•	Committed to ongoing COVID-19 relief efforts to provide resources and assistance to all constituencies, including proactive outreach to vulnerable members to address clinical and social determinants of health needs to minimize the short-term impact amid the pandemic

•	Reports 1Q20 earnings per diluted common share (EPS) of $3.56 on a GAAP basis, $5.40 on an Adjusted basis

•	Comments on FY 2020 guidance:

◦	FY 2020 GAAP EPS expected to be in a range of $16.04 to $16.54

◦	Reaffirms FY 2020 Adjusted EPS guidance range of $18.25 to $18.75 while acknowledging the inherent uncertainty surrounding the ongoing crisis

◦	Increases full year expected individual Medicare Advantage membership growth to 300,000 to 350,000 members from previous range of 270,000 to 330,000 members, while reaffirming group Medicare Advantage and stand-alone PDP membership estimates for 2020

◦	Withdraws additional FY 2020 detailed guidance not noted above given the likelihood of significant variability of results by financial statement line item and related ratios

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•	Amortization expense for identifiable intangibles of approximately $ 21 million pretax income, or $ 0.12 per diluted common share; GAAP measures affected in this release include consolidated pretax, EPS, and segment earnings (for respective amortization expense for the Retail and Group and Specialty segments).

•	Put/call valuation adjustments of approximately $297 million , or $1.72 per diluted common share, associated with Humana’s non-consolidating minority interest investments. GAAP measures affected in this release include consolidated pretax and EPS.

•	Amortization expense for identifiable intangibles of approximately $18 million pretax, or $0.10 per diluted common share; GAAP measures affected in this release include consolidated pretax, EPS, and segment earnings (for respective amortization expense for the Retail and Group and Specialty segments).

•	Put/call valuation adjustments of approximately $39 million, or $0.22 per diluted common share, associated with Humana’s non-consolidating minority interest investments. GAAP measures affected in this release include consolidated pretax and EPS.

•	Amortization expense for identifiable intangibles of approximately $0.49 per diluted common share.

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•	Put/call valuation adjustments of $1.72 per diluted common share related to Humana's non-consolidating minority interest investments. FY20 GAAP EPS guidance excludes the impact of future value changes of put/call options related to Humana’s non-consolidating minority interest investments. The future value change of these put/call options cannot be estimated.

•	Amortization expense for identifiable intangibles of approximately $70 million pretax income, or $0.40 per diluted common share.

•	Put/call valuation adjustments of approximately $506 million, or $2.89 per diluted common share, associated with Humana’s non-consolidating minority interest investments.

•	Expense associated with involuntary workforce reduction of approximately $47 million pretax, or $0.26 per diluted common share.

•

If Humana does not design and price its products properly and competitively, if the premiums Humana receives are insufficient to cover the cost of healthcare services delivered to its members, if the company is unable to implement clinical initiatives to provide a better healthcare experience for its members, lower costs and appropriately document the risk profile of its members, or if its estimates of benefits expense are inadequate, Humana’s profitability could be materially adversely affected. Humana estimates the costs of its benefit expense payments, and designs and prices its products accordingly, using actuarial methods and assumptions based upon, among other relevant factors, claim payment patterns, medical cost inflation, and historical developments such as claim inventory levels and claim receipt patterns. The company continually reviews estimates of future payments relating to benefit expenses for services incurred in the current and prior periods and makes necessary adjustments to its reserves, including premium deficiency reserves, where appropriate. These estimates, however, involve extensive judgment, and have considerable inherent variability because they are extremely sensitive to changes in claim payment patterns and medical cost trends, so any reserves the company may establish, including premium deficiency reserves, may be insufficient.

•

If Humana fails to effectively implement its operational and strategic initiatives, particularly its Medicare initiatives and state-based contract strategy, the company’s business may be materially adversely affected, which is of particular importance given the concentration of the company’s revenues in these products. In addition, there can be no assurances that the company will be successful in maintaining or improving its Star ratings in future years.

•

If Humana fails to properly maintain the integrity of its data, to strategically implement new information systems, to protect Humana’s proprietary rights to its systems, or to defend against cyber-security attacks or prevent other privacy or data security incidents that result in security breaches that disrupt our operations or in the unintended dissemination of sensitive personal information or proprietary or confidential information, the company’s business may be materially adversely affected.

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•

Humana is involved in various legal actions, or disputes that could lead to legal actions (such as, among other things, provider contract disputes and qui tam litigation brought by individuals on behalf of the government), governmental and internal investigations, and routine internal review of business processes any of which, if resolved unfavorably to the company, could result in substantial monetary damages or changes in its business practices. Increased litigation and negative publicity could also increase the company’s cost of doing business.

•

As a government contractor, Humana is exposed to risks that may materially adversely affect its business or its willingness or ability to participate in government healthcare programs including, among other things, loss of material government contracts, governmental audits and investigations, potential inadequacy of government determined payment rates, potential restrictions on profitability, including by comparison of profitability of the company’s Medicare Advantage business to non-Medicare Advantage business, or other changes in the governmental programs in which Humana participates. Changes to the risk-adjustment model utilized by CMS to adjust premiums paid to Medicare Advantage, or MA, plans according to the health status of covered members, including proposed changes to the methodology used by CMS for risk adjustment data validation audits that fail to address adequately the statutory requirement of actuarial equivalence, if implemented, could have a material adverse effect on our operating results, financial position and cash flows.

•

Humana's business activities are subject to substantial government regulation. New laws or regulations, or legislative, judicial, or regulatory changes in existing laws or regulations or their manner of application could increase the company's cost of doing business and have a material adverse effect on Humana’s results of operations (including restricting revenue, enrollment and premium growth in certain products and market segments, restricting the company’s ability to expand into new markets, increasing the company’s medical and operating costs by, among other things, requiring a minimum benefit ratio on insured products, lowering the company’s Medicare payment rates and increasing the company’s expenses associated with a non-deductible health insurance industry fee and other assessments); the company’s financial position (including the company’s ability to maintain the value of its goodwill); and the company’s cash flows.

•	Humana’s failure to manage acquisitions, divestitures and other significant transactions successfully may have a material adverse effect on the company’s results of operations, financial position, and cash flows.

•	If Humana fails to develop and maintain satisfactory relationships with the providers of care to its members, the company’s business may be adversely affected.

•	Humana’s pharmacy business is highly competitive and subjects it to regulations in addition to those the company faces with its core health benefits businesses.

•	Changes in the prescription drug industry pricing benchmarks may adversely affect Humana’s financial performance.

•	If Humana does not continue to earn and retain purchase discounts and volume rebates from pharmaceutical manufacturers at current levels, Humana’s gross margins may decline.

•	Humana’s ability to obtain funds from certain of its licensed subsidiaries is restricted by state insurance regulations.

•	Downgrades in Humana’s debt ratings, should they occur, may adversely affect its business, results of operations, and financial condition.

•	The securities and credit markets may experience volatility and disruption, which may adversely affect Humana’s business.

•	The spread of, and response to, the novel coronavirus, or COVID-19, underscores certain risks Humana faces, including those discussed above, and the rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact to Humana of COVID-19.

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•	Form 10-K for the year ended December 31, 2019; and

•	Form 8-Ks filed during 2020.

•	Annual reports to stockholders

•	Securities and Exchange Commission filings

•	Most recent investor conference presentations

•	Quarterly earnings news releases and conference calls

•	Calendar of events

•	Corporate Governance information

•	Committed to ongoing COVID-19 relief efforts to provide resources and assistance to all constituencies, including proactive outreach to vulnerable members to address clinical and social determinants of health needs to minimize the short-term impact amid the pandemic

•	Reports 1Q20 earnings per diluted common share (EPS) of $3.56 on a GAAP basis, $5.40 on an Adjusted basis

•	Comments on FY 2020 guidance:

◦	FY 2020 GAAP EPS expected to be in a range of $16.04 to $16.54

◦	Reaffirms FY 2020 Adjusted EPS guidance range of $18.25 to $18.75 while acknowledging the inherent uncertainty surrounding the ongoing crisis

◦	Increases full year expected individual Medicare Advantage membership growth to 300,000 to 350,000 members from previous range of 270,000 to 330,000 members, while reaffirming group Medicare Advantage and stand-alone PDP membership estimates for 2020

◦	Withdraws additional FY 2020 detailed guidance not noted above given the likelihood of significant variability of results by financial statement line item and related ratios

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◦	reinstatement of the non-deductible health insurance industry fee in 2020 which was contemplated in the pricing and benefit design of the company's products,

◦	engaging the company's Medicare Advantage members, including the robust growth of members in 2019, in clinical programs, as well as ensuring they are appropriately documented under the CMS risk-adjustment model, and

◦	the continued shift in Medicare membership mix due to the decline of stand-alone PDP members and significant growth in Medicare Advantage members; the benefit ratio for stand-alone PDP members generally is higher earlier in the year and then decreases as the year progresses.

◦	deliberate pricing and benefit design changes in the commercial business in response to the 2019 performance,

◦	the unfavorable impact of weekday seasonality including the impact of a leap year in 1Q20, and

◦	a lesser impact from favorable prior period medical claims reserve development (Prior Period Development) in 1Q20.

•	reinstatement of the non-deductible health insurance industry fee in 2020, which increased the consolidated GAAP operating cost ratio by approximately 160 basis points in 1Q20; and

•	COVID-19 related costs, including a $50 million contribution to the Humana Foundation to promote its coronavirus relief efforts in the communities served by Humana.

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•	scale efficiencies associated with growth in the company's Medicare Advantage membership; and

•	significant operating cost efficiencies in 1Q20 driven by previously disclosed productivity initiatives.

•

At March 31, 2020, the company had cash, cash equivalents, and investment securities of $17.55 billion , up approximately $2.12 billion, or 14 percent, from $15.43 billion at December 31, 2019. The sequential increase primarily resulted from the net proceeds of a $1.10 billion senior note issuance as more fully discussed below, as well as proceeds from a term loan and commercial paper issuance. These increases were partially offset by the acquisition of Enclara Healthcare, capital expenditures, and the payment of dividends to stockholders. Additional changes are outlined in the company’s consolidated statement of cash flows on pages S-5 of the statistical supplement included in this release.

•

At March 31, 2020, cash and short-term investments held at the parent company of $2.35 billion increased approximately $990 million, or 73 percent, from $1.36 billion at December 31, 2019. The sequential increase primarily resulted from the net proceeds of a $1.10 billion senior note issuance, as well as proceeds from a term loan and commercial paper issuance. The increase was further impacted by non-regulated subsidiary earnings in the company's Healthcare Services segment. These increases were partially offset by the acquisition of Enclara Healthcare, capital contributions to regulated subsidiaries, capital expenditures, cash dividends to shareholders, and the unfavorable impact of the timing of working capital changes between the parent and its subsidiaries.

•	Days in claims payable (DCP) of 41.3 days at March 31, 2020, increased by 0.9 days from 40.4 days at December 31, 2019 and increased 1.1 days from 40.2 days at March 31, 2019. Changes are outlined in the DCP rollforward on page S-13 of the statistical supplement included in this release.

•	Debt-to-total capitalization at March 31, 2020 was 39.2 percent, up 720 basis points from 32.0 percent at December 31, 2019 primarily resulting from the impact of the company's $1.10 billion senior debt offering, as well as borrowings under a term loan and commercial paper issuance. These increases were partially offset by the net impact of 1Q20 earnings.

•

GAAP cash flows provided by operations of $474 million in 1Q20 unfavorably compared to GAAP cash flows provided by operations of $896 million in 1Q19, a decrease of $422 million year over year. The year-over-year decline was impacted by the timing of working capital items, including the impact of early prescription refills permitting members to prepare for extended supply needs in response to COVID-19, partially offset by higher income from operations.

•	Humana did not complete any open-market transactions during 1Q20.

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•	The company paid cash dividends to its stockholders of $ 73 million in 1Q20 versus $ 68 million in 1Q19.

•	In February 2020, the company's Board of Directors declared a cash dividend of $0.625 per share payable on April 24, 2020 to stockholders of record on March 31, 2020. The dividend of $0.625 per share reflected an increase of 14 percent from the previous per share dividend of $0.55.

•	In April 2020, Humana's Board of Directors declared an additional cash dividend of $0.625 per share to stockholders of record on June 30, 2020. The dividend is payable on July 31, 2020.

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•

The 1Q20 revenues for the Retail segment were $16.76 billion , an increase of $2.75 billion , or 20 percent , from $14.01 billion in 1Q19 primarily reflecting higher premiums as a result of membership growth and higher per member premiums in the company’s Medicare Advantage and state-based contract businesses. These favorable items were partially offset by the decline in membership in the company's stand-alone PDP offerings. The year-over-year membership changes are further discussed below.

•

Individual Medicare Advantage membership was 3,838,100 as of March 31, 2020, a net increase of 404,800 or 12 percent , from 3,433,300 as of March 31, 2019, and up 250,900 , or 7 percent , from 3,587,200 as of December 31, 2019. The increases were primarily due to membership additions associated with the most recent Annual Election Period (AEP) and Open Election Period (OEP) for Medicare beneficiaries. The year-over-year growth was further impacted by strong sales to age-ins and Dual Eligible Special Need Plans (D-SNP) members following the 2019 OEP.

•

Group Medicare Advantag e membership was 607,400 as of March 31, 2020, a net increase of 89,500 , or 17 percent , from 517,900 at March 31, 2019, and up 82,100 , or 16 percent , from 525,300 as of December 31, 2019. These increases primarily resulted from the addition of a large account in January 2020, along with net membership additions associated with the most recent AEP for Medicare beneficiaries.

•

Membership in the company’s stand-alone PDP offerings was 3,895,100 as of March 31, 2020, a net decrease of 553,300 , or 12 percent , from 4,448,400 as of March 31, 2019, and down 470,100 , or 11 percent , from 4,365,200 as of December 31, 2019. These comparisons primarily reflect net declines during the most recent AEP for Medicare beneficiaries. The anticipated declines were primarily the result of terminations driven by premium and benefit adjustments experienced by members that were previously enrolled in the company's 2019 Humana Walmart Rx plan and the 2019 Humana Enhanced plan, which were consolidated into the Premier Rx plan in 2020. The expected PDP losses were partially offset by growth in the new low-price Humana Walmart Value Rx plan, driven by both new sales and plan to plan changes.

•	State-based contracts membership (including dual-eligible demonstration members) was 617,300 as of March 31, 2020, a net increase of 156,000 , or 34 percent , from 461,300 at March 31, 2019, and up 148,300 , or 32 percent, from 469,000 at December 31, 2019. Theses increases primarily reflect the impact of discontinuing the

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•	The 1Q20 benefit ratio for the Retail segment of 86.6 percent decreased 170 basis points from 88.3 percent in 1Q19. The year-over-year decrease was primarily the result of the following factors:

◦	reinstatement of the non-deductible health insurance industry fee in 2020 which was contemplated in the pricing and benefit design of the company's products,

◦	engaging the company's Medicare Advantage members, including the robust growth of members in 2019, in clinical programs, as well as ensuring they are appropriately documented under the CMS risk-adjustment model,

◦	the continued shift in Medicare membership mix due to the decline of stand-alone PDP members and significant growth in Medicare Advantage members; the benefit ratio for stand-alone PDP members generally is higher earlier in the year and then decreases as the year progresses, and

◦	the impact of the benefit design of Humana's 2020 Premier Rx plan, which includes a member deductible.

◦	the unfavorable impact of weekday seasonality including the impact of a leap year in 1Q20; and

◦	lower favorable Prior Period Development in 1Q20.

•	The Retail segment's favorable Prior Period Development of $238 million in 1Q20 lowered the segment benefit ratio by 140 basis points in 1Q20. In 1Q19, the segment's favorable Prior Period Development of $283 million decreased the benefit ratio by 200 basis points.

•	The Retail segment’s operating cost ratio of 9.2 percent in 1Q20 increased 100 basis points from 8.2 percent in 1Q19. The year-over-year comparison was negatively impacted by the reinstatement of the non-deductible health insurance industry fee in 2020, which increased the Retail segment's GAAP operating cost ratio by approximately 170 basis points in 1Q20.

◦	scale efficiencies associated with growth in the company's Medicare Advantage membership; and

◦	significant operating cost efficiencies in 1Q20 driven by previously disclosed productivity initiatives.

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•	The Retail segment’s GAAP segment earnings of $685 million in 1Q20 increased $220 million , or 47 percent , from GAAP segment earnings of $465 million in 1Q19. The year-over-year favorable comparison resulted from the same factors that led to an improving benefit ratio, partially offset by the segment's higher operating cost ratio.

•	The 1Q20 revenues for the Group and Specialty segment were $1.87 billion , down $22 million year over year from $1.89 billion in 1Q19. This decrease was primarily due to the decline in the company's fully-insured group commercial membership.

◦	higher stop-loss revenues related to the company's level-funded ASO accounts resulting from membership growth in this product as more fully described below; and

◦	higher per member premiums across the fully-insured commercial business.

•

Group fully-insured commercial medical membership was 861,600 at March 31, 2020, a decrease of 96,600 , or 10 percent , from 958,200 at March 31, 2019, and down 47,000 , or 5 percent , from 908,600 at December 31, 2019. These anticipated declines primarily reflect lower membership in small group accounts due in part to more small group accounts selecting level-funded ASO products, as well as the loss of certain large group accounts due to disciplined pricing in the competitive environment. The portion of group fully-insured commercial medical membership in small group accounts (2-99 sized employer groups) was approximately 57 percent at March 31, 2020 compared to 59 percent at December 31, 2019 and 61 percent at March 31, 2019.

•

Group ASO commercial medical membership was 506,100 at March 31, 2020, an increase of 27,500 , or 6 percent , from 478,600 at March 31, 2019, but down 23,100 , or 4 percent , from 529,200 at December 31, 2019. These changes primarily reflect more small group accounts selecting level-funded ASO products combined with the loss of certain large group accounts due to continued discipline in pricing of services for self-funded accounts amid a highly competitive environment. Small group membership comprised 45 percent of group ASO medical membership at March 31, 2020 versus 40 percent at December 31, 2019 and 34 percent at March 31, 2019.

•	Military services membership was 5,999,200 at March 31, 2020, an increase of 56,700 , or 1 percent , from 5,942,500 at March 31, 2019, and up 14,900 , or less than 1 percent, versus 5,984,300 at December 31, 2019. Membership includes military service members, retirees, and their families to whom the company is providing healthcare services under the current TRICARE East Region contract.

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•

Membership in specialty products (g)  was 5,470,700 at March 31, 2020, a decrease of 364,500 , or 6 percent , from 5,835,200 , at March 31, 2019, but up 44,800 , or 1 percent , from 5,425,900 at December 31, 2019. The year-over-year decrease resulted from the loss of certain group accounts, including one jumbo account, offering stand-alone dental and vision products. The sequential increase resulted from higher sales of the company’s dental product.

•	The 1Q20 benefit ratio for the Group and Specialty segment was 79.1 percent , an increase of 270 basis points from 76.4 percent for 1Q19. The year-over-year increase in the benefit ratio is primarily due to the following factors:

◦	deliberate pricing and benefit design changes in the commercial business in response to the 2019 performance; and

◦	the unfavorable impact of weekday seasonality including the impact of a leap year in 1Q20.

◦	reinstatement of the non-deductible health insurance industry fee in 2020 which was contemplated in the pricing and benefit design of the company's products; and

•	The segment's favorable Prior Period Development of $46 million in 1Q20 compared to unfavorable development of $16 million in 1Q19. The favorable Prior Period Development for the Group and Specialty segment decreased the 1Q20 benefit ratio by 280 basis points while the unfavorable Prior Period Development in 1Q19 increased the segment benefit ratio by 100 basis points.

•	The Group and Specialty segment’s operating cost ratio was 23.1 percent in 1Q20, an increase of 120 basis points from 21.9 percent in 1Q19 primarily reflecting the reinstatement of the non-deductible health insurance industry fee in 2020, which increased the Group and Specialty segment's GAAP operating cost ratio by approximately 140 basis points in 1Q20.

•	The Group and Specialty segment’s GAAP segment earnings of $105 million in 1Q20 compared to GAAP segment earnings of $165 million in 1Q19, a decrease of $60 million , or 36 percent . The decrease primarily reflects the company's deliberate pricing and benefit design changes in its commercial business in response to the 2019 performance.

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•	Revenues of $7.09 billion in 1Q20 for the Healthcare Services segment increased by $987 million , or 16 percent , from $6.10 billion in 1Q19. The year-over-year comparison was favorably impacted by the following factors:

◦	the company's strong Medicare Advantage membership growth,

◦	an increase in pharmacy revenues as a result of the company allowing early prescription refills to permit members to prepare for extended supply needs in response to COVID-19, and

◦	additional pharmacy revenues associated with the acquisition of Enclara Healthcare in 1Q20.

•	The Healthcare Services segment’s operating cost ratio of 96.0 percent in 1Q20 decreased 60 basis points from 96.6 percent in 1Q19 primarily as a result of operational improvements in the company's provider services business, largely related to Conviva, along with significant operating cost efficiencies in 1Q20 driven by previously disclosed productivity initiatives.

•

Primary care providers in value-based (shared risk and path to risk) relationships of 65,900 at March 31, 2020 increased 14  percent from 57,600 at March 31, 2019, and increased 6 percent from 61,900 at December 31, 2019. The percentage of the company’s individual Medicare Advantage members in value-based relationships was 66  percent as of March 31, 2020, compared to 65 percent at March 31, 2019 and 67 percent at December 31, 2019. The sequential decline was impacted by solid AEP and OEP results that have led to a greater proportion of new individual Medicare Advantage members that are not yet assigned to a primary care provider.

•

Medicare Advantage and dual demonstration program membership enrolled in a Humana chronic care management program (h) was 899,700 at March 31, 2020, up 8  percent from 834,700 at March 31, 2019 and up 4  percent from 868,800 at December 31, 2019. These changes were driven by the company's improved process for identifying and enrolling members in the appropriate program at the right time, coupled with growth in Special Needs Plans (SNP) membership.

•	Pharmacy script volume on an adjusted 30-day equivalent basis of 120  million for 1Q20 increased 9 percent compared to 110  million for 1Q19. This increase primarily was driven by higher Medicare Advantage and state-based contracts membership along with the impact of early prescription refills as members prepared for

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•	The Healthcare Services segment’s 1Q20 GAAP segment earnings increased $75 million , or 43 percent , to $250 million compared to GAAP segment earnings of $175 million in 1Q19. The increase primarily resulted from the following factors:

◦	higher earnings from the company's pharmacy operations as a result of previously mentioned factors,

◦	operational improvement in the provider services business year over year, and

◦	higher earnings from Kindred at Home operations.

•	Amortization expense for identifiable intangibles of approximately $ 21 million   pretax income, or $ 0.12 per diluted common share; GAAP measures affected in this release include consolidated

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•	Put/call valuation adjustments of approximately $297 million , or $1.72 per diluted common share, associated with Humana’s non-consolidating minority interest investments. GAAP measures affected in this release include consolidated pretax and EPS.

•	Amortization expense for identifiable intangibles of approximately $18 million pretax, or $0.10 per diluted common share; GAAP measures affected in this release include consolidated pretax, EPS, and segment earnings (for respective amortization expense for the Retail and Group and Specialty segments).

•	Put/call valuation adjustments of approximately $39 million, or $0.22 per diluted common share, associated with Humana’s non-consolidating minority interest investments. GAAP measures affected in this release include consolidated pretax and EPS.

•	Amortization expense for identifiable intangibles of approximately $0.49 per diluted common share.

•	Put/call valuation adjustments of $1.72 per diluted common share related to Humana's non-consolidating minority interest investments. FY20 GAAP EPS guidance excludes the impact of future value changes of put/call options related to Humana’s non-consolidating minority interest investments. The future value change of these put/call options cannot be estimated.

•	Amortization expense for identifiable intangibles of approximately $70 million pretax income, or $0.40 per diluted common share.

•	Put/call valuation adjustments of approximately $506 million, or $2.89 per diluted common share, associated with Humana’s non-consolidating minority interest investments.

•	Expense associated with involuntary workforce reduction of approximately $47 million pretax, or $0.26 per diluted common share.

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•

If Humana does not design and price its products properly and competitively, if the premiums Humana receives are insufficient to cover the cost of healthcare services delivered to its members, if the company is unable to implement clinical initiatives to provide a better healthcare experience for its members, lower costs and appropriately document the risk profile of its members, or if its estimates of benefits expense are inadequate, Humana’s profitability could be materially adversely affected. Humana estimates the costs of its benefit expense payments, and designs and prices its products accordingly, using actuarial methods and assumptions based upon, among other relevant factors, claim payment patterns, medical cost inflation, and historical developments such as claim inventory levels and claim receipt patterns. The company continually reviews estimates of future payments relating to benefit expenses for services incurred in the current and prior periods and makes necessary adjustments to its reserves, including premium deficiency reserves, where appropriate. These estimates, however, involve extensive judgment, and have considerable inherent variability because they are extremely sensitive to changes in claim payment patterns and medical cost trends, so any reserves the company may establish, including premium deficiency reserves, may be insufficient.

•

If Humana fails to effectively implement its operational and strategic initiatives, particularly its Medicare initiatives and state-based contract strategy, the company’s business may be materially adversely affected, which is of particular importance given the concentration of the company’s revenues in these products. In addition, there can be no assurances that the company will be successful in maintaining or improving its Star ratings in future years.

•

If Humana fails to properly maintain the integrity of its data, to strategically implement new information systems, to protect Humana’s proprietary rights to its systems, or to defend against cyber-security attacks or prevent other privacy or data security incidents that result in security breaches that disrupt our operations or in the unintended dissemination of sensitive personal information or proprietary or confidential information, the company’s business may be materially adversely affected.

•

Humana is involved in various legal actions, or disputes that could lead to legal actions (such as, among other things, provider contract disputes and qui tam litigation brought by individuals on behalf of the government), governmental and internal investigations, and routine internal review of business processes any of which, if resolved unfavorably to the company, could result in substantial monetary damages or changes in its business practices. Increased litigation and negative publicity could also increase the company’s cost of doing business.

•

As a government contractor, Humana is exposed to risks that may materially adversely affect its business or its willingness or ability to participate in government healthcare programs including, among other things, loss of material government contracts, governmental audits and investigations, potential inadequacy of government determined payment rates, potential restrictions on profitability, including by comparison of profitability of the company’s Medicare Advantage business to non-Medicare Advantage business, or other changes in the governmental programs in which Humana participates. Changes to the risk-adjustment model utilized by CMS to adjust premiums paid to Medicare Advantage, or MA, plans according to the health status of covered members, including

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•

Humana's business activities are subject to substantial government regulation. New laws or regulations, or legislative, judicial, or regulatory changes in existing laws or regulations or their manner of application could increase the company's cost of doing business and have a material adverse effect on Humana’s results of operations (including restricting revenue, enrollment and premium growth in certain products and market segments, restricting the company’s ability to expand into new markets, increasing the company’s medical and operating costs by, among other things, requiring a minimum benefit ratio on insured products, lowering the company’s Medicare payment rates and increasing the company’s expenses associated with a non-deductible health insurance industry fee and other assessments); the company’s financial position (including the company’s ability to maintain the value of its goodwill); and the company’s cash flows.

•	Humana’s failure to manage acquisitions, divestitures and other significant transactions successfully may have a material adverse effect on the company’s results of operations, financial position, and cash flows.

•	If Humana fails to develop and maintain satisfactory relationships with the providers of care to its members, the company’s business may be adversely affected.

•	Humana’s pharmacy business is highly competitive and subjects it to regulations in addition to those the company faces with its core health benefits businesses.

•	Changes in the prescription drug industry pricing benchmarks may adversely affect Humana’s financial performance.

•	If Humana does not continue to earn and retain purchase discounts and volume rebates from pharmaceutical manufacturers at current levels, Humana’s gross margins may decline.

•	Humana’s ability to obtain funds from certain of its licensed subsidiaries is restricted by state insurance regulations.

•	Downgrades in Humana’s debt ratings, should they occur, may adversely affect its business, results of operations, and financial condition.

•	The securities and credit markets may experience volatility and disruption, which may adversely affect Humana’s business.

•	The spread of, and response to, the novel coronavirus, or COVID-19, underscores certain risks Humana faces, including those discussed above, and the rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact to Humana of COVID-19.

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•	Form 10-K for the year ended December 31, 2019; and

•	Form 8-Ks filed during 2020.

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•	Annual reports to stockholders

•	Securities and Exchange Commission filings

•	Most recent investor conference presentations

•	Quarterly earnings news releases and conference calls

•	Calendar of events

•	Corporate Governance information

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(A)	Put/call valuation adjustments associated with the company's non-consolidating minority interest investments.

(B)	Net earnings associated with the company's non-consolidating minority interest investments.

(C)	The Medicaid and other category includes premiums associated with the company’s Medicaid business.

(D)	The ASO and other category is primarily comprised of Administrative Services Only (ASO) fees and other ancillary services fees, including military services unless separately disclosed.

(E)	Includes Medicaid Temporary Assistance for Needy Families (TANF), dual-eligible demonstration, and Long-Term Support Services (LTSS) from state-based contracts.

(F)	Fully-insured dental membership as reported does not include Humana members that have a Medicare Advantage plan that includes an embedded dental benefit. Costs associated with these dental benefits, however, are recorded in the Group and Specialty segment earnings results.

(G)	Other supplemental benefits include group life policies.

(H)

In certain circumstances, the company contracts with providers to accept financial risk for a defined set of Medicare Advantage 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 Medicare Advantage members assigned or attributed to their provider panel, including some health benefit administrative functions and claims processing. For these capitated Shared Risk arrangements, the company generally agrees to payment rates that target a benefit expense ratio. The result is a high level of engagement on the part of the provider.

(I)

A Path to Risk provider is one who has a high level of engagement and participates in one of Humana’s pay-for-performance programs (Model Practice or Medical Home) or has a risk contract in place with a trigger (future date or membership threshold) which has not yet been met. In addition to earning incentives, these providers may also have a shared savings component by which they can share in achieved surpluses when the actual cost of the medical services provided to patients assigned or attributed to their panel is less than the agreed upon medical expense target.

(J)	Specialty per member per month is computed based on reported specialty premiums and average fully-insured specialty membership for the period. Included with specialty premiums are stop-loss ASO premiums.

(K)	The amounts primarily reflect services revenues under the TRICARE East Region contract which generally are contracted on a per-member basis.

(L)	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).

(M)

Includes Medicare Advantage (including Special Needs Plans (SNP)) and dual-eligible demonstration program members enrolled in one of Humana’s chronic care programs. These members may be enrolled in Humana At Home Chronic Care Program (HCCP), Humana At Home Remote Monitoring, or an Advance Illness Support program. Members included in these programs may not be unique to each program since members have the ability to enroll in multiple programs. In addition, the members in the HCCP program may receive varying levels of care management based on their health status and needs, ranging from active care management to ongoing monitoring.

(N)

Reflects discharges enrolled in Humana’s 30-day care management services, which supports members after they are discharged home from a hospital or other facility. The program is aimed at individuals at high-risk for re-hospitalization. Care managers visit and call members at home to ensure they have and understand correct prescriptions, their doctors are informed about members’ changed status, and that members are either self-managing adequately or are referred to appropriate ongoing services.

(O)	Script volume is presented on an adjusted 30-day equivalent basis. This includes all scripts processed by the Humana pharmacy benefit manager (PBM).

(P)	Represents reinsurance recoverables associated with the company’s state-based Medicaid contract in Kentucky.

(Q)

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.

(R)	A common metric for monitoring benefits payable levels relative to benefits expense is days in claims payable (DCP). The company calculates DCP using the quarterly reported benefits expense and benefits payable balances as presented within the company’s consolidated financial statements.

(S)

DCP fluctuates due to a number of factors, 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.

(T)	Provider accruals represent portions of capitation payments set aside to pay future settlements for capitated providers. Related settlements generally happen over a 12-month period.

(U)	Represents medical and specialty claims incurred but not reported (IBNR) for non-pharmacy fully-insured products.

(V)	Represents pharmacy claims expense including payments to the company’s pharmacy benefit manager for prescription drugs filled on behalf of Humana’s members, as well as government subsidized programs from Medicare Part D such as low income cost and reinsurance subsidies, as well as coverage gap discount programs.

(W)	Includes processed claims that are in the post claim adjudication process, which consists of operating functions such as audit, check batching and check handling. These claims are included in IBNR lags, but have not yet been mailed or released from Humana.

(X)	Includes non-lagged reserves such as ASO stop loss, life reserves, and accidental death and dismemberment/accident and health. Also includes an explicit provision for uncertainty (also called a provision for adverse deviation) intended to ensure the unpaid claim liabilities are adequate under moderately adverse conditions.