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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Humana Inc | NYSE:HUM | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
11.18 | 2.91% | 395.39 | 401.11 | 391.02 | 395.15 | 970,001 | 19:31:15 |
FORM 10-Q
|
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
HUMANA INC.
(Exact name of registrant as specified in its charter)
|
|
Delaware
|
|
61-0647538
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification Number)
|
|
Large accelerated filer
|
ý
|
|
Accelerated filer
|
¨
|
|
|
|
|
|
Non-accelerated filer
|
¨
|
|
Smaller reporting company
|
¨
|
|
|
|
|
|
Emerging growth company
|
¨
|
|
|
|
Class of Common Stock
|
Outstanding at
March 31, 2018 |
$0.16 2/3 par value
|
137,682,171 shares
|
|
|
Page
|
Part I: Financial Information
|
|
|
Item 1.
|
Financial Statements (Unaudited)
|
|
|
|
|
|
||
|
|
|
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||
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|
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||
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Item 2.
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||
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Item 3.
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||
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Item 4.
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||
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||
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Item 1.
|
||
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Item 1A.
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||
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Item 2.
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||
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Item 3.
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||
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Item 4.
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||
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Item 5.
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||
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Item 6.
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||
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||
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Certifications
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(in millions, except share amounts)
|
||||||
A
SSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
8,855
|
|
|
$
|
4,042
|
|
Investment securities
|
9,742
|
|
|
9,557
|
|
||
Receivables, less allowance for doubtful accounts of $87 in 2018
and $96 in 2017 |
1,276
|
|
|
854
|
|
||
Other current assets
|
4,059
|
|
|
2,949
|
|
||
Total current assets
|
23,932
|
|
|
17,402
|
|
||
Property and equipment, net
|
1,595
|
|
|
1,584
|
|
||
Long-term investment securities
|
2,361
|
|
|
2,745
|
|
||
Goodwill
|
3,760
|
|
|
3,281
|
|
||
Other long-term assets
|
1,805
|
|
|
2,166
|
|
||
Total assets
|
$
|
33,453
|
|
|
$
|
27,178
|
|
L
IABILITIES
AND
S
TOCKHOLDERS
’ E
QUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Benefits payable
|
$
|
4,961
|
|
|
$
|
4,668
|
|
Trade accounts payable and accrued expenses
|
6,266
|
|
|
4,069
|
|
||
Book overdraft
|
124
|
|
|
141
|
|
||
Unearned revenues
|
3,706
|
|
|
378
|
|
||
Short-term debt
|
398
|
|
|
150
|
|
||
Total current liabilities
|
15,455
|
|
|
9,406
|
|
||
Long-term debt
|
4,772
|
|
|
4,770
|
|
||
Future policy benefits payable
|
2,842
|
|
|
2,923
|
|
||
Other long-term liabilities
|
303
|
|
|
237
|
|
||
Total liabilities
|
23,372
|
|
|
17,336
|
|
||
Commitments and contingencies (Note 14)
|
|
|
|
||||
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;
198,585,156 shares issued at March 31, 2018 and 198,572,458 shares issued at December 31, 2017 |
33
|
|
|
33
|
|
||
Capital in excess of par value
|
2,626
|
|
|
2,445
|
|
||
Retained earnings
|
14,086
|
|
|
13,670
|
|
||
Accumulated other comprehensive (loss) income
|
(154
|
)
|
|
19
|
|
||
Treasury stock, at cost, 60,902,985 shares at March 31, 2018 and
60,893,762 shares at December 31, 2017 |
(6,510
|
)
|
|
(6,325
|
)
|
||
Total stockholders’ equity
|
10,081
|
|
|
9,842
|
|
||
Total liabilities and stockholders’ equity
|
$
|
33,453
|
|
|
$
|
27,178
|
|
|
Three months ended
March 31, |
||||||
|
2018
|
|
2017
|
||||
|
(in millions, except per share results)
|
||||||
Revenues:
|
|
|
|
||||
Premiums
|
$
|
13,811
|
|
|
$
|
13,398
|
|
Services
|
327
|
|
|
253
|
|
||
Investment income
|
141
|
|
|
111
|
|
||
Total revenues
|
14,279
|
|
|
13,762
|
|
||
Operating expenses:
|
|
|
|
||||
Benefits
|
11,670
|
|
|
11,326
|
|
||
Operating costs
|
1,749
|
|
|
1,553
|
|
||
Merger termination fee and related costs, net
|
—
|
|
|
(947
|
)
|
||
Depreciation and amortization
|
100
|
|
|
92
|
|
||
Total operating expenses
|
13,519
|
|
|
12,024
|
|
||
Income from operations
|
760
|
|
|
1,738
|
|
||
Interest expense
|
53
|
|
|
49
|
|
||
Income before income taxes
|
707
|
|
|
1,689
|
|
||
Provision for income taxes
|
216
|
|
|
574
|
|
||
Net income
|
$
|
491
|
|
|
$
|
1,115
|
|
Basic earnings per common share
|
$
|
3.56
|
|
|
$
|
7.54
|
|
Diluted earnings per common share
|
$
|
3.53
|
|
|
$
|
7.49
|
|
Dividends declared per common share
|
$
|
0.50
|
|
|
$
|
0.40
|
|
|
Three months ended
March 31, |
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Net income
|
$
|
491
|
|
|
$
|
1,115
|
|
Other comprehensive (loss) income:
|
|
|
|
||||
Change in gross unrealized investment
gains/losses |
(203
|
)
|
|
38
|
|
||
Effect of income taxes
|
52
|
|
|
(14
|
)
|
||
Total change in unrealized
investment gains/losses, net of tax |
(151
|
)
|
|
24
|
|
||
Reclassification adjustment for net
realized gains included in investment income |
(29
|
)
|
|
(26
|
)
|
||
Effect of income taxes
|
7
|
|
|
10
|
|
||
Total reclassification adjustment, net
of tax |
(22
|
)
|
|
(16
|
)
|
||
Other comprehensive (loss) income, net
of tax |
(173
|
)
|
|
8
|
|
||
Comprehensive income
|
$
|
318
|
|
|
$
|
1,123
|
|
|
For the three months ended
March 31, |
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Cash flows from operating activities
|
|
|
|
||||
Net income
|
$
|
491
|
|
|
$
|
1,115
|
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
||||
Net realized capital gains
|
(29
|
)
|
|
(26
|
)
|
||
Stock-based compensation
|
35
|
|
|
26
|
|
||
Depreciation
|
109
|
|
|
100
|
|
||
Other intangible amortization
|
30
|
|
|
18
|
|
||
Provision for deferred income taxes
|
83
|
|
|
29
|
|
||
Changes in operating assets and liabilities, net of effect of
businesses acquired and dispositions: |
|
|
|
||||
Receivables
|
(422
|
)
|
|
(558
|
)
|
||
Other assets
|
(1,164
|
)
|
|
(415
|
)
|
||
Benefits payable
|
293
|
|
|
198
|
|
||
Other liabilities
|
885
|
|
|
542
|
|
||
Unearned revenues
|
3,328
|
|
|
3,140
|
|
||
Other, net
|
47
|
|
|
36
|
|
||
Net cash provided by operating activities
|
3,686
|
|
|
4,205
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Acquisitions, net of cash acquired
|
(169
|
)
|
|
(7
|
)
|
||
Purchases of property and equipment
|
(134
|
)
|
|
(122
|
)
|
||
Purchases of investment securities
|
(1,711
|
)
|
|
(1,876
|
)
|
||
Maturities of investment securities
|
217
|
|
|
284
|
|
||
Proceeds from sales of investment securities
|
1,392
|
|
|
795
|
|
||
Net cash used in investing activities
|
(405
|
)
|
|
(926
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Receipts from contract deposits, net
|
1,401
|
|
|
1,730
|
|
||
Proceeds from issuance of senior notes, net
|
—
|
|
|
991
|
|
||
Proceeds from issuance of commercial paper, net
|
245
|
|
|
169
|
|
||
Change in book overdraft
|
(17
|
)
|
|
(34
|
)
|
||
Common stock repurchases
|
(51
|
)
|
|
(1,574
|
)
|
||
Dividends paid
|
(57
|
)
|
|
(47
|
)
|
||
Proceeds from stock option exercises and other
|
11
|
|
|
34
|
|
||
Net cash provided by financing activities
|
1,532
|
|
|
1,269
|
|
||
Increase in cash and cash equivalents
|
4,813
|
|
|
4,548
|
|
||
Cash and cash equivalents at beginning of period
|
4,042
|
|
|
3,877
|
|
||
Cash and cash equivalents at end of period
|
$
|
8,855
|
|
|
$
|
8,425
|
|
Supplemental cash flow disclosures:
|
|
|
|
||||
Interest payments
|
$
|
22
|
|
|
$
|
10
|
|
Income tax payments (refunds), net
|
$
|
4
|
|
|
$
|
(4
|
)
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
|
(in millions)
|
||||||||||||||
March 31, 2018
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and other U.S. government
corporations and agencies: |
|
|
|
|
|
|
|
||||||||
U.S. Treasury and agency obligations
|
$
|
505
|
|
|
$
|
1
|
|
|
$
|
(5
|
)
|
|
$
|
501
|
|
Mortgage-backed securities
|
2,308
|
|
|
—
|
|
|
(56
|
)
|
|
2,252
|
|
||||
Tax-exempt municipal securities
|
3,549
|
|
|
6
|
|
|
(61
|
)
|
|
3,494
|
|
||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
||||||||
Residential
|
24
|
|
|
—
|
|
|
(1
|
)
|
|
23
|
|
||||
Commercial
|
580
|
|
|
—
|
|
|
(11
|
)
|
|
569
|
|
||||
Asset-backed securities
|
554
|
|
|
1
|
|
|
(1
|
)
|
|
554
|
|
||||
Corporate debt securities
|
4,693
|
|
|
131
|
|
|
(114
|
)
|
|
4,710
|
|
||||
Total debt securities
|
$
|
12,213
|
|
|
$
|
139
|
|
|
$
|
(249
|
)
|
|
$
|
12,103
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and other U.S. government
corporations and agencies: |
|
|
|
|
|
|
|
||||||||
U.S. Treasury and agency obligations
|
$
|
532
|
|
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
$
|
531
|
|
Mortgage-backed securities
|
1,625
|
|
|
4
|
|
|
(19
|
)
|
|
1,610
|
|
||||
Tax-exempt municipal securities
|
3,884
|
|
|
33
|
|
|
(28
|
)
|
|
3,889
|
|
||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
||||||||
Residential
|
26
|
|
|
—
|
|
|
—
|
|
|
26
|
|
||||
Commercial
|
455
|
|
|
3
|
|
|
(2
|
)
|
|
456
|
|
||||
Asset-backed securities
|
407
|
|
|
1
|
|
|
—
|
|
|
408
|
|
||||
Corporate debt securities
|
5,175
|
|
|
244
|
|
|
(37
|
)
|
|
5,382
|
|
||||
Total debt securities
|
$
|
12,104
|
|
|
$
|
286
|
|
|
$
|
(88
|
)
|
|
$
|
12,302
|
|
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
||||||||||||||||||
|
Fair
Value |
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Gross
Unrealized Losses |
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury and other U.S.
government corporations and agencies: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury and agency
obligations |
$
|
362
|
|
|
$
|
(2
|
)
|
|
$
|
129
|
|
|
$
|
(3
|
)
|
|
$
|
491
|
|
|
$
|
(5
|
)
|
Mortgage-backed
securities |
1,489
|
|
|
(28
|
)
|
|
638
|
|
|
(28
|
)
|
|
2,127
|
|
|
(56
|
)
|
||||||
Tax-exempt municipal
securities |
2,409
|
|
|
(41
|
)
|
|
621
|
|
|
(20
|
)
|
|
3,030
|
|
|
(61
|
)
|
||||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Residential
|
18
|
|
|
—
|
|
|
3
|
|
|
(1
|
)
|
|
21
|
|
|
(1
|
)
|
||||||
Commercial
|
451
|
|
|
(10
|
)
|
|
28
|
|
|
(1
|
)
|
|
479
|
|
|
(11
|
)
|
||||||
Asset-backed securities
|
162
|
|
|
(1
|
)
|
|
7
|
|
|
—
|
|
|
169
|
|
|
(1
|
)
|
||||||
Corporate debt securities
|
2,431
|
|
|
(60
|
)
|
|
761
|
|
|
(54
|
)
|
|
3,192
|
|
|
(114
|
)
|
||||||
Total debt securities
|
$
|
7,322
|
|
|
$
|
(142
|
)
|
|
$
|
2,187
|
|
|
$
|
(107
|
)
|
|
$
|
9,509
|
|
|
$
|
(249
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury and other U.S.
government corporations and agencies: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury and agency
obligations |
$
|
273
|
|
|
$
|
(1
|
)
|
|
$
|
130
|
|
|
$
|
(1
|
)
|
|
$
|
403
|
|
|
$
|
(2
|
)
|
Mortgage-backed
securities |
581
|
|
|
(2
|
)
|
|
672
|
|
|
(17
|
)
|
|
1,253
|
|
|
(19
|
)
|
||||||
Tax-exempt municipal
securities |
1,590
|
|
|
(16
|
)
|
|
661
|
|
|
(12
|
)
|
|
2,251
|
|
|
(28
|
)
|
||||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Residential
|
20
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
23
|
|
|
—
|
|
||||||
Commercial
|
131
|
|
|
(1
|
)
|
|
28
|
|
|
(1
|
)
|
|
159
|
|
|
(2
|
)
|
||||||
Asset-backed securities
|
107
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
117
|
|
|
—
|
|
||||||
Corporate debt securities
|
1,297
|
|
|
(10
|
)
|
|
804
|
|
|
(27
|
)
|
|
2,101
|
|
|
(37
|
)
|
||||||
Total debt securities
|
$
|
3,999
|
|
|
$
|
(30
|
)
|
|
$
|
2,308
|
|
|
$
|
(58
|
)
|
|
$
|
6,307
|
|
|
$
|
(88
|
)
|
|
Three months ended
March 31, |
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Gross realized gains
|
$
|
32
|
|
|
$
|
27
|
|
Gross realized losses
|
(3
|
)
|
|
(1
|
)
|
||
Net realized capital gains
|
$
|
29
|
|
|
$
|
26
|
|
|
Amortized
Cost |
|
Fair
Value |
||||
|
(in millions)
|
||||||
Due within one year
|
$
|
856
|
|
|
$
|
854
|
|
Due after one year through five years
|
2,846
|
|
|
2,803
|
|
||
Due after five years through ten years
|
2,317
|
|
|
2,247
|
|
||
Due after ten years
|
2,728
|
|
|
2,801
|
|
||
Mortgage and asset-backed securities
|
3,466
|
|
|
3,398
|
|
||
Total debt securities
|
$
|
12,213
|
|
|
$
|
12,103
|
|
|
Fair Value Measurements Using
|
||||||||||||||
|
Fair
Value |
|
Quoted Prices
in Active Markets (Level 1) |
|
Other
Observable Inputs (Level 2) |
|
Unobservable
Inputs (Level 3) |
||||||||
|
(in millions)
|
||||||||||||||
March 31, 2018
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
4,346
|
|
|
$
|
4,346
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Debt securities:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and other U.S. government
corporations and agencies: |
|
|
|
|
|
|
|
||||||||
U.S. Treasury and agency obligations
|
501
|
|
|
—
|
|
|
501
|
|
|
—
|
|
||||
Mortgage-backed securities
|
2,252
|
|
|
—
|
|
|
2,252
|
|
|
—
|
|
||||
Tax-exempt municipal securities
|
3,494
|
|
|
—
|
|
|
3,494
|
|
|
—
|
|
||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
||||||||
Residential
|
23
|
|
|
—
|
|
|
23
|
|
|
—
|
|
||||
Commercial
|
569
|
|
|
—
|
|
|
569
|
|
|
—
|
|
||||
Asset-backed securities
|
554
|
|
|
—
|
|
|
554
|
|
|
—
|
|
||||
Corporate debt securities
|
4,710
|
|
|
—
|
|
|
4,709
|
|
|
1
|
|
||||
Total debt securities
|
12,103
|
|
|
—
|
|
|
12,102
|
|
|
1
|
|
||||
Total invested assets
|
$
|
16,449
|
|
|
$
|
4,346
|
|
|
$
|
12,102
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
4,564
|
|
|
$
|
4,564
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Debt securities:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and other U.S. government
corporations and agencies: |
|
|
|
|
|
|
|
||||||||
U.S. Treasury and agency obligations
|
531
|
|
|
—
|
|
|
531
|
|
|
—
|
|
||||
Mortgage-backed securities
|
1,610
|
|
|
—
|
|
|
1,610
|
|
|
—
|
|
||||
Tax-exempt municipal securities
|
3,889
|
|
|
—
|
|
|
3,889
|
|
|
—
|
|
||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
||||||||
Residential
|
26
|
|
|
—
|
|
|
26
|
|
|
—
|
|
||||
Commercial
|
456
|
|
|
—
|
|
|
456
|
|
|
—
|
|
||||
Asset-backed securities
|
408
|
|
|
—
|
|
|
408
|
|
|
—
|
|
||||
Corporate debt securities
|
5,382
|
|
|
—
|
|
|
5,381
|
|
|
1
|
|
||||
Total debt securities
|
12,302
|
|
|
—
|
|
|
12,301
|
|
|
1
|
|
||||
Total invested assets
|
$
|
16,866
|
|
|
$
|
4,564
|
|
|
$
|
12,301
|
|
|
$
|
1
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||
Risk
Corridor Settlement |
|
CMS
Subsidies/ Discounts |
|
Risk
Corridor Settlement |
|
CMS
Subsidies/ Discounts |
|||||||||
|
(in millions)
|
||||||||||||||
Other current assets
|
$
|
5
|
|
|
$
|
79
|
|
|
$
|
4
|
|
|
$
|
101
|
|
Trade accounts payable and accrued expenses
|
(240
|
)
|
|
(2,509
|
)
|
|
(255
|
)
|
|
(1,085
|
)
|
||||
Net current liability
|
(235
|
)
|
|
(2,430
|
)
|
|
(251
|
)
|
|
(984
|
)
|
||||
Other long-term assets
|
33
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other long-term liabilities
|
(78
|
)
|
|
—
|
|
|
(28
|
)
|
|
—
|
|
||||
Net long-term liability
|
(45
|
)
|
|
—
|
|
|
(28
|
)
|
|
—
|
|
||||
Total net liability
|
$
|
(280
|
)
|
|
$
|
(2,430
|
)
|
|
$
|
(279
|
)
|
|
$
|
(984
|
)
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||||||
|
Risk Adjustment
Settlement |
|
Reinsurance
Recoverables |
|
Risk Adjustment
Settlement |
|
Reinsurance
Recoverables |
||||||||||||
|
(in millions)
|
||||||||||||||||||
Prior Coverage Years
|
|
|
|
|
|
|
|
||||||||||||
Premiums receivable
|
$
|
65
|
|
|
$
|
—
|
|
|
$
|
62
|
|
|
$
|
—
|
|
||||
Other current assets
|
—
|
|
|
—
|
|
|
—
|
|
|
44
|
|
||||||||
Trade accounts payable and
accrued expenses |
(79
|
)
|
|
—
|
|
|
(80
|
)
|
|
—
|
|
||||||||
Net current (liability) asset
|
(14
|
)
|
|
—
|
|
|
(18
|
)
|
|
44
|
|
||||||||
Other long-term assets
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
||||||||
Total prior coverage years' net (liability) asset
|
(14
|
)
|
|
—
|
|
|
(13
|
)
|
|
44
|
|
||||||||
Current Coverage Year
|
|
|
|
|
|
|
|
||||||||||||
Other long-term assets
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Other long-term liabilities
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Net long-term liability
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total 2018 coverage year net liability
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total net (liability) asset
|
$
|
(24
|
)
|
|
$
|
—
|
|
|
$
|
(13
|
)
|
|
$
|
44
|
|
|
Retail
|
|
Group and Specialty
|
|
Healthcare
Services |
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Balance at January 1, 2018
|
$
|
1,059
|
|
|
$
|
261
|
|
|
$
|
1,961
|
|
|
$
|
3,281
|
|
Acquisitions
|
360
|
|
|
—
|
|
|
119
|
|
|
479
|
|
||||
Balance at March 31, 2018
|
$
|
1,419
|
|
|
$
|
261
|
|
|
$
|
2,080
|
|
|
$
|
3,760
|
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Weighted
Average Life |
|
Cost
|
|
Accumulated
Amortization |
|
Net
|
|
Cost
|
|
Accumulated
Amortization |
|
Net
|
||||||||||||
|
|
|
($ in millions)
|
||||||||||||||||||||||
Other intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer contracts/
relationships |
9.6 years
|
|
$
|
646
|
|
|
$
|
414
|
|
|
$
|
232
|
|
|
$
|
566
|
|
|
$
|
401
|
|
|
$
|
165
|
|
Trade names and
technology |
6.5 years
|
|
83
|
|
|
78
|
|
|
5
|
|
|
104
|
|
|
84
|
|
|
20
|
|
||||||
Provider contracts
|
11.9 years
|
|
68
|
|
|
32
|
|
|
36
|
|
|
68
|
|
|
30
|
|
|
38
|
|
||||||
Noncompetes and
other |
8.1 years
|
|
32
|
|
|
29
|
|
|
3
|
|
|
32
|
|
|
29
|
|
|
3
|
|
||||||
Total other intangible
assets |
9.4 years
|
|
$
|
829
|
|
|
$
|
553
|
|
|
$
|
276
|
|
|
$
|
770
|
|
|
$
|
544
|
|
|
$
|
226
|
|
|
|
For the three months ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(in millions)
|
||||||
Balances, beginning of period
|
|
$
|
4,668
|
|
|
$
|
4,563
|
|
Less: Reinsurance recoverables
|
|
(70
|
)
|
|
(76
|
)
|
||
Balances, beginning of period, net
|
|
4,598
|
|
|
4,487
|
|
||
Incurred related to:
|
|
|
|
|
||||
Current year
|
|
11,947
|
|
|
11,580
|
|
||
Prior years
|
|
(267
|
)
|
|
(231
|
)
|
||
Total incurred
|
|
11,680
|
|
|
11,349
|
|
||
Paid related to:
|
|
|
|
|
||||
Current year
|
|
(7,775
|
)
|
|
(7,695
|
)
|
||
Prior years
|
|
(3,619
|
)
|
|
(3,451
|
)
|
||
Total paid
|
|
(11,394
|
)
|
|
(11,146
|
)
|
||
Reinsurance recoverable
|
|
77
|
|
|
71
|
|
||
Balances, end of period
|
|
$
|
4,961
|
|
|
$
|
4,761
|
|
|
|
For the three months ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(in millions)
|
||||||
Future policy benefits:
|
|
|
|
|
||||
Individual Commercial
|
|
$
|
(16
|
)
|
|
$
|
(33
|
)
|
Other Businesses
|
|
6
|
|
|
10
|
|
||
Total future policy benefits
|
|
$
|
(10
|
)
|
|
$
|
(23
|
)
|
|
|
For the three months ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(in millions)
|
||||||
Balances, beginning of period
|
|
$
|
3,963
|
|
|
$
|
3,507
|
|
Less: Reinsurance recoverables
|
|
(70
|
)
|
|
(76
|
)
|
||
Balances, beginning of period, net
|
|
3,893
|
|
|
3,431
|
|
||
Incurred related to:
|
|
|
|
|
||||
Current year
|
|
10,739
|
|
|
10,255
|
|
||
Prior years
|
|
(187
|
)
|
|
(204
|
)
|
||
Total incurred
|
|
10,552
|
|
|
10,051
|
|
||
Paid related to:
|
|
|
|
|
||||
Current year
|
|
(7,119
|
)
|
|
(7,014
|
)
|
||
Prior years
|
|
(3,082
|
)
|
|
(2,572
|
)
|
||
Total paid
|
|
(10,201
|
)
|
|
(9,586
|
)
|
||
Reinsurance recoverable
|
|
77
|
|
|
71
|
|
||
Balances, end of period
|
|
$
|
4,321
|
|
|
$
|
3,967
|
|
|
|
For the three months ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(in millions)
|
||||||
Balances, beginning of period
|
|
$
|
568
|
|
|
$
|
578
|
|
Incurred related to:
|
|
|
|
|
||||
Current year
|
|
1,307
|
|
|
1,306
|
|
||
Prior years
|
|
(34
|
)
|
|
(20
|
)
|
||
Total incurred
|
|
1,273
|
|
|
1,286
|
|
||
Paid related to:
|
|
|
|
|
||||
Current year
|
|
(802
|
)
|
|
(824
|
)
|
||
Prior years
|
|
(463
|
)
|
|
(493
|
)
|
||
Total paid
|
|
(1,265
|
)
|
|
(1,317
|
)
|
||
Balances, end of period
|
|
$
|
576
|
|
|
$
|
547
|
|
|
|
For the three months ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(in millions)
|
||||||
Balances, beginning of period
|
|
$
|
101
|
|
|
$
|
454
|
|
Incurred related to:
|
|
|
|
|
||||
Current year
|
|
—
|
|
|
195
|
|
||
Prior years
|
|
(44
|
)
|
|
(6
|
)
|
||
Total incurred
|
|
(44
|
)
|
|
189
|
|
||
Paid related to:
|
|
|
|
|
||||
Current year
|
|
—
|
|
|
(59
|
)
|
||
Prior years
|
|
(29
|
)
|
|
(363
|
)
|
||
Total paid
|
|
(29
|
)
|
|
(422
|
)
|
||
Balance, end of period
|
|
$
|
28
|
|
|
$
|
221
|
|
Reconciliation of the Disclosure of Incurred and Paid Claims Development to Benefits Payable, net of reinsurance
|
||||
|
March 31,
|
|||
|
2018
|
|||
Net outstanding liabilities
|
|
|||
Retail
|
$
|
4,244
|
|
|
Group and Specialty
|
576
|
|
||
Individual Commercial
|
28
|
|
||
Other Businesses
|
36
|
|
||
Benefits payable, net of reinsurance
|
4,884
|
|
||
|
|
|||
Reinsurance recoverable on unpaid claims
|
|
|||
Retail
|
77
|
|
||
Total reinsurance recoverable on unpaid claims
|
77
|
|
||
|
|
|||
Total benefits payable, gross
|
$
|
4,961
|
|
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(dollars in millions, except per common share results; number of shares in thousands)
|
||||||
Net income available for common stockholders
|
$
|
491
|
|
|
$
|
1,115
|
|
Weighted average outstanding shares of common stock
used to compute basic earnings per common share |
137,903
|
|
|
147,824
|
|
||
Dilutive effect of:
|
|
|
|
||||
Employee stock options
|
213
|
|
|
199
|
|
||
Restricted stock
|
714
|
|
|
849
|
|
||
Shares used to compute diluted earnings per common share
|
138,830
|
|
|
148,872
|
|
||
Basic earnings per common share
|
$
|
3.56
|
|
|
$
|
7.54
|
|
Diluted earnings per common share
|
$
|
3.53
|
|
|
$
|
7.49
|
|
Number of antidilutive stock options and restricted stock
excluded from computation |
645
|
|
|
938
|
|
Record
Date |
|
Payment
Date |
|
Amount
per Share |
|
Total
Amount |
||||
|
|
|
|
|
|
(in millions)
|
||||
2017 payments
|
|
|
|
|
|
|
||||
1/12/2017
|
|
1/27/2017
|
|
$
|
0.29
|
|
|
$
|
43
|
|
3/31/2017
|
|
4/28/2017
|
|
$
|
0.40
|
|
|
$
|
58
|
|
6/30/2017
|
|
7/31/2017
|
|
$
|
0.40
|
|
|
$
|
58
|
|
9/29/2017
|
|
10/27/2017
|
|
$
|
0.40
|
|
|
$
|
57
|
|
2018 payments
|
|
|
|
|
|
|
||||
12/29/2017
|
|
1/26/2018
|
|
$
|
0.40
|
|
|
$
|
55
|
|
3/30/2018
|
|
4/27/2018
|
|
$
|
0.50
|
|
|
$
|
69
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
|
(in millions)
|
||||||
Senior notes:
|
|
|
|
||||
$400 million, 2.625% due October 1, 2019
|
$
|
399
|
|
|
$
|
399
|
|
$400 million, 2.50% due December 15, 2020
|
397
|
|
|
397
|
|
||
$400 million, 2.90% due December 15, 2022
|
396
|
|
|
396
|
|
||
$600 million, 3.15% due December 1, 2022
|
596
|
|
|
595
|
|
||
$600 million, 3.85% due October 1, 2024
|
596
|
|
|
595
|
|
||
$600 million, 3.95% due March 15, 2027
|
595
|
|
|
594
|
|
||
$250 million, 8.15% due June 15, 2038
|
263
|
|
|
263
|
|
||
$400 million, 4.625% due December 1, 2042
|
396
|
|
|
396
|
|
||
$750 million, 4.95% due October 1, 2044
|
739
|
|
|
739
|
|
||
$400 million, 4.80% due March 15, 2047
|
395
|
|
|
396
|
|
||
Total long-term debt
|
$
|
4,772
|
|
|
$
|
4,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Retail
|
|
Group and Specialty
|
|
Healthcare
Services |
|
Individual Commercial
|
|
Other
Businesses |
|
Eliminations/
Corporate |
|
Consolidated
|
||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
Three months ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Revenues - external customers
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Premiums:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Individual Medicare Advantage
|
$
|
8,970
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,970
|
|
Group Medicare Advantage
|
1,524
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,524
|
|
|||||||
Medicare stand-alone PDP
|
896
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
896
|
|
|||||||
Total Medicare
|
11,390
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,390
|
|
|||||||
Fully-insured
|
125
|
|
|
1,392
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
1,512
|
|
|||||||
Specialty
|
—
|
|
|
347
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
347
|
|
|||||||
Medicaid and other
|
553
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
562
|
|
|||||||
Total premiums
|
12,068
|
|
|
1,739
|
|
|
—
|
|
|
(5
|
)
|
|
9
|
|
|
—
|
|
|
13,811
|
|
|||||||
Services revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Provider
|
—
|
|
|
—
|
|
|
65
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
65
|
|
|||||||
ASO and other
|
2
|
|
|
219
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
223
|
|
|||||||
Pharmacy
|
—
|
|
|
—
|
|
|
39
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39
|
|
|||||||
Total services revenue
|
2
|
|
|
219
|
|
|
104
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
327
|
|
|||||||
Total revenues - external customers
|
12,070
|
|
|
1,958
|
|
|
104
|
|
|
(5
|
)
|
|
11
|
|
|
—
|
|
|
14,138
|
|
|||||||
Intersegment revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Services
|
—
|
|
|
5
|
|
|
4,018
|
|
|
—
|
|
|
—
|
|
|
(4,023
|
)
|
|
—
|
|
|||||||
Products
|
—
|
|
|
—
|
|
|
1,535
|
|
|
—
|
|
|
—
|
|
|
(1,535
|
)
|
|
—
|
|
|||||||
Total intersegment revenues
|
—
|
|
|
5
|
|
|
5,553
|
|
|
—
|
|
|
—
|
|
|
(5,558
|
)
|
|
—
|
|
|||||||
Investment income
|
37
|
|
|
7
|
|
|
6
|
|
|
—
|
|
|
35
|
|
|
56
|
|
|
141
|
|
|||||||
Total revenues
|
12,107
|
|
|
1,970
|
|
|
5,663
|
|
|
(5
|
)
|
|
46
|
|
|
(5,502
|
)
|
|
14,279
|
|
|||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Benefits
|
10,552
|
|
|
1,273
|
|
|
—
|
|
|
(60
|
)
|
|
26
|
|
|
(121
|
)
|
|
11,670
|
|
|||||||
Operating costs
|
1,222
|
|
|
463
|
|
|
5,441
|
|
|
2
|
|
|
2
|
|
|
(5,381
|
)
|
|
1,749
|
|
|||||||
Depreciation and amortization
|
66
|
|
|
23
|
|
|
49
|
|
|
—
|
|
|
—
|
|
|
(38
|
)
|
|
100
|
|
|||||||
Total operating expenses
|
11,840
|
|
|
1,759
|
|
|
5,490
|
|
|
(58
|
)
|
|
28
|
|
|
(5,540
|
)
|
|
13,519
|
|
|||||||
Income from operations
|
267
|
|
|
211
|
|
|
173
|
|
|
53
|
|
|
18
|
|
|
38
|
|
|
760
|
|
|||||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
53
|
|
|
53
|
|
|||||||
Income (loss) before income taxes
|
$
|
267
|
|
|
$
|
211
|
|
|
$
|
173
|
|
|
$
|
53
|
|
|
$
|
18
|
|
|
$
|
(15
|
)
|
|
$
|
707
|
|
|
Retail
|
|
Group and Specialty
|
|
Healthcare
Services |
|
Individual Commercial
|
|
Other
Businesses |
|
Eliminations/
Corporate |
|
Consolidated
|
||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
Three months ended March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Revenues - external customers
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Premiums:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Individual Medicare Advantage
|
$
|
8,376
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,376
|
|
Group Medicare Advantage
|
1,318
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,318
|
|
|||||||
Medicare stand-alone PDP
|
941
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
941
|
|
|||||||
Total Medicare
|
10,635
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,635
|
|
|||||||
Fully-insured
|
118
|
|
|
1,378
|
|
|
—
|
|
|
283
|
|
|
—
|
|
|
—
|
|
|
1,779
|
|
|||||||
Specialty
|
—
|
|
|
322
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
322
|
|
|||||||
Medicaid and other
|
653
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
662
|
|
|||||||
Total premiums
|
11,406
|
|
|
1,700
|
|
|
—
|
|
|
283
|
|
|
9
|
|
|
—
|
|
|
13,398
|
|
|||||||
Services revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Provider
|
—
|
|
|
—
|
|
|
70
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
70
|
|
|||||||
ASO and other
|
2
|
|
|
161
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
165
|
|
|||||||
Pharmacy
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|||||||
Total services revenue
|
2
|
|
|
161
|
|
|
88
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
253
|
|
|||||||
Total revenues - external customers
|
11,408
|
|
|
1,861
|
|
|
88
|
|
|
283
|
|
|
11
|
|
|
—
|
|
|
13,651
|
|
|||||||
Intersegment revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Services
|
—
|
|
|
5
|
|
|
4,310
|
|
|
—
|
|
|
—
|
|
|
(4,315
|
)
|
|
—
|
|
|||||||
Products
|
—
|
|
|
—
|
|
|
1,552
|
|
|
—
|
|
|
—
|
|
|
(1,552
|
)
|
|
—
|
|
|||||||
Total intersegment revenues
|
—
|
|
|
5
|
|
|
5,862
|
|
|
—
|
|
|
—
|
|
|
(5,867
|
)
|
|
—
|
|
|||||||
Investment income
|
25
|
|
|
11
|
|
|
8
|
|
|
1
|
|
|
21
|
|
|
45
|
|
|
111
|
|
|||||||
Total revenues
|
11,433
|
|
|
1,877
|
|
|
5,958
|
|
|
284
|
|
|
32
|
|
|
(5,822
|
)
|
|
13,762
|
|
|||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Benefits
|
10,051
|
|
|
1,286
|
|
|
—
|
|
|
156
|
|
|
29
|
|
|
(196
|
)
|
|
11,326
|
|
|||||||
Operating costs
|
954
|
|
|
399
|
|
|
5,680
|
|
|
62
|
|
|
4
|
|
|
(5,546
|
)
|
|
1,553
|
|
|||||||
Merger termination fee and related costs, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(947
|
)
|
|
(947
|
)
|
|||||||
Depreciation and amortization
|
58
|
|
|
21
|
|
|
34
|
|
|
3
|
|
|
—
|
|
|
(24
|
)
|
|
92
|
|
|||||||
Total operating expenses
|
11,063
|
|
|
1,706
|
|
|
5,714
|
|
|
221
|
|
|
33
|
|
|
(6,713
|
)
|
|
12,024
|
|
|||||||
Income (loss) from operations
|
370
|
|
|
171
|
|
|
244
|
|
|
63
|
|
|
(1
|
)
|
|
891
|
|
|
1,738
|
|
|||||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49
|
|
|
49
|
|
|||||||
Income (loss) before income taxes
|
$
|
370
|
|
|
$
|
171
|
|
|
$
|
244
|
|
|
$
|
63
|
|
|
$
|
(1
|
)
|
|
$
|
842
|
|
|
$
|
1,689
|
|
•
|
Our consolidated pretax results of
$707 million
for the
three months ended March 31, 2018
as compared to
$1.7 billion
for the
three months ended March 31, 2017
were primarily impacted by the net gain associated with the terminated Merger Agreement, mainly the break-up fee, that was recorded in the
three months ended March 31, 2017
, and lower year-over-year pretax earnings in the Retail and Healthcare Services segments, partially offset by higher Group and Specialty segment pretax earnings. The year-over-year comparison was further impacted by the guaranty fund assessment expense to support policyholder obligations of Penn Treaty, an unaffiliated long-term care insurance company, recorded in the
three months ended March 31, 2017
.
|
•
|
Year-over-year comparisons of diluted earnings per common share are favorably impacted by a lower number of shares used to compute earnings per commons share reflecting the impact of share repurchases and the impact of a lower tax rate for the
three months ended March 31, 2018
.
|
•
|
Our
2018
results through
March 31, 2018
reflect the continued implementation of our strategy to offer our members affordable health care combined with a positive consumer experience in growing markets. At the core of this strategy is our integrated care delivery model, which unites quality care, high member engagement, and sophisticated data analytics. Our approach to primary, physician-directed care for our members aims to provide quality care that is consistent, integrated, cost-effective, and member-focused, provided by both employed physicians and physicians with network contract arrangements. The model is designed to improve health outcomes and affordability for individuals and for the health system as a whole, while offering our members a simple, seamless healthcare experience. We believe this strategy is positioning us for long-term
|
•
|
The annual health insurance industry fee was suspended for calendar year 2017, but has resumed in 2018. Operating costs associated with the health insurer fee attributable to the
three months ended March 31, 2018
was
$263 million
. This fee is not deductible for tax purposes, which increases our effective income tax rate. The one-year suspension in 2017 of the health insurer fee has significantly reduced our operating costs and effective tax rate during the
three months ended March 31, 2017
.
|
•
|
The 2018 quarter includes pretax income from our Individual Commercial business of
$53 million
, or
$0.29
per diluted common share compared to
$63 million
, or
0.27
per diluted common share, included in the 2017 quarter.
|
•
|
The 2018 quarter also includes an adjustment to provisional remeasurement of deferred taxes related to rate change from the tax reform law enacted on December 22, 2017 of
$6.6 million
, or
$0.05
per diluted common share.
|
•
|
We recorded a net gain associated with the terminated Merger Agreement, consisting primarily of the break-up fee, of approximately
$947 million
, or
$4.26
per diluted common share during the
three months ended March 31, 2017
. Certain costs associated with the Merger were previously not deductible for tax purposes, but became deductible, and were recorded as such in the three months ended March 31, 2017 as a result of the termination of the Merger Agreement.
|
•
|
On March 1, 2017, a court ordered the liquidation of Penn Treaty (an unaffiliated long-term care insurance company), which triggered assessments from state guaranty associations that resulted in our recording a
$54 million
, or
$0.23
per diluted common share, estimate in operating costs in the three months ended March 31, 2017.
|
•
|
During the
three months ended March 31, 2018
, cash flow provided by operations was
$3.7 billion
as compared to
$4.2 billion
for the
three months ended March 31, 2017
. Our operating cash flows for the
three months ended March 31, 2017
were significantly impacted by the receipt of the
$1 billion
Merger termination fee, net of related expenses. Our operating cash flows were also significantly impacted in both periods by the early receipt of the Medicare premium remittance for April 2018 of
$3.3 billion
in March 2018 and the receipt of the Medicare premium remittance for April 2017 of $3.1 billion in March 2017 because the payment dates of April 2018 and April 2017 fell on a weekend.
Excluding the Merger termination fee and the timing of the Medicare premium remittances, our operating cash flows were impacted by higher earnings and the timing of working capital items.
See further discussion under the section titled "Liquidity" in this report.
|
•
|
On April 2, 2018, the Centers for Medicare and Medicaid Services (CMS) issued its announcement of 2019 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter (the Final Rate Notice). The company expects the Final Rate Notice to result in a 3% rate increase for Humana’s individual Medicare Advantage business versus CMS’ estimate for the sector of 3.5%, excluding the impact of Employer Group Waiver Plan (EGWP) funding changes, on a comparable basis. The difference between Humana and CMS projections primarily results from the geographic distribution of our members relative to the national average. In addition, the Final Rate Notice clarified that CMS has the authority to permit MA organizations to offer tailored supplemental benefits with flexibilities to target the social determinants of health as recommended by a licensed medical professional. We expect that this additional flexibility will allow us to include supplemental benefits that we believe will improve health outcomes for our members.
|
•
|
On April 24, 2018, we received a Notice of Intent to be Awarded a Comprehensive Medicaid Contract under Florida’s Statewide Managed Medicaid Program in 10 of 11 regions, including the South Florida, Tampa, Jacksonville, and Orlando metro areas. The comprehensive program combines the traditional Medicaid, or TANF, and Long-Term Care programs.
|
•
|
The T2017 East Region contract is a consolidation of the former T3 North and South Regions, comprising thirty-two states and approximately six million TRICARE beneficiaries, under which delivery of health care services commenced on January 1, 2018. The T2017 East Region contract is a 5-year contract set to expire on December 31, 2022 and is subject to renewals on January 1 of each year during its term at the government's option.
During 2017, we delivered services under the 5-year T3 South Region contract, which expired on December 31, 2017.
|
•
|
Medicare Advantage and dual demonstration program membership enrolled in a Humana chronic care management program was
752,400
at
March 31, 2018
, a
decrease
of
27.3%
from
1,035,300
at
March 31, 2017
, and
5.3%
from
794,900
at
December 31, 2017
. We have undergone an optimization process that ensures the appropriate level of member interaction with clinicians, including moving members into a monitoring program as their needs change, and graduating them out of the care management program when they no longer benefit from the services. This drives quality outcomes, which has resulted in reduced segment earnings but higher returns on investment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
For the three months ended
March 31, |
|
Change
|
|||||||||||
|
2018
|
|
2017
|
|
Dollars
|
|
Percentage
|
|||||||
|
(dollars in millions, except per common share results)
|
|
|
|||||||||||
Revenues:
|
|
|
|
|
|
|
|
|||||||
Premiums:
|
|
|
|
|
|
|
|
|||||||
Retail
|
$
|
12,068
|
|
|
$
|
11,406
|
|
|
$
|
662
|
|
|
5.8
|
%
|
Group and Specialty
|
1,739
|
|
|
1,700
|
|
|
39
|
|
|
2.3
|
%
|
|||
Individual Commercial
|
(5
|
)
|
|
283
|
|
|
(288
|
)
|
|
(101.8
|
)%
|
|||
Other Businesses
|
9
|
|
|
9
|
|
|
—
|
|
|
—
|
%
|
|||
Total premiums
|
13,811
|
|
|
13,398
|
|
|
413
|
|
|
3.1
|
%
|
|||
Services:
|
|
|
|
|
|
|
|
|||||||
Retail
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
%
|
|||
Group and Specialty
|
219
|
|
|
161
|
|
|
58
|
|
|
36.0
|
%
|
|||
Healthcare Services
|
104
|
|
|
88
|
|
|
16
|
|
|
18.2
|
%
|
|||
Other Businesses
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
%
|
|||
Total services
|
327
|
|
|
253
|
|
|
74
|
|
|
29.2
|
%
|
|||
Investment income
|
141
|
|
|
111
|
|
|
30
|
|
|
27.0
|
%
|
|||
Total revenues
|
14,279
|
|
|
13,762
|
|
|
517
|
|
|
3.8
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Benefits
|
11,670
|
|
|
11,326
|
|
|
344
|
|
|
3.0
|
%
|
|||
Operating costs
|
1,749
|
|
|
1,553
|
|
|
196
|
|
|
12.6
|
%
|
|||
Merger termination fee and related costs, net
|
—
|
|
|
(947
|
)
|
|
947
|
|
|
100.0
|
%
|
|||
Depreciation and amortization
|
100
|
|
|
92
|
|
|
8
|
|
|
8.7
|
%
|
|||
Total operating expenses
|
13,519
|
|
|
12,024
|
|
|
1,495
|
|
|
12.4
|
%
|
|||
Income from operations
|
760
|
|
|
1,738
|
|
|
(978
|
)
|
|
(56.3
|
)%
|
|||
Interest expense
|
53
|
|
|
49
|
|
|
4
|
|
|
8.2
|
%
|
|||
Income before income taxes
|
707
|
|
|
1,689
|
|
|
(982
|
)
|
|
(58.1
|
)%
|
|||
Provision for income taxes
|
216
|
|
|
574
|
|
|
(358
|
)
|
|
(62.4
|
)%
|
|||
Net income
|
$
|
491
|
|
|
$
|
1,115
|
|
|
$
|
(624
|
)
|
|
(56.0
|
)%
|
Diluted earnings per common share
|
$
|
3.53
|
|
|
$
|
7.49
|
|
|
$
|
(3.96
|
)
|
|
(52.9
|
)%
|
Benefit ratio
(a)
|
84.5
|
%
|
|
84.5
|
%
|
|
|
|
—
|
%
|
||||
Operating cost ratio
(b)
|
12.4
|
%
|
|
11.4
|
%
|
|
|
|
1.0
|
%
|
||||
Effective tax rate
|
30.7
|
%
|
|
34.0
|
%
|
|
|
|
(3.3
|
)%
|
(a)
|
Represents total benefits expense as a percentage of premiums revenue.
|
(b)
|
Represents total operating costs, excluding
Merger termination fee and related costs, net,
and depreciation and amortization, as a percentage of total revenues less investment income.
|
|
March 31,
|
|
Change
|
||||||||
|
2018
|
|
2017
|
|
Members
|
|
Percentage
|
||||
Membership:
|
|
|
|
|
|
|
|
||||
Medical membership:
|
|
|
|
|
|
|
|
||||
Individual Medicare Advantage
|
3,018,500
|
|
|
2,839,700
|
|
|
178,800
|
|
|
6.3
|
%
|
Group Medicare Advantage
|
492,700
|
|
|
431,100
|
|
|
61,600
|
|
|
14.3
|
%
|
Medicare stand-alone PDP
|
5,042,100
|
|
|
5,199,400
|
|
|
(157,300
|
)
|
|
(3.0
|
)%
|
Total Retail Medicare
|
8,553,300
|
|
|
8,470,200
|
|
|
83,100
|
|
|
1.0
|
%
|
State-based Medicaid
|
336,000
|
|
|
380,400
|
|
|
(44,400
|
)
|
|
(11.7
|
)%
|
Medicare Supplement
|
238,700
|
|
|
231,400
|
|
|
7,300
|
|
|
3.2
|
%
|
Total Retail medical members
|
9,128,000
|
|
|
9,082,000
|
|
|
46,000
|
|
|
0.5
|
%
|
|
|
|
|
|
|
|
|
|
For the three months ended
March 31, |
|
Change
|
|||||||||||
|
2018
|
|
2017
|
|
Dollars
|
|
Percentage
|
|||||||
|
(in millions)
|
|
|
|||||||||||
Premiums and Services Revenue:
|
|
|
|
|
|
|
|
|||||||
Premiums:
|
|
|
|
|
|
|
|
|||||||
Individual Medicare Advantage
|
$
|
8,970
|
|
|
$
|
8,376
|
|
|
$
|
594
|
|
|
7.1
|
%
|
Group Medicare Advantage
|
1,524
|
|
|
1,318
|
|
|
206
|
|
|
15.6
|
%
|
|||
Medicare stand-alone PDP
|
896
|
|
|
941
|
|
|
(45
|
)
|
|
(4.8
|
)%
|
|||
Total Retail Medicare
|
11,390
|
|
|
10,635
|
|
|
755
|
|
|
7.1
|
%
|
|||
State-based Medicaid
|
553
|
|
|
653
|
|
|
(100
|
)
|
|
(15.3
|
)%
|
|||
Medicare Supplement
|
125
|
|
|
118
|
|
|
7
|
|
|
5.9
|
%
|
|||
Total premiums
|
12,068
|
|
|
11,406
|
|
|
662
|
|
|
5.8
|
%
|
|||
Services
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
%
|
|||
Total premiums and services revenue
|
$
|
12,070
|
|
|
$
|
11,408
|
|
|
$
|
662
|
|
|
5.8
|
%
|
Income before income taxes
|
$
|
267
|
|
|
$
|
370
|
|
|
$
|
(103
|
)
|
|
(27.8
|
)%
|
Benefit ratio
|
87.4
|
%
|
|
88.1
|
%
|
|
|
|
(0.7
|
)%
|
||||
Operating cost ratio
|
10.1
|
%
|
|
8.4
|
%
|
|
|
|
1.7
|
%
|
•
|
Retail segment pretax income was
$267 million
in the
2018 quarter
, a
decrease
of
$103 million
, or
27.8%
, compared to
$370 million
in the
2017 quarter
, primarily due to the result of investment in benefit design for 2018 Medicare Advantage offerings further discussed below, investments made in the 2018 quarter as a result of the Tax Reform Law as previously described, lower favorable prior-period reserve development, and a more severe flu season year-over-year. These items were partially offset by the significant operating cost efficiencies further discussed below.
|
•
|
Individual Medicare Advantage membership
increased
178,800
members, or
6.3%
, from
March 31, 2017
to
March 31, 2018
, primarily due to membership additions associated with the most recent Annual Election Period, or AEP, for Medicare beneficiaries.
|
•
|
Group Medicare Advantage membership
increased
61,600
, or
14.3%
, from
March 31, 2017
to
March 31, 2018
, primarily due to increased sales to our existing group accounts during the most recent AEP for Medicare beneficiaries.
|
•
|
Medicare stand-alone PDP membership
decreased
157,300
members, or
3.0%
, from
March 31, 2017
to
March 31, 2018
reflecting net declines during the most recent AEP for Medicare beneficiaries.These declines primarily resulted from the previously disclosed loss of auto assigned members in Florida and South Carolina due to pricing over CMS low income benchmark and continued membership declines in our Enhanced Plan. In addition, growth in our co-branded Walmart plan was significantly lower than historic levels due to the introduction of additional low-priced competitor offerings in many regions.
|
•
|
State-based Medicaid membership
decreased
44,400
members, or
11.7%
, from
March 31, 2017
to
March 31, 2018
, primarily driven by the previously disclosed decision to not participate in Illinois' Integrated Program Medicaid contract, along with lower membership associated with our Florida contract due to overall strengthening economic conditions.
|
•
|
Retail segment premiums increased
$662 million
, or
5.8%
, from the
2017 quarter
to the
2018 quarter
primarily due to individual and group Medicare Advantage membership growth in the most recent AEP as well as increased per-member premiums for certain products within the segment, partially offset by declines in the stand-alone PDP and state-based contracts revenues resulting from membership declines discussed above. Average group and individual Medicare Advantage membership increased
7.4%
for the
2018 quarter
. Average membership is calculated by summing the ending membership for each month in a period and dividing the result by the number of months in a period. Premiums revenue reflects changes in membership and average per-member premiums. Items impacting average per-member premiums include changes in premium rates as well as changes in the geographic mix of membership, the mix of product offerings, and the mix of benefit plans selected by our membership.
|
•
|
The Retail segment benefit ratio
decreased
70
basis points from
88.1%
in the
2017 quarter
to
87.4%
in the
2018 quarter
, primarily due to the reinstatement of the health insurance industry fee in 2018 which was contemplated in the pricing and benefit design of our products. This was partially offset by the unfavorable impact from investment of higher than initially expected individual Medicare Advantage pretax earnings in 2017 into our benefit design for our 2018 Medicare Advantage offerings, lower favorable prior-period reserve development, and a more severe flu season year-over-year.
|
•
|
The Retail segment’s benefits expense for the
2018 quarter
included
$187 million
in favorable prior-period medical claims reserve development versus
$204 million
in the
2017 quarter
. Prior-period medical claims reserve development decreased the Retail segment benefit ratio by approximately
150
basis points in the
2018 quarter
versus approximately
180
basis points in the
2017 quarter
.
|
•
|
The Retail segment operating cost ratio of
10.1%
for the
2018 quarter
increased
170
basis points from
8.4%
for the
2017 quarter
. The year-over-year comparison was negatively impacted by the reinstatement of the health insurance industry fee in 2018, and investments made in the
2018 quarter
as a result of the Tax Reform Law. These items were partially offset by significant operating cost efficiencies in the
2018 quarter
driven by productivity initiatives implemented in 2017. The non-deductible health insurance industry fee impacted the operating cost ratio by
190
basis points in the
2018 quarter
.
|
|
March 31,
|
|
Change
|
||||||||
|
2018
|
|
2017
|
|
Members
|
|
Percentage
|
||||
Membership:
|
|
|
|
|
|
|
|
||||
Medical membership:
|
|
|
|
|
|
|
|
||||
Fully-insured commercial group
|
1,075,100
|
|
|
1,119,400
|
|
|
(44,300
|
)
|
|
(4.0
|
)%
|
ASO
|
452,600
|
|
|
447,000
|
|
|
5,600
|
|
|
1.3
|
%
|
Military services
|
5,931,100
|
|
|
3,082,800
|
|
|
2,848,300
|
|
|
92.4
|
%
|
Total group and specialty medical members
|
7,458,800
|
|
|
4,649,200
|
|
|
2,809,600
|
|
|
60.4
|
%
|
Specialty membership (a)
|
6,738,900
|
|
|
6,921,800
|
|
|
(182,900
|
)
|
|
(2.6
|
)%
|
(a)
|
Specialty products include dental, vision, voluntary benefit products and other supplemental health and financial protection products. Members included in these products may not be unique to each product since members have the ability to enroll in multiple products.
|
|
|
|
|
|
|
|
|
•
|
Group and Specialty segment pretax income was
$211 million
in the
2018 quarter
, an increase of
$40 million
or
23.4%
, from
$171 million
in the
2017 quarter
, primarily due to higher pretax earnings from our fully insured commercial medical business.
|
•
|
Fully-insured commercial group medical membership
decreased
44,300
members, or
4.0%
, from
March 31, 2017
to
March 31, 2018
reflecting lower membership in small group accounts due in part to more small group accounts continuing to select level funded ASO products in 2018.
|
•
|
Group ASO commercial medical membership
increased
5,600
members, or
1.3%
, from
March 31, 2017
to
March 31, 2018
reflecting more small group accounts selecting level-funded ASO products in 2018, partially offset by the loss of certain large group accounts as a result of continued discipline in pricing of services for self-funded accounts amid a highly competitive environment.
|
•
|
Military services membership
increased
2,848,300
members, or
92.4%
, from
March 31, 2017
to
March 31, 2018
primarily due to our transition to providing healthcare services to military service members, retirees, and their families under the new T2017 East Region contract covering 32 states, which became effective January 1, 2018.
|
•
|
Specialty membership
decreased
182,900
members, or
2.6%
, from
March 31, 2017
to
March 31, 2018
primarily due to the losses of some large group accounts offering stand-alone dental and vision products, partially offset by an increase in individual dental and vision membership.
|
•
|
Group and Specialty segment premiums
increased
$39 million
, or
2.3%
, from the
2017 quarter
to
$1.7 billion
for the
2018 quarter
primarily reflecting higher stop-loss premiums related to our small group level funded accounts, and higher
per-member premiums across most lines of business in the segment, partially offset by declines in average group fully-insured and ASO commercial medical membership.
|
•
|
Group and Specialty segment services revenue
increased
$58 million
, or
36.0%
, from the
2017 quarter
to
$219 million
for the
2018 quarter
as a result of the transition to the TRICARE T2017 East Region contract on January 1, 2018.
|
•
|
The Group and Specialty segment benefit ratio
decreased
240
basis points from
75.6%
in the
2017 quarter
to
73.2%
in the
2018 quarter
primarily due to the impact of the reinstatement of the health insurance industry fee in 2018 which was contemplated in the pricing of our products, the seasonality and product design of our fully-insured commercial products, including increased number of high deductible plan offerings, and higher favorable prior-period reserve development.
|
•
|
The Group and Specialty segment's benefits expense included
$34 million
in favorable prior-period medical claims reserve development in the
2018 quarter
and
$20 million
in the
2017 quarter
. This favorable prior-period medical claims reserve development decreased the Group and Specialty segment benefit ratio by approximately
200
basis points in the
2018 quarter
and
120
basis points in the
2017 quarter
.
|
•
|
The Group and Specialty segment operating cost ratio of
23.6%
for the
2018 quarter
increased
220
basis points from
21.4%
for the
2017 quarter
primarily due to the reinstatement of the health insurance industry fee in 2018, growth in our military services business, which carries a higher operating cost ratio than other products within the segment, as a result of the transition to the TRICARE T2017 East Region contract, and investments made in the 2018 quarter as a result of the Tax Reform Law as previously described. These items were partially offset by significant operating cost efficiencies in the 2018 quarter driven by productivity initiatives implemented in 2017. The non-deductible health insurance industry fee impacted the operating cost ratio by
160
basis points in the
2018 quarter
.
|
|
|
|
|
|
|
|
|
|
For the three months ended
March 31, |
|
Change
|
|||||||||||
|
2018
|
|
2017
|
|
Dollars
|
|
Percentage
|
|||||||
|
(in millions)
|
|
|
|||||||||||
Revenues:
|
|
|
|
|
|
|
|
|||||||
Services:
|
|
|
|
|
|
|
|
|||||||
Clinical care services
|
$
|
44
|
|
|
$
|
50
|
|
|
$
|
(6
|
)
|
|
(12.0
|
)%
|
Pharmacy solutions
|
39
|
|
|
18
|
|
|
21
|
|
|
116.7
|
%
|
|||
Provider services
|
21
|
|
|
20
|
|
|
1
|
|
|
5.0
|
%
|
|||
Total services revenues
|
104
|
|
|
88
|
|
|
16
|
|
|
18.2
|
%
|
|||
Intersegment revenues:
|
|
|
|
|
|
|
|
|
||||||
Pharmacy solutions
|
4,995
|
|
|
5,141
|
|
|
(146
|
)
|
|
(2.8
|
)%
|
|||
Provider services
|
378
|
|
|
418
|
|
|
(40
|
)
|
|
(9.6
|
)%
|
|||
Clinical care services
|
180
|
|
|
303
|
|
|
(123
|
)
|
|
(40.6
|
)%
|
|||
Total intersegment revenues
|
5,553
|
|
|
5,862
|
|
|
(309
|
)
|
|
(5.3
|
)%
|
|||
Total services and intersegment revenues
|
$
|
5,657
|
|
|
$
|
5,950
|
|
|
$
|
(293
|
)
|
|
(4.9
|
)%
|
Income before income taxes
|
$
|
173
|
|
|
$
|
244
|
|
|
$
|
(71
|
)
|
|
(29.1
|
)%
|
Operating cost ratio
|
96.2
|
%
|
|
95.5
|
%
|
|
|
|
0.7
|
%
|
•
|
Healthcare Services segment pretax income of
$173 million
for the
2018 quarter
decreased
$71 million
, or
29.1%
, from
$244 million
in the
2017 quarter
primarily due to the impact of the optimization process associated with our chronic care management programs, as well as the investments made in the
2018 quarter
as a result of the Tax Reform Law as previously described.
|
•
|
Humana Pharmacy Solutions script volumes on an adjusted 30-day equivalent basis increased to approximately
108 million
in the
2018 quarter
, up
0.9%
, versus scripts of approximately
107 million
in the
2017 quarter
. This increase primarily reflected growth associated with higher individual Medicare Advantage membership for the
2018 quarter
compared to the
2017 quarter
, partially offset by the decline in stand-alone PDP and Individual Commercial membership.
|
•
|
Services revenues
increased
$16 million
, or
18.2%
, from the
2017 quarter
to
$104 million
for the
2018 quarter
primarily due to service revenue growth from our pharmacy solutions business.
|
•
|
Intersegment revenues
decreased
$309 million
, or
5.3%
, from the
2017 quarter
to
$5.6 billion
for the
2018 quarter
primarily due to the loss of intersegment revenues associated with our exit from the Individual commercial business, and a decline in pharmacy solutions revenue year-over-year primarily due to lower stand-alone PDP membership as a result of the previously disclosed loss of auto assigned members in Florida and South Carolina resulting from pricing over the CMS low income benchmark and continued membership declines in our Enhanced product. In addition, the year-over-year comparison was impacted by the result of the optimization process associated with our chronic care management programs previously discussed, and lower revenue in our provider services business reflecting Medicare rates year-over-year in geographies where
|
•
|
The Healthcare Services segment operating cost ratio of
96.2%
for the
2018 quarter
increased
70
basis points from
95.5%
for the
2017 quarter
primarily due to the timing of the optimization process associated with our chronic conditions management programs and the long-term sustainability investments in the
2018 quarter
as a result of the Tax Reform Law. With the optimization of our chronic care management programs, operating cost reductions may lag the associated reduction in revenue, negatively impacting the operating cost ratio. These items were partially offset by significant operating cost efficiencies in the
2018 quarter
driven by productivity initiatives implemented in 2017.
|
•
|
Individual Commercial segment pretax income of
$53 million
for the
2018 quarter
decreased
$10 million
from the
2017 quarter
. The pretax income in the
2018 quarter
primarily reflects the impact of favorable prior-period reserve development.
|
|
Three Months Ended
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Net cash provided by operating activities
|
$
|
3,686
|
|
|
$
|
4,205
|
|
Net cash used in investing activities
|
(405
|
)
|
|
(926
|
)
|
||
Net cash provided by financing activities
|
1,532
|
|
|
1,269
|
|
||
Increase in cash and cash equivalents
|
$
|
4,813
|
|
|
$
|
4,548
|
|
|
March 31, 2018
|
|
December 31, 2017
|
|
2018
Quarter Change |
|
2017
Quarter Change |
||||||||
|
(in millions)
|
||||||||||||||
IBNR (1)
|
$
|
3,360
|
|
|
$
|
3,154
|
|
|
$
|
206
|
|
|
$
|
(25
|
)
|
Reported claims in process (2)
|
718
|
|
|
614
|
|
|
104
|
|
|
(66
|
)
|
||||
Other benefits payable (3)
|
883
|
|
|
900
|
|
|
(17
|
)
|
|
289
|
|
||||
Total benefits payable
|
$
|
4,961
|
|
|
$
|
4,668
|
|
|
$
|
293
|
|
|
$
|
198
|
|
(1)
|
IBNR represents an estimate of benefits payable for claims incurred but not reported (IBNR) at the balance sheet date and includes unprocessed claim inventories. 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 and processed (i.e. a shorter time span results in a lower IBNR). IBNR includes unprocessed claims inventories.
|
(2)
|
Reported claims in process represents 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, as well as amounts owed to our pharmacy benefit administrator which fluctuate due to bi-weekly payments and the month-end cutoff.
|
(3)
|
Other benefits payable primarily include amounts owed to providers under capitated and risk sharing arrangements.
|
|
March 31, 2018
|
|
December 31, 2017
|
|
2018
Quarter Change |
|
2017
Quarter Change |
||||||||
|
(in millions)
|
||||||||||||||
Medicare
|
$
|
968
|
|
|
$
|
511
|
|
|
$
|
457
|
|
|
$
|
467
|
|
Commercial and other
|
246
|
|
|
273
|
|
|
(27
|
)
|
|
64
|
|
||||
Military services
|
149
|
|
|
166
|
|
|
(17
|
)
|
|
22
|
|
||||
Allowance for doubtful accounts
|
(87
|
)
|
|
(96
|
)
|
|
9
|
|
|
5
|
|
||||
Total net receivables
|
$
|
1,276
|
|
|
$
|
854
|
|
|
$
|
422
|
|
|
$
|
558
|
|
Item 2:
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
(a)
|
None.
|
(b)
|
N/A
|
(c)
|
The following table provides information about our purchases of equity securities that are registered by us pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, during the
three months ended March 31, 2018
:
|
Period
|
Total Number
of Shares Purchased (1)(2) |
|
Average
Price Paid per Share (3) |
|
Total Number of
Shares Purchased as Part of Publicly Announced Plans or Programs (1)(2) |
|
Dollar Value of
Shares that May Yet Be Purchased Under the Plans or Programs (1) |
||||||
January 2018
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
2,000,000,000
|
|
February 2018
|
—
|
|
|
—
|
|
|
—
|
|
|
2,000,000,000
|
|
||
March 2018
|
453,323
|
|
|
—
|
|
|
453,323
|
|
|
2,000,000,000
|
|
||
Total
|
453,323
|
|
|
$
|
—
|
|
|
453,323
|
|
|
|
(1)
|
On
December 14, 2017
, our Board of Directors authorized the repurchase of up to
$3.0 billion
of our common shares expiring on
December 31, 2020
, exclusive of shares repurchased in connection with employee stock plans. On
December 21, 2017
, we entered into an accelerated stock repurchase agreement, the December 2017 ASR, with Bank of America, N.A., or BofA, to repurchase
$1.0 billion
of our common stock as part of the
$3.0 billion
share repurchase program authorized on
December 14, 2017
. On
March 26, 2018
we completed the final settlement of our accelerated stock repurchase.
Our remaining repurchase authorization was approximately
$2 billion
as of May 1, 2018.
|
(2)
|
Includes
0.46 million
shares received in March 2018 upon settlement of an accelerated repurchase program for which no cash was paid during the period and excludes
0.19 million
shares repurchased in connection with employee stock plans.
|
(3)
|
Excludes the impact of the
0.46 million
shares received in March 2018 upon settlement of an accelerated repurchase program which were determined by the average daily volume weighted-average share price of our common stock during the term of the ASR Agreement of
$267.55
.
|
Item 3:
|
Defaults Upon Senior Securities
|
Item 4:
|
Mine Safety Disclosures
|
Item 5:
|
Other Information
|
Item 6:
|
Exhibits
|
3(i)
|
Restated Certificate of Incorporation of Humana Inc. filed with the Secretary of State of Delaware on November 9, 1989, as restated to incorporate the amendment of January 9, 1992, and the correction of March 23, 1992 (incorporated herein by reference to Exhibit 4(i) to Humana Inc.’s Post-Effective Amendment No. 1 to the Registration Statement on Form S-8 (Reg. No. 33-49305) filed February 2, 1994).
|
101
|
The following materials from Humana Inc.'s Quarterly Report on Form 10-Q formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets at
March 31, 2018
and
December 31, 2017
; (ii) the Condensed Consolidated Statements of Income for the
three
months ended
March 31, 2018
and
2017
; (iii) the Condensed Consolidated Statements of Comprehensive Income for the
three
months ended
March 31, 2018
and
2017
; (iv) the Condensed Consolidated Statements of Cash Flows for the
three
months ended
March 31, 2018
and
2017
; and (v) Notes to Condensed Consolidated Financial Statements.
|
|
|
HUMANA INC.
|
|
|
|
(Registrant)
|
|
|
|
|
|
Date:
|
May 2, 2018
|
By:
|
/s/ CYNTHIA H. ZIPPERLE
|
|
|
|
Cynthia H. Zipperle
|
|
|
|
Senior Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)
|
|
|
|
|
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