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Humana Realigns Financial Reporting Segments

Humana Realigns Financial Reporting Segments

April 22, 2015 at 8:32 AM EDT

LOUISVILLE, Ky.--(BUSINESS WIRE)--Apr. 22, 2015-- Humana Inc. (NYSE: HUM) announced today that it has realigned certain of its businesses among its financial reporting segments to correspond with internal management reporting changes and renamed its Employer Group segment the Group segment. The company’s three reportable segments remain Retail, Group, and Healthcare Services.

The more significant realignments of the company’s businesses included reclassifying Medicare benefits offered to groups to the Retail segment from the Group segment, bringing all of Humana’s Medicare offerings, which are now managed collectively, together in one segment, recognizing that in some instances we market directly to individuals that are part of a group Medicare account. In addition, the company realigned its military services business, primarily its TRICARE South Region contract previously included in the Other Businesses category, to its Group segment as the company considers this contract with the government to be a group account.

Additionally, the company has revised its reporting of membership associated with dual-eligible demonstration projects to report that membership under Medicaid rather than Medicare Advantage. Dual-eligible members not associated with demonstration projects will continue to be classified as Medicare Advantage members.

Restated historical segment financials for the 2014 quarters are included with this press release. The three reportable segments now consist of the following businesses:

  • Retail segment – consists of Medicare benefits, marketed to individuals or directly via group accounts, as well as individual commercial fully-insured medical and specialty health insurance benefits, including dental, vision, and other supplemental health and financial protection products. In addition, the Retail segment also includes the company’s contract with the Centers for Medicare and Medicaid Services to administer the Limited Income Newly Eligible Transition prescription drug plan program and contracts with various states to provide Medicaid, dual eligible, and Long-Term Support Services benefits, collectively, its state-based contracts.
  • Group segment – consists of employer group commercial fully-insured medical and specialty health insurance benefits, including dental, vision, and other supplemental health and voluntary insurance benefits, as well as administrative services only products. In addition, the company’s Group segment includes its health and wellness products (primarily marketed to employer groups) and military services business, primarily its TRICARE South Region contract.
  • Healthcare Services segment – includes services offered to the company’s health plan members as well as to third parties, including pharmacy solutions, provider services, home-based services, and clinical programs, as well as services and capabilities to advance population health.

The company will also continue to report under the category of Other Businesses those businesses which do not align with the reportable segments described above, primarily the company’s closed block long-term care insurance policies.

As previously announced, Humana will be releasing its first quarter 2015 financial results on April 29, 2015. Details associated with the company’s upcoming earnings release are available at:

http://phx.corporate-ir.net/phoenix.zhtml?c=92913&p=irol-newsArticle&ID=2028487

Humana Inc., headquartered in Louisville, Ky., is a leading health and well-being company focused on making it easy for people to achieve their best health with clinical excellence through coordinated care. The company’s strategy integrates care delivery, the member experience, and clinical and consumer insights to encourage engagement, behavior change, proactive clinical outreach and wellness for the millions of people we serve across the country.

More information regarding Humana is available to investors via the Investor Relations page of the company’s web site at www.humana.com, including copies of:

  • Annual reports to stockholders;
  • Securities and Exchange Commission filings;
  • Most recent investor conference presentations;
  • Quarterly earnings news releases;
  • Replays of most recent earnings release conference calls;
  • Calendar of events (including upcoming earnings conference call dates and times, as well as planned interaction with research analysts and institutional investors);
  • Corporate Governance information.

Humana Inc.
Segment Realignment
Supplementary Information
4/22/2015

Humana Inc.
Segment Realignment Supplementary Information

Contents

Page

Description

6 1Q14 Segment Financial Information
7 2Q14 Segment Financial Information
8 3Q14 Segment Financial Information
9 4Q14 Segment Financial Information
10 FY 2014 Segment Financial Information
11 2014 Membership Detail by Quarter
Humana Inc.
1Q14 Segment Financial Information
in millions
Healthcare Other Eliminations/
Retail Group Services Businesses Corporate Consolidated
1Q14 QTD
Revenues - external customers
Premiums:
Individual Medicare Advantage $ 6,460 $ - $ - $ - $ - $ 6,460
Group Medicare Advantage 1,384 - - - - 1,384
Medicare stand-alone PDP 865 - - - - 865
Total Medicare 8,709 - - - - 8,709
Fully-insured 525 1,329 - - - 1,854
Specialty 59 275 - - - 334
Military services - 6 - - - 6
Medicaid and other 169 - - 11 - 180
Total premiums 9,462 1,610 - 11 - 11,083
Services revenue:
Provider - 5 307 - - 312
ASO and other 14 188 - 3 - 205
Pharmacy - - 21 - - 21
Total services revenue 14 193 328

3

- 538
Total revenues - external customers 9,476 1,803 328 14 - 11,621
Intersegment revenues
Services - 19 3,481 - (3,500 ) -
Products - - 846 - (846 ) -
Total intersegment revenues - 19 4,327 - (4,346 ) -
Investment income 23 6 - 15 47 91
Total revenues 9,499 1,828 4,655 29 (4,299 ) 11,712
Operating expenses:
Benefits 8,080 1,167 - 24 (147 ) 9,124
Operating costs 1,010 493 4,434 4 (4,156 ) 1,785
Depreciation and amortization 40 24 36 1 (19 ) 82
Total operating expenses 9,130 1,684 4,470 29 (4,322 ) 10,991
Income from operations 369 144 185 - 23 721
Interest expense - - - - 35 35
Income before income taxes $ 369 $ 144 $ 185 $ - $ (12 ) $ 686
Benefit ratio 85.4 % 72.5 % 82.3 %
Operating cost ratio 10.7 % 27.1 % 95.3 % 15.4 %
Humana Inc.
2Q14 Segment Financial Information
in millions
Healthcare Other Eliminations/
Retail Group Services Businesses Corporate Consolidated
2Q14 QTD
Revenues - external customers
Premiums:
Individual Medicare Advantage $ 6,467 $ - $ - $ - $ - $ 6,467
Group Medicare Advantage 1,366 - - - - 1,366
Medicare stand-alone PDP 941 - - - - 941
Total Medicare 8,774 - - - - 8,774
Fully-insured 912 1,321 - - - 2,233
Specialty 66 275 - - - 341
Military services - 4 - - - 4
Medicaid and other 214 - - 18 - 232
Total premiums 9,966 1,600 - 18 - 11,584
Services revenue:
Provider - 6 324 - - 330
ASO and other 13 175 - 3 - 191
Pharmacy - - 25 - - 25
Total services revenue 13 181 349

3

- 546
Total revenues - external customers 9,979 1,781 349 21 - 12,130
Intersegment revenues
Services - 16 3,724 - (3,740 ) -
Products - - 938 - (938 ) -
Total intersegment revenues - 16 4,662 - (4,678 ) -
Investment income 24 5 - 15 48 92
Total revenues 10,003 1,802 5,011 36 (4,630 ) 12,222
Operating expenses:
Benefits 8,495 1,262 - 25 (155 ) 9,627
Operating costs 1,071 484 4,770 5 (4,495 ) 1,835
Depreciation and amortization 37 26 35 1 (20 ) 79
Total operating expenses 9,603 1,772 4,805 31 (4,670 ) 11,541
Income from operations 400 30 206 5 40 681
Interest expense - - - - 35 35
Income before income taxes $ 400 $ 30 $ 206 $ 5 $ 5 $ 646
Benefit ratio 85.2 % 78.9 % 83.1 %
Operating cost ratio 10.7 % 26.9 % 95.2 % 15.1 %
Humana Inc.
3Q14 Segment Financial Information
in millions
Healthcare Other Eliminations/
Retail Group Services Businesses Corporate Consolidated
3Q14 QTD
Revenues - external customers
Premiums:
Individual Medicare Advantage $ 6,448 $ - $ - $ - $ - $ 6,448
Group Medicare Advantage 1,381 - - - - 1,381
Medicare stand-alone PDP 806 - - - - 806
Total Medicare 8,635 - - - - 8,635
Fully-insured 926 1,335 - - - 2,261
Specialty 67 274 - - - 341
Military services - 5 - - - 5
Medicaid and other 352 - - 13 - 365
Total premiums 9,980 1,614 - 13 - 11,607
Services revenue:
Provider - 6 320 - - 326
ASO and other 10 172 - 2 - 184
Pharmacy - - 26 - - 26
Total services revenue 10 178 346

2

- 536
Total revenues - external customers 9,990 1,792 346 15 - 12,143
Intersegment revenues
Services - 22 3,879 - (3,901 ) -
Products - - 968 - (968 ) -
Total intersegment revenues - 22 4,847 - (4,869 ) -
Investment income 24 6 - 15 50 95
Total revenues 10,014 1,820 5,193 30 (4,819 ) 12,238
Operating expenses:
Benefits 8,469 1,324 - 24 (151 ) 9,666
Operating costs 1,156 468 4,953 5 (4,684 ) 1,898
Depreciation and amortization 43 27 37 - (22 ) 85
Total operating expenses 9,668 1,819 4,990 29 (4,857 ) 11,649
Income from operations 346 1 203 1 38 589
Interest expense - - - - 38 38
Income before income taxes $ 346 $ 1 $ 203 $ 1 $ - $ 551
Benefit ratio 84.9 % 82.0 % 83.3 %
Operating cost ratio 11.6 % 25.8 % 95.4 % 15.6 %
Humana Inc.
4Q14 Segment Financial Information
in millions
Healthcare Other Eliminations/
Retail Group Services Businesses Corporate Consolidated
4Q14 QTD
Revenues - external customers
Premiums:
Individual Medicare Advantage $ 6,407 $ - $ - $ - $ - $ 6,407
Group Medicare Advantage 1,359 - - - - 1,359
Medicare stand-alone PDP 792 - - - - 792
Total Medicare 8,558 - - - - 8,558
Fully-insured 902 1,354 - - - 2,256
Specialty 64 274 - - - 338
Military services - 4 - - - 4
Medicaid and other 520 - - 9 - 529
Total premiums 10,044 1,632 - 9 - 11,685
Services revenue:
Provider - 6 303 - - 309
ASO and other 2 205 - 1 - 208
Pharmacy - - 27 - - 27
Total services revenue 2 211 330

1

- 544
Total revenues - external customers 10,046 1,843 330 10 - 12,229
Intersegment revenues
Services - 21 4,014 - (4,035 ) -
Products - - 997 - (997 ) -
Total intersegment revenues - 21 5,011 - (5,032 ) -
Investment income 26 6 - 15 52 99
Total revenues 10,072 1,870 5,341 25 (4,980 ) 12,328
Operating expenses:
Benefits 8,464 1,377 - 29 (121 ) 9,749
Operating costs 1,339 491 5,150 3 (4,862 ) 2,121
Depreciation and amortization 45 26 47 (2 ) (29 ) 87
Total operating expenses 9,848 1,894 5,197 30 (5,012 ) 11,957
Income (loss) from operations 224 (24 ) 144 (5 ) 32 371
Interest expense - - - - 84 84
Income (loss) before income taxes $ 224 $ (24 ) $ 144 $ (5 ) $ (52 ) $ 287
Benefit ratio 84.3 % 84.4 % 83.4 %
Operating cost ratio 13.3 % 26.3 % 96.4 % 17.3 %
Humana Inc.
FY 2014 Segment Financial Information
in millions
Healthcare Other Eliminations/
Retail Group Services Businesses Corporate Consolidated
2014 YTD
Revenues - external customers
Premiums:
Individual Medicare Advantage $ 25,782 $ - $ - $ - $ - $ 25,782
Group Medicare Advantage 5,490 - - - - 5,490
Medicare stand-alone PDP 3,404 - - - - 3,404
Total Medicare 34,676 - - - - 34,676
Fully-insured 3,265 5,339 - - - 8,604
Specialty 256 1,098 - - - 1,354
Military services - 19 - - - 19
Medicaid and other 1,255 - - 51 - 1,306
Total premiums 39,452 6,456 - 51 - 45,959
Services revenue:
Provider - 23 1,254 - - 1,277
ASO and other 39 740 - 9 - 788
Pharmacy - - 99 - - 99
Total services revenue 39 763 1,353

9

- 2,164
Total revenues - external customers 39,491 7,219 1,353 60 - 48,123
Intersegment revenues
Services - 78 15,098 - (15,176 ) -
Products - - 3,749 - (3,749 ) -
Total intersegment revenues - 78 18,847 - (18,925 ) -
Investment income 97 23 - 60 197 377
Total revenues 39,588 7,320 20,200 120 (18,728 ) 48,500
Operating expenses:
Benefits 33,508 5,130 - 102 (574 ) 38,166
Operating costs 4,576 1,936 19,307 17 (18,197 ) 7,639
Depreciation and amortization 165 103 155 - (90 ) 333
Total operating expenses 38,249 7,169 19,462 119 (18,861 ) 46,138
Income from operations 1,339 151 738 1 133 2,362
Interest expense - - - - 192 192
Income before income taxes $ 1,339 $ 151 $ 738 $ 1 $ (59 ) $ 2,170
Benefit ratio 84.9 % 79.5 % 83.0 %
Operating cost ratio 11.6 % 26.5 % 95.6 % 15.9 %
Humana Inc.
Ending Membership Detail
In thousands
March 31, 2014 June 30, 2014 September 30, 2014 December 31, 2014
Medical Membership:
Retail
Individual Medicare Advantage 2,330.8 2,359.0 2,402.8 2,427.9
Group Medicare Advantage 477.6 479.7 484.9 489.7
Medicare stand-alone PDPs 3,856.5 3,885.5 3,940.8 3,994.0
Total Medicare 6,664.9 6,724.2 6,828.5 6,911.6
Individual commercial 715.6 1,120.8 1,085.8 1,016.2
State-based Medicaid 129.6 167.0 296.3 316.8
Medicare Supplement 118.4 123.5 129.2 131.9
Total Retail 7,628.5 8,135.5 8,339.8 8,376.5
Group
Fully-insured medical commercial 1,200.2 1,210.1 1,212.3 1,235.5
ASO commercial 1,142.0 1,120.1 1,111.9 1,104.3
Military services 3,098.0 3,111.3 3,085.6 3,090.4
Total Employer Group 5,440.2 5,441.5 5,409.8 5,430.2
Other Businesses
Long-term care and other 37.9 36.7 36.0 35.0
Total Other Businesses 37.9 36.7 36.0 35.0
Total Medical Membership 13,106.6 13,613.7 13,785.6 13,841.7
Specialty Membership:
Retail
Dental - fully-insured 803.2 889.1 876.4 828.5
Vision 176.7 202.7 209.0 208.4
Other supplemental benefits 143.8 137.7 134.1 128.9
Total Retail 1,123.7 1,229.5 1,219.5 1,165.8
Group
Dental - fully-insured 2,397.6 2,401.6 2,379.7 2,370.5
Dental - ASO 800.4 792.1 783.7 772.4
Vision 2,072.3 2,080.1 2,074.7 2,103.3
Other supplemental benefits 1,330.6 1,302.2 1,287.2 1,256.5
Total Employer Group 6,600.9 6,576.0 6,525.3 6,502.7
Total Specialty Membership 7,724.6 7,805.5 7,744.8 7,668.5

Source: Humana Inc.

Humana Investor Relations
Regina Nethery, 502-580-3644
Rnethery@humana.com
or
Humana Corporate Communications
Tom Noland, 502-580-3674
Tnoland@humana.com
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