Humana Inc. Releases First Quarter 2013 Financial Results
*1Q13 EPS of $2.95 exceeds management’s expectations
*2013 EPS guidance raised to range of $8.40 to $8.60
*2014 earnings growth uncertain
*Share repurchase authorization reset to $1 billion
LOUISVILLE, Ky. -- May 01, 2013
Humana Inc. (NYSE: HUM) today issued a detailed press release reporting
diluted earnings per common share (EPS) for the quarter ended March 31, 2013
(1Q13) of $2.95, compared to $1.49 per share for the quarter ended March 31,
2012. Results for 1Q13 exceeded management’s previous expectations of $1.75 to
$1.85 primarily due to outperformance across the company’s portfolio of
businesses as well as the beneficial effect of certain discrete items and a
lower-than-projected tax rate.
The company’s results for 1Q13 included the beneficial effect of settlement of
contract claims with the Department of Defense related to previously-disclosed
litigation and a delay in the implementation of sequestration for the
company’s Medicare business – neither of which was anticipated in management’s
previous financial guidance. The beneficial effect of these items upon 1Q13
results was approximately $66 million on a pretax basis, or $0.26 per diluted
The company now anticipates EPS for the year ending December 31, 2013 to be in
the range of $8.40 to $8.60 versus management’s previous guidance of $7.60 to
$7.80. This increase reflects the better-than-expected first quarter results
partially offset by higher-than-previously projected investment spending for
the company’s integrated care delivery model and health care exchanges during
the latter half of 2013.
“Our better-than-expected earnings this quarter are a testament to the
benefits of our focus on further developing our new member and chronic care
clinical programs – key elements of our integrated care delivery model,” said
Bruce D. Broussard, President and Chief Executive Officer of Humana. “We
expect this model will allow us to maintain and improve the economic value
proposition we provide, which we believe will enable long-term earnings
growth. On the immediate horizon, while the final 2014 Medicare rate notice
remedied some aspects of the major reduction that was initially proposed,
funding challenges continue, making 2014 earnings growth uncertain at this
Humana’s 1Q13 earnings press release also notes that in April 2013, the
company’s Board of Directors replaced its previous share repurchase
authorization (of which approximately $557 million remained unused) with a new
$1 billion repurchase authorization with an expiration date of June 30, 2015.
Humana’s full detailed earnings press release has been posted to the company’s
Investor Relations site and may be accessed at
http://phx.corporate-ir.net/phoenix.zhtml?c=92913&p=irol-IRHome or via a
current report on Form 8-K filed by the company with the Securities and
Exchange Commission this morning (available at www.sec.gov or on the company’s
Conference Call & Virtual Slide Presentation
Humana will host a conference call, as well as a virtual slide presentation,
at 9:00 a.m. eastern time today to discuss its financial results for the
quarter and the company’s expectations for future earnings. A live virtual
presentation (audio with slides) may be accessed via Humana’s Investor
Relations page at www.humana.com. The company suggests web participants sign
on at least 15 minutes in advance of the call. The company also suggests web
participants visit the site well in advance of the call to run a system test
and to download any free software needed to view the presentation.
All parties interested in the audio-only portion of the conference call are
invited to dial 888-625-7430. No password is required. The company suggests
participants dial in at least ten minutes in advance of the call. For those
unable to participate in the live event, the virtual presentation archive may
be accessed via the Historical Webcasts & Presentations section of the
Investor Relations page at www.humana.com.
This news release includes forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. When used in investor
presentations, press releases, Securities and Exchange Commission (SEC)
filings, and in oral statements made by or with the approval of one of
Humana’s executive officers, the words or phrases like “expects,” “believes,”
“anticipates,” “intends,” “likely will result,” “estimates,” “projects” or
variations of such words and similar expressions are intended to identify such
forward-looking statements. These forward-looking statements are not
guarantees of future performance and are subject to risks, uncertainties, and
assumptions, including, among other things, information set forth in the “Risk
Factors” section of the company’s SEC filings, a summary of which includes but
is not limited to the following:
*If Humana does not design and price its products properly and
competitively, if the premiums Humana receives are insufficient to cover
the cost of health care services delivered to its members, if the company
is unable to implement clinical initiatives to provide a better health
care 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. These estimates,
however, involve extensive judgment, and have considerable inherent
variability because they are extremely sensitive to changes in payment
patterns and medical cost trends.
*If Humana fails to effectively implement its operational and strategic
initiatives, particularly its Medicare initiatives (given the
concentration of the company’s revenues in the Medicare business), the
company’s business may be materially adversely affected.
*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, the company’s business may be materially adversely affected.
*Humana’s business may be materially adversely impacted by CMS’s adoption
of a new coding set for diagnoses (commonly known as ICD-10).
*Humana is involved in various legal actions and governmental and internal
investigations, any of which, if resolved unfavorably to the company,
could result in substantial monetary damages. Increased litigation and
negative publicity could also increase the company’s cost of doing
*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 health care programs including, among other things, loss of
material government contracts, governmental audits and investigations,
potential inadequacy of government-determined payment rates or other
changes in the governmental programs in which Humana participates.
*Recently enacted health insurance reform, including The Patient Protection
and Affordable Care Act and The Health Care and Education Reconciliation
Act of 2010, could 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 (and particularly how the ratio may apply to Medicare plans,
including aggregation, credibility thresholds, and its possible
application to prescription drug plans), lowering the company’s Medicare
payment rates and increasing the company’s expenses associated with a
non-deductible federal premium tax and other assessments; financial
position, including the company's ability to maintain the value of its
goodwill; and cash flows. In addition, if the new non-deductible federal
premium tax and other assessments, including a three-year commercial
reinsurance fee, were imposed as enacted, and if Humana is unable to
adjust its business model to address these new taxes and assessments, such
as through the reduction of the company’s operating costs, there can be no
assurance that the non-deductible federal premium tax and other
assessments would not have a material adverse effect on the company’s
results of operations, financial position, and cash flows.
*Humana’s business activities are subject to substantial government
regulation. New laws or regulations, or changes in existing laws or
regulations or their manner of application could increase the company’s
cost of doing business and may adversely affect the company’s business,
profitability and cash flows.
*Any failure to manage operating costs could hamper Humana’s profitability.
*Any failure by Humana to manage acquisitions and other significant
transactions successfully may have a material adverse effect on its
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
*Humana’s pharmacy business is highly competitive and subjects it to
regulations in addition to those the company faces with its core health
*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 its 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.
*Changes in economic conditions could adversely affect Humana’s business
and results of operations.
*The securities and credit markets may experience volatility and
disruption, which may adversely affect Humana’s business.
*Given the current economic climate, Humana’s stock and the stock of other
companies in the insurance industry may be increasingly subject to stock
price and trading volume volatility.
In making forward-looking statements, Humana is not undertaking to address or
update them in future filings or communications regarding its business or
results. In light of these risks, uncertainties, and assumptions, the
forward-looking events discussed herein may or may not occur. There also may
be other risks that the company is unable to predict at this time. Any of
these risks and uncertainties may cause actual results to differ materially
from the results discussed in the forward-looking statements.
Humana advises investors to read the following documents as filed by the
company with the SEC for further discussion both of the risks it faces and its
*Form 10-K for the year ended December 31, 2012;
*Form 8-Ks filed during 2013.
Humana Inc., headquartered in Louisville, Kentucky, is a leading health care
company that offers a wide range of insurance products and health and wellness
services that incorporate an integrated approach to lifelong well-being. By
leveraging the strengths of its core businesses, Humana believes it can better
explore opportunities for existing and emerging adjacencies in health care
that can further enhance wellness opportunities for the millions of people
across the nation with whom the company has relationships.
More information regarding Humana is available to investors via the Investor
Relations page of the company’s web site at www.humana.com, including copies
*Annual reports to stockholders;
*Securities and Exchange Commission filings;
*Most recent investor conference presentations;
*Quarterly earnings news releases;
*Replays of most recent earnings release conference calls;
*Calendar of events (including upcoming earnings conference call dates and
times, as well as planned interaction with research analysts and
*Corporate Governance information.
Humana Investor Relations
Regina Nethery, 502-580-3644
Humana Corporate Communications
Tom Noland, 502-580-3674
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