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.--(BUSINESS WIRE)--May. 1, 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 common share.
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 time.”
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 website).
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 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 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
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
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 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 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
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 historical performance:
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 of:
Annual reports to stockholders;
Securities and Exchange Commission filings;
Most recent investor conference presentations;
Quarterly earnings news releases;
Replays of most recent earnings release conference calls;
Calendar of events (including upcoming earnings conference call dates
and times, as well as planned interaction with research analysts and
Corporate Governance information.
Source: Humana Inc.
Humana Investor Relations
Regina Nethery, 502-580-3644
Tom Noland, 502-580-3674