 8,029.4 | 7,974.9 | 7,174.9 | 854.5 | 11.9 | % | 7,315.1 | 714.3 | 9.8 | % | ||||||||||
S-14 | ||||||||||||||||||||
Humana Inc. | |||||||||||||||||
Premiums and Services Revenue Detail | |||||||||||||||||
Dollars in millions, except per member per month | |||||||||||||||||
Per Member per Month (F) | |||||||||||||||||
Three Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||||
Dollar | Percentage | ||||||||||||||||
2012 | 2011 | Change | Change | 2012 | 2011 | ||||||||||||
Premiums and Services Revenue | |||||||||||||||||
Retail: | |||||||||||||||||
Medicare Advantage | $ | 5,203 | $ | 4,566 | $ | 637 | 14.0 | % | $909 | $945 | |||||||
Medicare stand-alone PDPs | 635 | 579 | 56 | 9.7 | % | $72 | $79 | ||||||||||
Individual commercial | 219 | 194 | 25 | 12.9 | % | $165 | $155 | ||||||||||
Medicare Supplemental | 36 | 27 | 9 | 33.3 | % | $162 | $162 | ||||||||||
Specialty | 45 | 33 | 12 | 36.4 | % | $16 | $15 | ||||||||||
ASO & other services (B) | 7 | 5 | 2 | 40.0 | % | ||||||||||||
Total Retail | 6,145 | 5,404 | 741 | 13.7 | % | ||||||||||||
Employer Group: | |||||||||||||||||
Medicare Advantage | 1,023 | 803 | 220 | 27.4 | % | $929 | $933 | ||||||||||
Medicare stand-alone PDPs | 2 | 2 | - | 0.0 | % | ||||||||||||
Fully-insured medical commercial | 1,256 | 1,185 | 71 | 6.0 | % | $348 | $335 | ||||||||||
Specialty | 271 | 235 | 36 | 15.3 | % | $15 | $14 | ||||||||||
ASO & other services (B) | 91 | 93 | (2 | ) | -2.2 | % | |||||||||||
Total Employer Group | 2,643 | 2,318 | 325 | 14.0 | % | ||||||||||||
Health and Well-Being Services: | |||||||||||||||||
Pharmacy solutions | 2,770 | 2,484 | 286 | 11.5 | % | ||||||||||||
Primary care services | 311 | 277 | 34 | 12.3 | % | ||||||||||||
Home care services | 62 | 21 | 41 | 195.2 | % | ||||||||||||
Integrated wellness services | 57 | 45 | 12 | 26.7 | % | ||||||||||||
Total Health and Well-Being Services | 3,200 | 2,827 | 373 | 13.2 | % | ||||||||||||
Other Businesses: | |||||||||||||||||
Military services (G) | 155 | 968 | (813 | ) | -84.0 | % | $13 | $181 | |||||||||
LI-NET (D) | 64 | 43 | 21 | 48.8 | % | $290 | $190 | ||||||||||
Medicaid and other (H) | 278 | 243 | 35 | 14.4 | % | $146 | $130 | ||||||||||
Total Other Businesses | 497 | 1,254 | (757 | ) | -60.4 | % | |||||||||||
S-15 | |||||||||||||||||
Humana Inc. | |||||||||||||||||
Premiums and Services Revenue Detail | |||||||||||||||||
Dollars in millions, except per member per month | |||||||||||||||||
Per Member per Month (F) | |||||||||||||||||
Nine Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
Dollar | Percentage | ||||||||||||||||
2012 | 2011 | Change | Change | 2012 | 2011 | ||||||||||||
Premiums and Services Revenue | |||||||||||||||||
Retail: | |||||||||||||||||
Medicare Advantage | $ | 15,604 | $ | 13,646 | $ | 1,958 | 14.3 | % | $923 | $947 | |||||||
Medicare stand-alone PDPs | 1,967 | 1,737 | 230 | 13.2 | % | $76 | $81 | ||||||||||
Individual commercial | 645 | 552 | 93 | 16.8 | % | $162 | $155 | ||||||||||
Medicare Supplemental | 104 | 76 | 28 | 36.8 | % | $165 | $162 | ||||||||||
Specialty | 125 | 89 | 36 | 40.4 | % | $16 | $15 | ||||||||||
ASO & other services (B) | 19 | 12 | 7 | 58.3 | % | ||||||||||||
Total Retail | 18,464 | 16,112 | 2,352 | 14.6 | % | ||||||||||||
Employer Group: | |||||||||||||||||
Medicare Advantage | 3,059 | 2,363 | 696 | 29.5 | % | $941 | $929 | ||||||||||
Medicare stand-alone PDPs | 6 | 6 | - | 0.0 | % | ||||||||||||
Fully-insured medical commercial | 3,745 | 3,601 | 144 | 4.0 | % | $349 | $339 | ||||||||||
Specialty | 793 | 698 | 95 | 13.6 | % | $14 | $14 | ||||||||||
ASO & other services (B) | 277 | 279 | (2 | ) | -0.7 | % | |||||||||||
Total Employer Group | 7,880 | 6,947 | 933 | 13.4 | % | ||||||||||||
Health and Well-Being Services: | |||||||||||||||||
Pharmacy solutions | 8,536 | 7,347 | 1,189 | 16.2 | % | ||||||||||||
Primary care services | 884 | 797 | 87 | 10.9 | % | ||||||||||||
Home care services | 140 | 55 | 85 | 154.5 | % | ||||||||||||
Integrated wellness services | 164 | 134 | 30 | 22.4 | % | ||||||||||||
Total Health and Well-Being Services | 9,724 | 8,333 | 1,391 | 16.7 | % | ||||||||||||
Other Businesses: | |||||||||||||||||
Military services (G) | 1,191 | 2,869 | (1,678 | ) | -58.5 | % | $64 | $179 | |||||||||
LI-NET (D) | 203 | 196 | 7 | 3.6 | % | $305 | $244 | ||||||||||
Medicaid and other (H) | 795 | 711 | 84 | 11.8 | % | $142 | $126 | ||||||||||
Total Other Businesses | 2,189 | 3,776 | (1,587 | ) | -42.0 | % | |||||||||||
S-16 | |||||||||||||||||
Humana Inc. | ||||||||||||||||
Medicare Summary | ||||||||||||||||
Premiums in millions | ||||||||||||||||
Membership in thousands | ||||||||||||||||
Per Member per Month (F) | ||||||||||||||||
Three Months Ended September 30, | Year-over-year Change | Three Months Ended September 30, | ||||||||||||||
2012 | 2011 | Amount | Percent | 2012 | 2011 | |||||||||||
Premiums | ||||||||||||||||
Medicare Advantage | $ | 6,226 | $ | 5,369 | $ | 857 | 16.0 | % | $913 | $943 | ||||||
Medicare stand-alone PDPs | 701 | 624 | 77 | 12.3 | % | $78 | $82 | |||||||||
Total Medicare | $ | 6,927 | $ | 5,993 | $ | 934 | 15.6 | % | ||||||||
Per Member per Month (F) | ||||||||||||||||
Nine Months Ended September 30, | Year-over-year Change | Nine Months Ended September 30, | ||||||||||||||
2012 | 2011 | Amount | Percent | 2012 | 2011 | |||||||||||
Premiums | ||||||||||||||||
Medicare Advantage | $ | 18,663 | $ | 16,009 | $ | 2,654 | 16.6 | % | $926 | $944 | ||||||
Medicare stand-alone PDPs | 2,176 | 1,939 | 237 | 12.2 | % | $82 | $87 | |||||||||
Total Medicare | $ | 20,839 | $ | 17,948 | $ | 2,891 | 16.1 | % | ||||||||
Ending | Ending | Year-over-year Change | ||||||||||||||
September 30, 2012 | September 30, 2011 | Amount | Percent | |||||||||||||
Fully-Insured Membership | ||||||||||||||||
Medicare Advantage | 2,279.7 | 1,901.3 | 378.4 | 19.9 | % | |||||||||||
Medicare stand-alone PDPs | 3,025.5 | 2,556.9 | 468.6 | 18.3 | % | |||||||||||
Total Medicare | 5,305.2 | 4,458.2 | 847.0 | 19.0 | % | |||||||||||
S-17 | ||||||||||||||||
Humana Inc. | Fair value | |||||
Investments | ||||||
Dollars in millions | ||||||
9/30/2012 | 6/30/2012 | 12/31/2011 | ||||
Investment Portfolio: | ||||||
Cash & cash equivalents | $1,363 | $3,869 | $1,377 | |||
Investment securities | 8,058 | 7,882 | 7,743 | |||
Long-term investments | 1,837 | 1,783 | 1,710 | |||
Total investment portfolio | $11,258 | $13,534 | $10,830 | |||
Duration (I) | 3.89 | 3.24 | 3.94 | |||
Average Credit Rating | AA- | AA- | AA- | |||
Investment Portfolio Detail: | ||||||
Cash and cash equivalents | $1,363 | $3,869 | $1,377 | |||
U.S. Government and agency obligations | ||||||
U.S. Treasury and agency obligations | 563 | 553 | 725 | |||
U.S. Government residential mortgage-backed | 1,908 | 1,921 | 1,751 | |||
U.S. Government commercial mortgage-backed | 34 | 34 | 33 | |||
Total U.S. Government and agency obligations | 2,505 | 2,508 | 2,509 | |||
Tax-exempt municipal securities | ||||||
Pre-refunded | 286 | 294 | 332 | |||
Insured | 618 | 631 | 634 | |||
Other | 1,961 | 1,946 | 1,874 | |||
Auction rate securities | 13 | 15 | 16 | |||
Total tax-exempt municipal securities | 2,878 | 2,886 | 2,856 | |||
Residential mortgage-backed | ||||||
Prime residential mortgages | 34 | 36 | 41 | |||
Alt-A residential mortgages | 1 | 1 | 2 | |||
Sub-prime residential mortgages | 1 | 1 | 1 | |||
Total residential mortgage-backed | 36 | 38 | 44 | |||
Commercial mortgage-backed | 658 | 448 | 381 | |||
Asset-backed securities | 37 | 44 | 83 | |||
Corporate securities | ||||||
Financial services | 853 | 818 | 692 | |||
Other | 2,928 | 2,923 | 2,888 | |||
Total corporate securities | 3,781 | 3,741 | 3,580 | |||
Total investment portfolio | $11,258 | $13,534 | $10,830 | |||
S-18 | ||||||
Humana Inc. | |||||||||
Detail of Benefits Payable Balance and Year-to-Date Changes | |||||||||
Dollars in millions | |||||||||
September 30, | September 30, | December 31, | |||||||
2012 | 2011 | 2011 | |||||||
Detail of benefits payable | |||||||||
IBNR and other benefits payable (J) | $3,097 | $2,742 | $2,759 | ||||||
Unprocessed claim inventories (K) | 380 | 419 | 280 | ||||||
Processed claim inventories (L) | 339 | 174 | 209 | ||||||
Payable to pharmacy benefit administrator (M) | 127 | 157 | 167 | ||||||
Benefits payable, excluding military services | 3,943 | 3,492 | 3,415 | ||||||
Military services benefits payable (N) | 15 | 376 | 339 | ||||||
Total Benefits Payable | $3,958 | $3,868 | $3,754 | ||||||
Nine Months Ended | Nine Months Ended | Year Ended | |||||||
September 30, 2012 | September 30, 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 | 73 | - | 29 | ||||||
Incurred related to: | |||||||||
Current year | 22,606 | 19,476 | 25,821 | ||||||
Prior years (P) | (235 | ) | (318 | ) | (372 | ) | |||
Total incurred | 22,371 | 19,158 | 25,449 | ||||||
Paid related to: | |||||||||
Current year | (19,091 | ) | (16,301 | ) | (22,729 | ) | |||
Prior years | (2,825 | ) | (2,579 | ) | (2,548 | ) | |||
Total paid | (21,916 | ) | (18,880 | ) | (25,277 | ) | |||
Balances at end of period | $3,943 | $3,492 | $3,415 | ||||||
Nine Months Ended | Nine Months Ended | Year Ended | |||||||
September 30, 2012 | September 30, 2011 | December 31, 2011 | |||||||
Summary of Consolidated Benefit Expense: | |||||||||
Total benefit expense incurred, per above | $22,371 | $19,158 | $25,449 | ||||||
Military services benefit expense | 908 | 2,512 | 3,247 | ||||||
Future policy benefit expense (Q) | 190 | 91 | 127 | ||||||
Consolidated Benefit Expense | $23,469 | $21,761 | $28,823 | ||||||
S-19 | |||||||||
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 | 13.7 | 13.8 | (0.1) | -0.7% | ||||
3rd Quarter Average | 13.0 | 13.6 | (0.6) | -4.4% | ||||
4th Quarter Average | 14.0 | n/a | n/a | |||||
Full Year Average | 13.2 | 13.8 | ||||||
Unprocessed Claims Inventories | ||||||||
Date | Estimated Valuation | Claim Item | Number of Days | |||||
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 | |||||
6/30/2012 | $310 | 1,077 | 4.2 | |||||
9/30/2012 | $380 | 1,440 | 5.7 | |||||
S-20 | ||||||||
Humana Inc. | |||||||||||
Benefits Payable Statistics (Continued) (R) | |||||||||||
Days in Claims Payable (T) | |||||||||||
Quarter Ended | Days in Claims | Change Last 4 | Percentage | ||||||||
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 | % | ||||||
6/30/2012 | 51.0 | (5.0 | ) | -8.9 | % | ||||||
9/30/2012 | 51.6 | (2.6 | ) | -4.8 | % | ||||||
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 | 1.0 | (2.3 | ) | ||||||||
Change in processed claims inventories | 1.7 | 1.4 | |||||||||
Change in pharmacy payment cutoff | (0.4 | ) | 0.6 | ||||||||
Change in capitation/provider settlements | (3.3 | ) | (0.7 | ) | |||||||
All other | 0.1 | ||||||||||
DCP - end of period | 51.6 | 52.5 | |||||||||
S-21 | |||||||||||
Humana Inc. Footnotes to Statistical Schedules and Supplementary Information 3Q12 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 operating 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 (8th, 16th, 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 medical 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 medical claims reserve recorded upon enrollment later in the quarter. This analysis excludes the impact of military services and Medicare stand-alone PDPs upon DCP. | ||
S-22 |