Humana Reports Detailed Second Quarter 2007 Financial Results
View Press Release in PDF format
LOUISVILLE, Ky., Jul 30, 2007 (BUSINESS WIRE) -- Humana Inc. (NYSE: HUM):-- Full year EPS expected to grow more than 50 percent in 2007
-- Lower administrative costs primarily from efficiency and productivity gains
-- Improving medical expense ratios in both segments
-- GAAP cash flows from operations up 33 percent year to date
-- Non-GAAP cash flows from operations up 71 percent year to date
Humana Inc. (NYSE: HUM) today reported financial results for the quarter ended June 30, 2007 (2Q07) including diluted earnings per common share (EPS) of $1.28, as announced in the company's July 18, 2007 press release. The company earned $0.53 per share for the quarter ended June 30, 2006 (2Q06). The year-over-year improvement in second quarter results reflected higher operating earnings in both of the company's business segments, primarily driven by efficiency gains in its consolidated administrative costs as well as medical expense ratio improvement.
As also announced on July 18, 2007, the company estimates EPS for the year ending December 31, 2007 (FY07E) will be in the range of $4.40 to $4.50 versus $2.90 for the year ended December 31, 2006 (FY06).
"An across-the-board focus on operational excellence led to an extremely strong second quarter," said Michael B. McCallister, Humana's president and chief executive officer. "These same dynamics are expected to fuel Humana's performance for the remainder of the year and position us well for growth into the future."
For the six months ended June 30, 2007 (1H07) the company reported $1.70 in EPS compared to $1.03 for the six months ended June 30, 2006 (1H06). Results for 1H06 included approximately $0.19 per share of venture capital gains that did not recur in 1H07. The year-over-year increase in 1H07 financial results was primarily due to better operating performance in both business segments.
Revenues - 2Q07 consolidated revenues rose 19 percent to $6.43 billion from $5.41 billion in 2Q06, with total premium and administrative services fees up 18 percent compared to the prior year's quarter. This year-over-year increase was primarily driven by higher average Medicare membership versus 2Q06.
1H07 consolidated revenues rose 25 percent to $12.63 billion from $10.11 billion in 1H06 with total premium and administrative services fees up 25 percent compared to the prior year's period, also primarily driven by higher average enrollment in the company's Medicare plans.
Medical costs - The 2Q07 consolidated medical expense ratio (medical expenses as a percent of premium revenues or MER) of 83.4 percent was 170 basis points lower than the 2Q06 MER of 85.1 percent as a result of MER improvement in both the Government and Commercial segments.
The consolidated MER for 1H07 of 85.1 percent was 70 basis points higher than the 1H06 consolidated MER of 84.4 percent, as the year-over-year increase in the Government Segment MER resulting from the Medicare Part D claims pattern outweighed the improvement in the Commercial Segment MER.
Selling, general, & administrative (SG&A) expenses - The 2Q07 consolidated SG&A expense ratio (SG&A expenses as a percent of premiums, administrative services fees and other revenue) decreased 70 basis points to 13.0 percent for 2Q07 from 13.7 percent in 2Q06. The year-over-year decline was primarily the result of improving administrative cost efficiency and productivity gains associated with servicing the company's 11.3 million medical members.
The SG&A expense ratio for 1H07 of 13.2 percent was 160 basis points lower than that for 1H06 of 14.8 percent also primarily driven by efficiency and productivity gains.
Government Segment Results Summary
Pretax results:
-- Government Segment pretax earnings were $288.8 million in 2Q07 compared to $98.0 million in 2Q06. As expected, this primarily reflects a more normal MER pattern for the Part D benefit for 2007 as well as administrative cost efficiency associated with higher average Medicare medical membership. The extended enrollment period for this benefit during 2006 distorted the claims pattern associated with the beneficiaries' progression through the Part D benefit stages in the prior year.
-- For 1H07, pretax earnings for the Government Segment of $306.7 million increased by $187.1 million, or 157 percent versus 1H06 pretax earnings for the segment of $119.6 million, primarily reflecting the same factors impacting the year-over-year comparison for the second quarter.
Enrollment:
-- Medicare Advantage membership grew to 1,133,700 at June 30, 2007, an increase of 173,900, or 18 percent, from June 30, 2006 and 20,300, or 2 percent, from March 31, 2007. Average Medicare Advantage membership for 2Q07 was up 28 percent compared to that for 2Q06. The company's expanded participation in various Medicare products and markets combined with the company's increased sales and marketing efforts for these programs led to the higher membership level both year over year and sequentially.
-- Membership in the company's stand-alone Prescription Drug Plans (PDPs) totaled 3,440,100 at June 30, 2007 compared to 3,458,800 at June 30, 2006 and 3,473,700 at March 31, 2007. Average stand-alone PDP membership was 21 percent higher in 2Q07 than 2Q06.
-- TRICARE membership of 2,868,200 at June 30, 2007 was essentially unchanged from both June 30, 2006 and March 31, 2007.
-- Medicaid membership of 567,600 at June 30, 2007 increased 149,100 from June 30, 2006 due primarily to the award of a new Puerto Rico regional ASO contract during the fourth quarter of 2006, partially offset by eligible Puerto Rico Medicaid members choosing to move into the Medicare Advantage program.
Premiums and administrative services fees:
-- Medicare Advantage premiums of $2.80 billion in 2Q07 increased 33 percent compared to $2.11 billion in 2Q06, primarily the result of higher average membership.
-- Medicare stand-alone Part D premiums of $1.05 billion in 2Q07 increased 31 percent compared to $801.8 million in 2Q06, primarily the result of higher average membership.
-- TRICARE premiums and administrative services fees during 2Q07 increased $71.8 million to $740.6 million compared to $668.8 million in 2Q06.
Medical Expenses:
-- The Government Segment MER decreased 170 basis points to 84.3 percent in 2Q07 compared to 86.0 percent in the prior year's quarter. This decrease reflects a more normalized MER pattern for the Medicare Part D benefit for 2007. The extended enrollment period for this benefit during the prior year distorted the claims pattern associated with the beneficiaries' progression through the Part D benefit stages in 2006.
SG&A Expenses:
-- The Government Segment's SG&A expense ratio for 2Q07 of 10.0 percent was 150 basis points lower than that for 2Q06 of 11.5 percent primarily driven by efficiency and productivity gains associated with servicing higher average Medicare membership. The 2Q07 SG&A expense ratio was approximately 30 basis points lower than previously expected primarily due to improving staffing metrics and enhanced processes associated with servicing its Medicare business.
Commercial Segment Results Summary
Pretax results:
-- Commercial Segment pretax earnings were $50.8 million in 2Q07 compared to $42.3 million in 2Q06. Commercial Segment operating earnings in 2Q07 continue to reflect the company's commitment to underwriting discipline and strategic growth in select lines of business.
-- For 1H07, pretax earnings for the Commercial Segment of $145.2 million were $6.8 million, or 5 percent lower than 1H06 pretax earnings for the segment of $152.0 million as a result of a $45.3 million pretax gain associated with the sale of a venture capital investment that occurred in 1Q06.
Enrollment:
-- Commercial Segment medical membership of 3,278,700 at June 30, 2007 was essentially unchanged from both June 30, 2006 and March 31, 2007.
-- Membership in the company's Smart plans and other consumer offerings grew to 480,900 at June 30, 2007, an increase of 64,500, or 15 percent, from June 30, 2006 and 9,600, or 2 percent, from March 31, 2007. Medical members in these products comprise approximately 15 percent of Commercial medical membership at June 30, 2007 and March 31, 2007 compared to 13 percent at June 30, 2006.
Premiums and administrative services fees:
-- Premiums and administrative services fees for the Commercial Segment decreased 3 percent to $1.59 billion in 2Q07 compared to $1.64 billion in the prior year's quarter, primarily due to lower average commercial fully-insured membership, down 8 percent year over year, as well as a shift in business mix from fully-insured to ASO enrollment.
-- Commercial Segment medical premiums for fully-insured groups increased approximately 5 percent on a per-member basis during 2Q07 compared to 2Q06.
Medical Expenses:
-- In 2Q07, the Commercial Segment MER of 80.7 percent was 220 basis points lower than the 2Q06 MER of 82.9 percent, primarily reflecting improving medical cost utilization trends and the company's continued commitment to underwriting discipline.
SG&A Expenses:
-- The Commercial Segment SG&A expense ratio of 21.8 percent for 2Q07 compares to 18.7 percent in 2Q06, primarily the combined result of higher average ASO membership and administrative costs associated with increased business for the company's mail order pharmacy. Average ASO membership increased 8 percent versus the prior year's quarter.
Balance Sheet
-- Cash and cash equivalents of $3.72 billion increased $26.7 million or 1 percent sequentially. The early receipt of the April Medicare premium from the Centers for Medicare and Medicaid Services (CMS) during 1Q07 was essentially offset by the early receipt of the July Medicare premium from CMS during 2Q07.
-- Parent company cash and investments decreased to $419.3 million at June 30, 2007 from $424.4 million at December 31, 2006.
-- Unearned revenues of $1.36 billion increased 2 percent from the March 31, 2007 balance of $1.33 billion also due to the timing of the receipts of Medicare premiums from CMS.
-- Debt-to-total capitalization at June 30, 2007 was 26.1 percent, down 350 basis points from March 31, 2007 due primarily to the repayment of 1Q07 borrowings against the company's credit facility.
-- The company's working capital at June 30, 2007 included approximately $690.2 million in net Part D risk-share payables to CMS associated with the company's Medicare Advantage and stand-alone PDP offerings. Approximately $728.1 million of this net liability related to Part D plan offerings for the year ended December 31, 2006.
-- Days in claims payable excluding the impact of Medicare stand-alone PDPs were up slightly to 62.4 days at June 30, 2007 from 62.0 days at March 31, 2007.
Cash Flows from Operations
Cash flows provided by operations for 2Q07 of $477.3 million compared to cash provided by operations of $534.9 million in 2Q06.
Cash flows from operations ($ in millions) 2Q07 2Q06 1H07 1H06 ---------------------------------------------------------------------- Cash flows provided by operations in accordance with Generally Accepted Accounting Principles (GAAP) $477.3 $534.9 $2,051.7 $1,542.8 ---------------------------------------------------------------------- Timing of premium payment from CMS(a) (45.6) (257.2) (1,175.3) (1,031.7) ---------------------------------------------------------------------- Non-GAAP cash flows provided by operations(a)(b) $431.7 $277.7 $876.4 $511.1 ----------------------------------------------------------------------
The company also evaluates operating cash flows on a non-GAAP basis(a)(b). Non-GAAP cash flows provided by operations rose to $431.7 million(a)(b) in 2Q07 from $277.7 million(a)(b) in 2Q06 driven primarily by growth in the company's Medicare operations.
Footnotes
(a) When reviewing and analyzing Humana's operating cash flows, company management applies the CMS premium payment in each month to match the corresponding disbursements. To do otherwise distorts meaningful analysis of the company's operating cash flow. Therefore, decisions such as management's forecasting and business plans regarding cash flow use this non-GAAP financial measure.
(b) The company believes that this non-GAAP measure, when presented in conjunction with the comparable GAAP measure, is useful to both management and its investors in analyzing the company's ongoing business and operating performance. Internally, management uses this non-GAAP financial measure as an indicator 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 approximately 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 approximately 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 contains statements and earnings guidance points that are forward-looking. The forward-looking items herein are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking items may be significantly impacted by certain risks and uncertainties described in the following documents filed by Humana with the Securities and Exchange Commission
-- Form 10-K for the year ended December, 31, 2006,
-- Form 10-Q for the quarter ended March 31, 2007,
-- Form 8-Ks filed during 2007.
About Humana
Humana Inc., headquartered in Louisville, Kentucky, is one of the nation's largest publicly traded health benefits companies, with approximately 11.3 million medical members. Humana offers a diversified portfolio of health insurance products and related services - through traditional and consumer-choice plans - to employer groups, government-sponsored plans, and individuals.
Over its 46-year history, Humana has consistently seized opportunities to meet changing customer needs. Today, the company is a leader in consumer engagement, providing guidance that leads to lower costs and a better health plan experience throughout its diversified customer portfolio.
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:
-- Annual reports to stockholders;
-- Securities and Exchange Commission filings;
-- Most recent investor conference presentations;
-- Quarterly earnings news releases;
-- Replay of most recent earnings release conference calls;
-- Calendar of events (includes upcoming earnings conference call dates and times, as well as planned interaction with research analysts and institutional investors);
-- Corporate Governance information.
Humana Inc.
Guidance Points as of For the year ending Comments
July 30, 2007 December 31, 2007 (in
accordance with
Generally Accepted
Accounting Principles)
----------------------------------------------------------------------
Diluted earnings per Full year 2007: $4.40
common share (EPS) to $4.50
3Q07: $1.45 to $1.50
----------------------------------------------------------------------
Revenues Consolidated revenues:
$24.5 billion to $25.5
billion;
Premiums and ASO fees:
Medicare Advantage:
$10.5 billion to
$11.0 billion;
Medicare
stand-alone PDPs:
Approximately $3.5
billion;
TRICARE:
Approximately $3.0
billion;
Commercial: $6.5
billion to $7.0
billion;
Investment income:
$290 million to
$300 million;
Other revenue: $150 Other revenue primarily
million to $155 relates to revenues
million associated with the
company's mail order
pharmacy; related
administrative costs
are in SG&A expenses
----------------------------------------------------------------------
Ending medical Medicare Advantage:
membership (fully- 1,120,000 to
insured and ASO 1,130,000;
combined)
Medicare stand-alone
PDPs: 3.4 million to
3.5 million;
TRICARE: No material
change from prior
year;
Medicaid: Down
approximately 10,000;
Commercial: Up
approximately 50,000
to 75,000 from prior
year
----------------------------------------------------------------------
Medical costs Total Medicare Medicare Advantage and
products: MER in the stand-alone PDP
range of 82.5% to combined
83.5%;
Commercial fully- 2007 secular Commercial
insured groups: medical cost trend
Medical cost trends in components as follows:
the range of 4.5% to inpatient hospital
5.0%; premium yields utilization - flat to
in line with medical 1 percent; inpatient
cost trends and outpatient
hospital rates - mid
to upper single
digits; outpatient
hospital utilization -
low to mid single
digits; physician -
mid single digits; and
pharmacy - low double
digits.
----------------------------------------------------------------------
Selling, general & Consolidated SG&A SG&A expenses as a
administrative expense ratio of 13% percent of premiums,
expenses to 14% administrative costs,
and other revenue
----------------------------------------------------------------------
Depreciation & Approximately $185
amortization million
----------------------------------------------------------------------
Interest expense Approximately $70
million
----------------------------------------------------------------------
Pretax results Total Medicare Medicare Advantage and
products: stand-alone PDP
Approximately 5% combined
pretax margin;
TRICARE: Approximately
3.5% pretax margin;
Commercial Segment: Includes no material
$230 million to $240 benefit from venture
million capital gains
----------------------------------------------------------------------
Cash flows from $1.2 billion to $1.5 Includes accrual for
operations billion estimated 2007 Part D
risk-share payable in
the range of zero to
$200 million
----------------------------------------------------------------------
Capital expenditures Approximately $220
million
----------------------------------------------------------------------
Effective tax rate Approximately 36% to
37%
----------------------------------------------------------------------
Shares used in Approximately 171
computing EPS million
----------------------------------------------------------------------
S-1
Humana Inc.
Statistical Schedules
And
Supplementary Information
2Q07 Earnings Release
S-2
Humana Inc.
Statistical Schedules and Supplementary Information
2Q07 Earnings Release
Contents
Page Description
------- --------------------------------------------------------------
S-3-4 Consolidated Statements of Income
S-5 Consolidated Balance Sheets
S-6-7 Consolidated Statements of Cash Flows
S-8 Key Income Statement Ratios and Segment Operating Results
S-9 Membership Detail
S-10-11 Premiums and Administrative Services Fees Detail
S-12 Percentage of Ending Membership under Capitation Arrangements
S-13-15 Medical Claims Reserves
S-16 Footnotes
S-3
Humana Inc.
Consolidated Statements of Income
In thousands, except per common share results
---------------------
Three Months Ended
June 30,
---------------------
Dollar Percentage
2007 2006 Change Change
--------------------- ---------------------
Revenues:
Premiums $6,223,250 $5,264,475 $958,775 18.2%
Administrative services
fees 97,093 83,711 13,382 16.0%
Investment income 72,052 50,567 21,485 42.5%
Other revenue 34,402 8,416 25,986 308.8%
--------------------- ----------
Total revenues 6,426,797 5,407,169 1,019,628 18.9%
--------------------- ----------
Operating expenses:
Medical 5,190,418 4,479,501 710,917 15.9%
Selling, general and
administrative 826,459 733,863 92,596 12.6%
Depreciation 48,820 31,613 17,207 54.4%
Other intangible
amortization 5,444 4,983 461 9.3%
--------------------- ----------
Total operating
expenses 6,071,141 5,249,960 821,181 15.6%
--------------------- ----------
Income from operations 355,656 157,209 198,447 126.2%
Interest expense 16,066 16,887 (821) -4.9%
--------------------- ----------
Income before income taxes 339,590 140,322 199,268 142.0%
Provision for income taxes 122,744 50,833 71,911 141.5%
--------------------- ----------
Net income $216,846 $89,489 $127,357 142.3%
===================== ==========
Basic earnings per common
share $1.30 $0.55 $0.75 136.4%
Diluted earnings per common
share $1.28 $0.53 $0.75 141.5%
Shares used in computing
basic earnings per common
share 166,614 163,706
Shares used in computing
diluted earnings per
common share 169,596 167,536
S-4
Humana Inc.
Consolidated Statements of Income
In thousands, except per common share results
----------------------
Six Months Ended June
30,
----------------------
Dollar Percentage
2007 2006 Change Change
---------------------- ----------------------
Revenues:
Premiums $12,227,813 $9,785,961 $2,441,852 25.0%
Administrative services
fees 192,957 162,389 30,568 18.8%
Investment income 145,579 149,469 (3,890) -2.6%
Other revenue 65,261 13,715 51,546 375.8%
---------------------- -----------
Total revenues 12,631,610 10,111,534 2,520,076 24.9%
---------------------- -----------
Operating expenses:
Medical 10,404,418 8,263,427 2,140,991 25.9%
Selling, general and
administrative 1,647,069 1,474,749 172,320 11.7%
Depreciation 84,329 61,465 22,864 37.2%
Other intangible
amortization 9,999 10,037 (38) -0.4%
---------------------- -----------
Total operating
expenses 12,145,815 9,809,678 2,336,137 23.8%
---------------------- -----------
Income from operations 485,795 301,856 183,939 60.9%
Interest expense 33,984 30,326 3,658 12.1%
---------------------- -----------
Income before income
taxes 451,811 271,530 180,281 66.4%
Provision for income
taxes 163,724 98,326 65,398 66.5%
---------------------- -----------
Net income $288,087 $173,204 $114,883 66.3%
====================== ===========
Basic earnings per common
share $1.73 $1.06 $0.67 63.2%
Diluted earnings per
common share $1.70 $1.03 $0.67 65.0%
Shares used in computing
basic earnings per
common share 166,213 163,411
Shares used in computing
diluted earnings per
common share 169,276 167,430
S-5
Humana Inc.
Consolidated Balance Sheets
Dollars in thousands, except share amounts
Sequential
June 30, March 31, Dec. 31, Change
---------------
2007 2007 2006 Dollar Percent
-------------------------------------- ---------------
Assets
Current assets:
Cash and cash
equivalents $3,720,769 $3,694,059 $1,740,304
Investment
securities 3,323,536 3,154,920 3,192,273
Receivables,
net:
Premiums 685,479 826,314 667,657
Administrative
services fees 12,074 10,806 13,284
Securities
lending
collateral 1,346,065 1,049,195 627,990
Other 1,318,003 1,135,298 1,091,465
--------------------------------------
Total current
assets 10,405,926 9,870,592 7,332,973 $535,334 5.4%
Property and
equipment, net 569,412 571,405 545,004
Other assets:
Long-term
investment
securities 400,775 380,138 414,877
Goodwill 1,330,585 1,331,418 1,310,631
Other 628,267 552,572 524,011
--------------------------------------
Total other
assets 2,359,627 2,264,128 2,249,519
--------------------------------------
Total assets $13,334,965 $12,706,125 $10,127,496 $628,840 4.9%
======================================
Liabilities and
Stockholders'
Equity
Current
liabilities:
Medical and
other expenses
payable $2,954,146 $2,886,214 $2,488,261
Trade accounts
payable and
accrued
expenses 2,084,463 1,977,465 1,626,658
Book overdraft 289,646 284,572 293,605
Securities
lending
payable 1,346,065 1,049,195 627,990
Unearned
revenues 1,355,017 1,330,325 155,298
--------------------------------------
Total current
liabilities 8,029,337 7,527,771 5,191,812 $501,566 6.7%
Long-term debt 1,189,570 1,329,334 1,269,100
Other long-term
liabilities 740,560 689,493 612,698
--------------------------------------
Total
liabilities 9,959,467 9,546,598 7,073,610 $412,869 4.3%
--------------------------------------
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;
185,002,041
issued at June
30, 2007 30,833 30,746 30,491
Capital in
excess of par
value 1,422,370 1,393,582 1,357,077
Retained
earnings 2,197,185 1,980,339 1,909,098
Accumulated
other
comprehensive
loss (38,112) (8,378) (13,205)
Treasury stock,
at cost,
16,439,317
shares at June
30, 2007 (236,778) (236,762) (229,575)
--------------------------------------
Total
stockholders'
equity 3,375,498 3,159,527 3,053,886 $215,971 6.8%
--------------------------------------
Total
liabilities and
stockholders'
equity $13,334,965 $12,706,125 $10,127,496 $628,840 4.9%
======================================
Debt-to-total
capitalization
ratio 26.1% 29.6% 29.4%
S-6
Humana Inc.
Consolidated Statements of Cash Flows
Dollars in thousands
-----------------------
Three Months Ended
June 30,
-----------------------
Dollar Percentage
2007 2006 Change Change
----------------------- ---------------------
Cash flows from
operating activities
Net income $216,846 $89,489
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation and
amortization 54,264 36,596
Stock-based
compensation 10,462 8,471
(Benefit) provision
for deferred income
taxes (17,900) 2,479
Changes in operating
assets and
liabilities
excluding the
effects of
acquisitions:
Receivables 139,567 3,104
Other assets (107,522) (174,050)
Medical and other
expenses payable 67,932 266,956
Other liabilities 75,771 57,967
Unearned revenues 24,692 244,661
Other 13,154 (818)
-----------------------
Net cash provided by
operating activities 477,266 534,855 ($57,589) -10.8%
-----------------------
Cash flows from
investing activities
Acquisitions, net of
cash acquired (224) (25,818)
Purchases of property
and equipment (43,973) (36,712)
Proceeds from sales of
property and equipment 2 18
Purchases of investment
securities (908,244) (594,890)
Proceeds from
maturities of
investment securities 212,471 100,289
Proceeds from sales of
investment securities 444,692 152,855
Change in securities
lending collateral (296,870) 9,473
-----------------------
Net cash used in
investing activities (592,146) (394,785) ($197,361) -50.0%
-----------------------
Cash flows from
financing activities
Receipts from CMS
contract deposits 639,722 550,868
Withdrawals from CMS
contract deposits (708,277) (462,981)
Borrowings under credit
agreement 400,000 -
Repayments under credit
agreement (510,000) (300,000)
Proceeds from issuance
of senior notes - 498,545
Debt issue costs - (3,825)
Change in book
overdraft 5,074 (3,763)
Change in securities
lending payable 296,870 (9,473)
Common stock
repurchases (16) (4,832)
Tax benefit from stock-
based compensation 5,426 5,252
Proceeds from stock
option exercises and
other 12,791 5,198
-----------------------
Net cash provided by
financing activities 141,590 274,989 ($133,399) -48.5%
-----------------------
Increase in cash and
cash equivalents 26,710 415,059
Cash and cash
equivalents at
beginning of period 3,694,059 1,843,405
-----------------------
Cash and cash
equivalents at end of
period $3,720,769 $2,258,464
=======================
S-7
Humana Inc.
Consolidated Statements of Cash Flows
Dollars in thousands
Six Months Ended
June 30,
-----------------------
Dollar Percentage
2007 2006 Change Change
----------------------- ---------------------
Cash flows from
operating activities
Net income $288,087 $173,204
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation and
amortization 94,328 71,502
Stock-based
compensation 20,264 15,051
Benefit for deferred
income taxes (24,011) (1,226)
Changes in operating
assets and
liabilities
excluding the
effects of
acquisitions:
Receivables (16,612) (42,957)
Other assets (126,467) (359,300)
Medical and other
expenses payable 465,885 526,763
Other liabilities 134,423 172,719
Unearned revenues 1,199,719 1,044,850
Other 16,131 (57,778)
-----------------------
Net cash provided by
operating activities 2,051,747 1,542,828 $508,919 33.0%
-----------------------
Cash flows from
investing activities
Acquisitions, net of
cash acquired (27,005) (25,931)
Purchases of property
and equipment (114,717) (81,973)
Proceeds from sales of
property and equipment 4,072 2,156
Purchases of investment
securities (1,873,295) (2,258,548)
Proceeds from
maturities of
investment securities 769,956 1,010,397
Proceeds from sales of
investment securities 926,603 712,685
Change in securities
lending collateral (718,075) (193,239)
-----------------------
Net cash used in
investing activities (1,032,461) (834,453) ($198,008) -23.7%
-----------------------
Cash flows from
financing activities
Receipts from CMS
contract deposits 1,483,359 1,045,062
Withdrawals from CMS
contract deposits (1,223,982) (736,425)
Borrowings under credit
agreement 710,000 100,000
Repayments under credit
agreement (760,000) (300,000)
Proceeds from issuance
of senior notes - 498,545
Debt issue costs - (3,825)
Change in book
overdraft (3,959) (8,181)
Change in securities
lending payable 718,075 193,239
Common stock
repurchases (7,203) (4,937)
Tax benefit from stock-
based compensation 14,554 13,656
Proceeds from stock
option exercises and
other 30,335 20,939
-----------------------
Net cash provided by
financing activities 961,179 818,073 $143,106 17.5%
-----------------------
Increase in cash and
cash equivalents 1,980,465 1,526,448
Cash and cash
equivalents at
beginning of period 1,740,304 732,016
-----------------------
Cash and cash
equivalents at end of
period $3,720,769 $2,258,464
=======================
S-8
Humana Inc.
Key Income Statement Ratios and Segment Operating Results
Dollars in thousands
------------------
Three Months Ended
June 30,
------------------
Percentage
2007 2006 Difference Change
------------------ ---------------------
Medical expense ratio
Government Segment 84.3% 86.0% -1.7%
Commercial Segment 80.7% 82.9% -2.2%
Consolidated 83.4% 85.1% -1.7%
Selling, general, and
administrative expense ratio
Government Segment 10.0% 11.5% -1.5%
Commercial Segment 21.8% 18.7% 3.1%
Consolidated 13.0% 13.7% -0.7%
Detail of Pretax Income
Government Segment $288,790 $97,981 $190,809 194.7%
Commercial Segment 50,800 42,341 8,459 20.0%
------------------ ----------
Consolidated $339,590 $140,322 $199,268 142.0%
================== ==========
Detail of Pretax Margins
Government Segment 6.0% 2.6% 3.4%
Commercial Segment 3.1% 2.5% 0.6%
Consolidated 5.3% 2.6% 2.7%
------------------
Six Months Ended
June 30,
------------------
Percentage
2007 2006 Difference Change
------------------ ---------------------
Medical expense ratio
Government Segment 86.7% 85.8% 0.9%
Commercial Segment 80.1% 81.5% -1.4%
Consolidated 85.1% 84.4% 0.7%
Selling, general, and
administrative expense ratio
Government Segment 10.4% 12.5% -2.1%
Commercial Segment 21.2% 19.5% 1.7%
Consolidated 13.2% 14.8% -1.6%
Detail of Pretax Income
Government Segment $306,655 $119,553 $187,102 156.5%
Commercial Segment 145,156 151,977 (6,821) -4.5%
------------------ ----------
Consolidated $451,811 $271,530 $180,281 66.4%
================== ==========
Detail of Pretax Margins
Government Segment 3.3% 1.8% 1.5%
Commercial Segment 4.4% 4.5% -0.1%
Consolidated 3.6% 2.7% 0.9%
S-9
Humana Inc.
Membership Detail
In thousands
---------------
Year-over-year
Ending Ending Change
---------------
June 30, Average June 30,
2007 - 2Q07 2006 Amount Percent
-------------------------- ---------------
Medical Membership:
Government Segment:
Medicare Advantage - HMO 452.4 454.2 457.0 (4.6) -1.0%
Medicare Advantage - PPO 66.9 66.5 64.6 2.3 3.6%
Medicare Advantage - PFFS 614.4 611.9 438.2 176.2 40.2%
-------------------------- -------
Total Medicare
Advantage 1,133.7 1,132.6 959.8 173.9 18.1%
-------------------------- -------
Medicare - PDP - Standard 2,131.0 2,133.1 2,066.5 64.5 3.1%
Medicare - PDP - Enhanced 1,075.9 1,075.2 977.2 98.7 10.1%
Medicare - PDP - Complete 233.2 235.7 415.1 (181.9) -43.8%
-------------------------- -------
Total Medicare stand-
alone PDPs 3,440.1 3,444.0 3,458.8 (18.7) -0.5%
-------------------------- -------
Total Medicare 4,573.8 4,576.6 4,418.6 155.2 3.5%
-------------------------- -------
TRICARE insured 1,717.6 1,719.4 1,732.6 (15.0) -0.9%
TRICARE ASO 1,150.6 1,161.1 1,141.9 8.7 0.8%
-------------------------- -------
Total TRICARE 2,868.2 2,880.5 2,874.5 (6.3) -0.2%
-------------------------- -------
Medicaid insured 384.9 384.0 418.5 (33.6) -8.0%
Medicaid ASO 182.7 181.7 - 182.7 100.0%
-------------------------- -------
Total Medicaid 567.6 565.7 418.5 149.1 35.6%
-------------------------- -------
Total Government Segment 8,009.6 8,022.8 7,711.6 298.0 3.9%
-------------------------- -------
Commercial Segment:
Fully-insured medical:
Group 1,533.0 1,530.1 1,716.4 (183.4) -10.7%
Individual 205.0 200.3 170.0 35.0 20.6%
Medicare supplement 8.3 7.8 6.7 1.6 23.9%
-------------------------- -------
Total fully-insured
medical 1,746.3 1,738.2 1,893.1 (146.8) -7.8%
ASO 1,532.4 1,525.8 1,420.8 111.6 7.9%
-------------------------- -------
Total Commercial Segment 3,278.7 3,264.0 3,313.9 (35.2) -1.1%
-------------------------- -------
Total medical membership 11,288.3 11,286.8 11,025.5 262.8 2.4%
========================== =======
Specialty Membership (all Commercial Segment)
Dental - fully-insured 978.1 979.9 955.6 22.5 2.4%
Dental - ASO 499.9 497.8 496.5 3.4 0.7%
-------------------------- -------
Total dental 1,478.0 1,477.7 1,452.1 25.9 1.8%
Group life 439.8 439.2 427.2 12.6 2.9%
Short-term disability 12.2 12.5 15.6 (3.4) -21.8%
-------------------------- -------
Total specialty membership 1,930.0 1,929.4 1,894.9 35.1 1.9%
========================== =======
-------------------
Ending Sequential Change
-------------------
March 31,
2007 Amount Percent
------------ -------------------
Medical Membership:
Government Segment:
Medicare Advantage - HMO 462.1 (9.7) -2.1%
Medicare Advantage - PPO 64.6 2.3 3.6%
Medicare Advantage - PFFS 586.7 27.7 4.7%
------------ ---------
Total Medicare Advantage 1,113.4 20.3 1.8%
------------ ---------
Medicare - PDP - Standard 2,146.2 (15.2) -0.7%
Medicare - PDP - Enhanced 1,084.0 (8.1) -0.7%
Medicare - PDP - Complete 243.5 (10.3) -4.2%
------------ ---------
Total Medicare stand-alone PDPs 3,473.7 (33.6) -1.0%
------------ ---------
Total Medicare 4,587.1 (13.3) -0.3%
------------ ---------
TRICARE insured 1,712.9 4.7 0.3%
TRICARE ASO 1,165.5 (14.9) -1.3%
------------ ---------
Total TRICARE 2,878.4 (10.2) -0.4%
------------ ---------
Medicaid insured 384.0 0.9 0.2%
Medicaid ASO 175.4 7.3 4.2%
------------ ---------
Total Medicaid 559.4 8.2 1.5%
------------ ---------
Total Government Segment 8,024.9 (15.3) -0.2%
------------ ---------
Commercial Segment:
Fully-insured medical:
Group 1,528.6 4.4 0.3%
Individual 192.1 12.9 6.7%
Medicare supplement 7.4 0.9 12.2%
------------ ---------
Total fully-insured medical 1,728.1 18.2 1.1%
ASO 1,529.4 3.0 0.2%
------------ ---------
Total Commercial Segment 3,257.5 21.2 0.7%
------------ ---------
Total medical membership 11,282.4 5.9 0.1%
============ =========
Specialty Membership (all Commercial
Segment)
Dental - fully-insured 980.5 (2.4) -0.2%
Dental - ASO 503.7 (3.8) -0.8%
------------ ---------
Total dental 1,484.2 (6.2) -0.4%
Group life 437.9 1.9 0.4%
Short-term disability 13.1 (0.9) -6.9%
------------ ---------
Total specialty membership 1,935.2 (5.2) -0.3%
============ =========
S-10
Humana Inc.
Premiums and Administrative Services Fees Detail
Dollars in thousands, except per member per month
-----------
Per
Member per
Month(A)
Three
Months
Three Months Ended Ended
June 30, June 30,
--------------------- -----------
Dollar Percentage
2007 2006 Change Change 2007 2006
--------------------- --------------------- -----------
Premium
revenues
Government
Segment:
Medicare
Advantage $2,804,438 $2,109,406 $695,032 32.9% $825 $792
Medicare
stand-alone
PDPs 1,051,259 801,755 249,504 31.1% $102 $94
--------------------- ----------
Total
Medicare 3,855,697 2,911,161 944,536 32.4%
TRICARE
insured(B) 725,040 657,627 67,413 10.3% $141 $127
Medicaid
insured 132,486 129,158 3,328 2.6% $115 $102
--------------------- ----------
Total
Government
Segment
premiums 4,713,223 3,697,946 1,015,277 27.5%
--------------------- ----------
Commercial
Segment:
Fully-insured
medical 1,402,082 1,464,646 (62,564) -4.3% $269 $259
Specialty 107,945 101,883 6,062 5.9% $22 $21
--------------------- ----------
Total
Commercial
Segment
premiums 1,510,027 1,566,529 (56,502) -3.6%
--------------------- ----------
Total premium
revenues $6,223,250 $5,264,475 $958,775 18.2%
===================== ==========
Administrative
services fees
TRICARE ASO(B) $15,535 $11,144 $4,391 39.4% $4 $3
Medicaid ASO 2,136 - 2,136 100.0% $4 -
--------------------- ----------
Total
Government
Segment 17,671 11,144 6,527 58.6%
Commercial
Segment 79,422 72,567 6,855 9.4% $13 $13
--------------------- ----------
Total
administrative
services fees $97,093 $83,711 $13,382 16.0%
===================== ==========
S-11
Humana Inc.
Premiums and Administrative Services Fees Detail
Dollars in thousands, except per member per month
---------
Per
Member
per
Month(A)
Six
Months
Six Months Ended June Ended
30, June 30,
---------------------- ---------
Dollar Percentage
2007 2006 Change Change 2007 2006
---------------------- ---------------------- ---------
Premium
revenues
Government
Segment:
Medicare
Advantage $5,547,149 $3,830,249 $1,716,900 44.8% $828 $808
Medicare
stand-alone
PDPs 1,957,685 1,316,912 640,773 48.7% $94 $96
---------------------- -----------
Total
Medicare 7,504,834 5,147,161 2,357,673 45.8%
TRICARE
insured(B) 1,452,255 1,258,381 193,874 15.4% $141 $121
Medicaid
insured 261,811 258,625 3,186 1.2% $113 $101
---------------------- -----------
Total
Government
Segment
premiums 9,218,900 6,664,167 2,554,733 38.3%
---------------------- -----------
Commercial
Segment:
Fully-insured
medical 2,792,887 2,918,578 (125,691) -4.3% $269 $259
Specialty 216,026 203,216 12,810 6.3% $22 $21
---------------------- -----------
Total
Commercial
Segment
premiums 3,008,913 3,121,794 (112,881) -3.6%
---------------------- -----------
Total premium
revenues $12,227,813 $9,785,961 $2,441,852 25.0%
====================== ===========
Administrative
services fees
TRICARE ASO(B) $29,829 $22,335 $7,494 33.6% $4 $3
Medicaid ASO 4,232 - 4,232 100.0% $4 -
---------------------- -----------
Total
Government
Segment 34,061 22,335 11,726 52.5%
Commercial
Segment 158,896 140,054 18,842 13.5% $13 $12
---------------------- -----------
Total
administrative
services fees $192,957 $162,389 $30,568 18.8%
====================== ===========
S-12
Humana Inc.
Percentage of Ending Membership under Capitation Arrangements
----------------------------------------------
Government Segment
----------------------------------------------
Medicare
stand- Total
Medicare alone Govt.
June 30, 2007 Advantage PDPs TRICARE Medicaid Segment
----------------------- ----------------------------------------------
Capitated HMO hospital
system based(C) 2.5% - - - 0.3%
Capitated HMO physician
group based(C) 2.0% - - 26.0% 2.1%
Risk-sharing(D) 24.3% - - 41.4% 6.4%
All other membership 71.2% 100.0% 100.0% 32.6% 91.2%
----------------------------------------------
Total medical
membership 100.0% 100.0% 100.0% 100.0% 100.0%
==============================================
June 30, 2006
-----------------------
Capitated HMO hospital
system based(C) 3.4% - - - 0.4%
Capitated HMO physician
group based(C) 2.5% - - 34.7% 2.2%
Risk-sharing(D) 27.9% - - 64.6% 7.0%
All other membership 66.2% 100.0% 100.0% 0.7% 90.4%
----------------------------------------------
Total medical
membership 100.0% 100.0% 100.0% 100.0% 100.0%
==============================================
--------------------------------
Commercial Segment
--------------------------------
Fully- Total Comm. Total Medical
June 30, 2007 insured ASO Segment Membership
----------------------------------------------------------------------
Capitated HMO hospital
system based(C) 1.4% - 0.8% 0.5%
Capitated HMO physician
group based(C) 1.5% - 0.8% 1.8%
Risk-sharing(D) 1.5% - 0.8% 4.8%
All other membership 95.6% 100.0% 97.6% 92.9%
-----------------------------------------------
Total medical
membership 100.0% 100.0% 100.0% 100.0%
===============================================
June 30, 2006
-----------------------
Capitated HMO hospital
system based(C) 1.8% - 1.1% 0.6%
Capitated HMO physician
group based(C) 1.7% - 1.0% 1.8%
Risk-sharing(D) 2.3% - 1.3% 5.3%
All other membership 94.2% 100.0% 96.6% 92.3%
-----------------------------------------------
Total medical
membership 100.0% 100.0% 100.0% 100.0%
===============================================
S-13
Humana Inc.
Detail of Medical and Other Expenses Payable Balance and Year-to-Date
Changes
Dollars in thousands
June 30, March 31, December 31,
2007 2007 2006
------------------------------------
Detail of medical and other
expenses payable
IBNR and other medical expenses
payable(E) $2,028,722 $1,869,209 $1,686,051
TRICARE IBNR (F) 308,112 361,786 318,583
TRICARE other medical expenses
payable(G) 100,975 97,994 94,699
Unprocessed claim inventories(H) 211,300 222,300 218,400
Processed claim inventories(I) 142,171 135,241 115,424
Payable to pharmacy benefit
administrator(J) 162,866 199,684 55,104
------------------------------------
Total medical and other expenses
payable $2,954,146 $2,886,214 $2,488,261
====================================
Three
Six Months Months
Ended Ended Year Ended
June 30, March 31, December 31,
2007 2007 2006
------------------------------------
Year-to-date changes in medical
and other expenses payable
Balances at January 1 $2,488,261 $2,488,261 $1,909,682
Acquisitions - - 21,198
Incurred related to:
Current year(K) 10,574,111 5,370,722 17,696,654
Prior years - non-TRICARE(K) (156,032) (148,777) (178,998)
Prior years - TRICARE(L) (13,661) (7,945) (96,452)
------------------------------------
Total incurred 10,404,418 5,214,000 17,421,204
------------------------------------
Paid related to:
Current year (8,275,133) (3,800,981) (15,532,079)
Prior years (1,663,400) (1,015,066) (1,331,744)
------------------------------------
Total paid (9,938,533) (4,816,047) (16,863,823)
------------------------------------
Balances at end of period $2,954,146 $2,886,214 $2,488,261
====================================
S-14
Humana Inc.
Medical Claims Reserves Statistics
Receipt Cycle Time(M)
Percentage
2007 2006 Change Change
-----------------------------------------------
1st Quarter Average 15.6 16.1 (0.5) -3.1%
2nd Quarter Average 15.6 15.8 (0.2) -1.3%
3rd Quarter Average - 16.0 N/A N/A
4th Quarter Average - 15.8 N/A N/A
------------------------------------
Full Year Average 15.6 15.9 (0.3) -1.9%
====================================
Unprocessed Claims Inventories
Estimated Number of
Valuation Claim Item Days on
Date (000's) Counts Hand
----------------------------------------------------------
6/30/2005 $119,500 443,600 4.0
9/30/2005 $136,700 512,800 4.7
12/31/2005 $148,200 498,400 4.6
3/31/2006 $185,300 683,900 5.6
6/30/2006 $193,700 702,000 4.8
9/30/2006 $187,900 623,900 5.4
12/31/2006 $218,400 757,700 6.1
3/31/2007 $222,300 747,200 5.5
----------------------------------------------------------
6/30/2007 $211,300 751,600 4.9
----------------------------------------------------------
S-15
Humana Inc.
Medical Claims Reserves Statistics (Continued)
Days in Claims Payable(N)
Days in
Claim DCP
Quarter Payable Annual Percentage Excluding Annual Percentage
Ended (DCP) Change Change Capitation Change Change
---------------------------------------------------------------------
6/30/2005 52.8 5.4 11.4% 58.6 4.5 8.3%
9/30/2005 54.0 2.2 4.2% 60.8 1.7 2.9%
12/31/2005 60.3 10.8 21.8% 66.6 11.8 21.5%
3/31/2006 59.1 8.6 17.0% 65.5 9.4 16.8%
6/30/2006 59.5 6.7 12.7% 65.5 6.9 11.8%
9/30/2006 61.2 7.2 13.3% 67.1 6.3 10.4%
12/31/2006 60.2 (0.1) -0.2% 66.5 (0.1) -0.2%
3/31/2007 62.0 2.9 4.9% 67.8 2.3 3.5%
---------------------------------------------------------------------
6/30/2007 62.4 2.9 4.9% 69.7 4.2 6.4%
---------------------------------------------------------------------
Year-to-Date Change in Days in Claims Payable(O)(P)
2007 2006
----------------------
DCP - 4th quarter of prior
year 60.2 60.3
Components of year-to-date
change in DCP:
Change in claims receipt
cycle time (0.8) (1.6)
Change in unprocessed
claims inventories (0.2) 1.7
Change in processed claims
inventories 0.6 0.8
Change in TRICARE reserve
balances (0.1) (2.1)
Change in pharmacy payment
cutoff - (1.3)
Change in provider
payables under risk
arrangements 2.5 1.9
All other 0.2 0.5
----------------------
DCP - current quarter 62.4 60.2
======================
S-16
Humana Inc.
Footnotes to Statistical Schedules and Supplementary Information
2Q07 Earnings Release
Footnote
----------------------------------------------------------------------
(A) 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).
(B) TRICARE revenues are not contracted on a per-member basis.
(C) In a limited number of circumstances, the company contracts with
hospitals and physicians to accept financial risk for a defined
set of HMO membership. In transferring this risk, the company
prepays these providers a monthly fixed-fee per member to
coordinate substantially all of the medical care for their
capitated HMO membership, including some health benefit
administrative functions and claims processing. For these
capitated HMO arrangements, the company generally agrees to
reimbursement rates that target a medical expense ratio.
Providers participating in hospital-based capitated HMO
arrangements generally receive a monthly payment for all of the
services within their system for their HMO membership. Providers
participating in physician-based capitated HMO arrangements
generally have subcontracted specialist physicians and are
responsible for reimbursing such physicians and hospitals for
services rendered to their HMO membership.
(D) In some circumstances, the company contracts with physicians under
risk-sharing arrangements whereby physicians have assumed some
level of risk for all or a portion of the medical costs of their
HMO membership. Although these arrangements do include capitation
payments for services rendered, the company processes
substantially all of the claims under these arrangements.
(E) IBNR represents an estimate of medical expenses payable for claims
incurred but not reported (IBNR) at the balance sheet date. The
level of IBNR is primarily impacted by membership levels, medical
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 medical expenses
payable includes amounts payable to providers under capitation
arrangements.
(F) TRICARE IBNR primarily fluctuates due to medical expense inflation
and changes in the utilization of benefits.
(G) TRICARE other medical expenses payable may include liabilities to
subcontractors and/or risk share payables to the Department of
Defense. The level of these balances may fluctuate from period to
period due to the timing of payment (cutoff) and whether or not
the balances are payables or receivables (receivables from the
Department of Defense are classified as receivables in the
company's balance sheet).
(H) Unprocessed claim inventories represent the estimated valuation of
claims received but not yet fully processed. TRICARE claim
inventories are not included in this amount as an independent
third party administrator processes all TRICARE medical claims on
the company's behalf. Reserves for TRICARE unprocessed claims
inventory are included in TRICARE IBNR.
(I) 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.
(J) 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 10 days
(10th & 20th of month) and the last day of the month.
(K) 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 our estimate of claim
reserves during the quarter.
(L) Changes in estimates of TRICARE incurred claims for prior years
result primarily from claim costs and utilization levels
developing favorably from the levels originally estimated for the
second half of the prior year. As a result of substantial risk-
sharing provisions with the Department of Defense and with
subcontractors, any resulting impact on operations from the
change in estimates of incurred related to prior years is
substantially reduced, whether positive or negative.
(M) 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 our largest claim
processing platforms represents 70% to 75% of the company's
fully-insured claims volume. Pharmacy claims are excluded from
this measurement.
(N) A common metric for monitoring medical claim reserve levels
relative to the medical claims expense is days in claims payable,
or DCP, which represents the medical claim liabilities at the end
of the period divided by average medical expenses per day in the
quarterly period. Since the company has some providers under
capitation payment arrangements (which do not require a medical
claim IBNR reserve), the company has also summarized this metric
excluding capitation expense. In addition, this calculation
excludes the impact of the company's stand-alone PDP business.
(O) Excludes the impact of Medicare stand-alone PDPs.
(P) DCP fluctuates due to a number of issues, the more significant of
which are detailed in the rollforward of DCP from the fourth
quarter of the prior year. 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.
SOURCE: Humana Inc.
Humana Inc. Investor Relations: Regina Nethery, 502-580-3644 Rnethery@humana.com or Corporate Communications: Tom Noland, 502-580-3674 Tnoland@humana.com