þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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61-0647538
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(State of incorporation)
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(I.R.S. Employer Identification Number)
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500 West Main Street Louisville, Kentucky
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40202
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code: (502) 580-1000
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Name of exchange on which registered
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Common stock, $0.16 2/3 par value
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New York Stock Exchange
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Page
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Part I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Part II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Part III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Part IV
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Item 15.
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Retail Segment
Premiums and Services Revenue |
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Percent of
Consolidated Premiums and Services Revenue |
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(dollars in millions)
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Premiums:
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Individual Medicare Advantage
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$
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29,526
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54.9
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%
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Group Medicare Advantage
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5,588
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10.4
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%
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Medicare stand-alone PDP
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3,846
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7.1
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%
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Total Medicare
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38,960
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72.4
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%
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Individual commercial
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4,243
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7.9
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%
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State-based Medicaid
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2,341
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4.3
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%
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Individual specialty
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261
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0.5
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%
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Total premiums
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45,805
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85.1
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%
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Services
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9
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—
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%
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Total premiums and services revenue
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$
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45,814
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85.1
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%
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Group
Segment Premiums and Services Revenue |
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Percent of
Consolidated Premiums and Services Revenue |
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(dollars in millions)
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External Revenue:
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Premiums:
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Fully-insured commercial group
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$
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5,493
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10.2
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%
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Group specialty
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1,055
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2.0
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%
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Military services
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21
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—
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%
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Total premiums
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6,569
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12.2
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%
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Services
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698
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1.3
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%
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Total premiums and services revenue
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$
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7,267
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13.5
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%
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Intersegment services revenue:
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Wellness
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$
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93
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n/a
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Total intersegment services revenue
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$
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93
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Healthcare Services
Segment Services Revenue |
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Percent of
Consolidated Premiums and Services Revenue |
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(dollars in millions)
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Intersegment revenue:
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Pharmacy solutions
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$
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20,551
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n/a
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Provider services
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1,291
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n/a
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Home based services
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875
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n/a
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Clinical programs
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203
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n/a
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Total intersegment revenue
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$
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22,920
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External services revenue:
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Provider services
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$
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515
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0.9
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%
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Home based services
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140
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0.3
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%
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Pharmacy solutions
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30
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0.1
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%
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Total external services revenue
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$
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685
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1.3
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%
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Retail Segment
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Group Segment
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(in thousands)
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Individual
Medicare Advantage |
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Group
Medicare Advantage |
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Medicare stand- alone PDP |
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Individual
Commercial |
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State-
based contracts |
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Fully-
insured commercial Group |
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ASO
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Military services
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Other
Businesses |
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Total
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Percent
of Total |
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Florida
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587.4
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19.9
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320.5
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288.4
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351.9
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168.4
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33.8
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—
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—
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1,770.3
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12.5
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%
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Texas
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215.6
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68.8
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281.4
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163.8
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—
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217.3
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107.2
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—
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—
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1,054.1
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7.4
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%
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Georgia
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105.2
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2.5
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115.0
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270.2
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—
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155.3
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18.6
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—
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—
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666.8
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4.7
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%
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Kentucky
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69.9
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56.1
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203.8
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17.6
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—
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109.3
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195.5
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—
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—
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652.2
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4.6
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%
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Ohio
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105.8
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155.6
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143.5
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20.8
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—
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46.3
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70.1
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—
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—
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542.1
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3.8
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%
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California
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64.9
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0.1
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420.7
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13.3
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—
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—
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—
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—
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—
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499.0
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3.5
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%
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Illinois
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81.7
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20.8
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|
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154.1
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11.3
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12.0
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|
|
82.4
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|
|
95.0
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—
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—
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457.3
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3.2
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%
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Missouri/Kansas
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100.6
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|
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3.4
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|
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202.0
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18.7
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—
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52.9
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9.4
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—
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—
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387.0
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2.7
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%
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Tennessee
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139.8
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2.0
|
|
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97.5
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26.5
|
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—
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|
|
47.0
|
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34.9
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—
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—
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|
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347.7
|
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2.5
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%
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Wisconsin
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63.2
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10.1
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|
|
95.8
|
|
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8.5
|
|
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—
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|
|
84.2
|
|
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80.1
|
|
|
—
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—
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|
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341.9
|
|
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2.4
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%
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Louisiana
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147.2
|
|
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10.9
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|
|
54.4
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|
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20.6
|
|
|
—
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|
|
67.9
|
|
|
31.7
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—
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—
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|
|
332.7
|
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2.3
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%
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North Carolina
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129.4
|
|
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37.2
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158.4
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5.6
|
|
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—
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—
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|
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—
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|
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—
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—
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330.6
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2.3
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%
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Indiana
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88.1
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|
|
3.7
|
|
|
120.2
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12.1
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|
|
—
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|
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22.4
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17.2
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—
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|
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—
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263.7
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|
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1.9
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%
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Virginia
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111.2
|
|
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5.5
|
|
|
125.5
|
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|
8.9
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9.8
|
|
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—
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—
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|
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—
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|
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—
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260.9
|
|
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1.8
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%
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Michigan
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48.8
|
|
|
14.1
|
|
|
135.8
|
|
|
19.4
|
|
|
—
|
|
|
6.5
|
|
|
0.5
|
|
|
—
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|
|
—
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|
|
225.1
|
|
|
1.6
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%
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Colorado
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35.2
|
|
|
5.5
|
|
|
83.3
|
|
|
22.7
|
|
|
—
|
|
|
24.8
|
|
|
1.1
|
|
|
—
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|
|
—
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|
|
172.6
|
|
|
1.2
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%
|
Arizona
|
57.8
|
|
|
1.2
|
|
|
75.3
|
|
|
8.4
|
|
|
—
|
|
|
28.4
|
|
|
1.2
|
|
|
—
|
|
|
—
|
|
|
172.3
|
|
|
1.2
|
%
|
Military services
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
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3,074.4
|
|
|
—
|
|
|
3,074.4
|
|
|
21.6
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%
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Others
|
601.6
|
|
|
66.7
|
|
|
1,770.7
|
|
|
120.9
|
|
|
—
|
|
|
65.2
|
|
|
14.4
|
|
|
—
|
|
|
32.6
|
|
|
2,672.1
|
|
|
18.8
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%
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Totals
|
2,753.4
|
|
|
484.1
|
|
|
4,557.9
|
|
|
1,057.7
|
|
|
373.7
|
|
|
1,178.3
|
|
|
710.7
|
|
|
3,074.4
|
|
|
32.6
|
|
|
14,222.8
|
|
|
100.0
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%
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•
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matters relating to the Merger (including integration planning) may require substantial commitments of time and resources by our management, which could otherwise have been devoted to other opportunities that may have been beneficial to us;
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the Merger Agreement includes restrictions on the conduct of our business prior to the completion or termination of the Merger, generally requiring us to conduct our business in the ordinary course and subjecting us to a variety of specified limitations absent Aetna's prior written consent. We may find that these and other contractual restrictions in the Merger Agreement may delay or prevent us from responding, or limit our ability to respond, effectively to competitive pressures, industry developments and future business opportunities that may arise during such period, even if our management believes they may be advisable. The pendency of the Merger may also divert management’s attention and our resources from ongoing business and operations;
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we may be required to pay a termination fee to Aetna and would have incurred expenses relating to the Merger; and
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we also could be subject to litigation related to our failure to consummate the Merger or to perform our obligations under the Merger Agreement.
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•
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increased use of medical facilities and services;
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increased cost of such services;
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increased use or cost of prescription drugs, including specialty prescription drugs;
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the introduction of new or costly treatments, including new technologies;
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our membership mix;
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variances in actual versus estimated levels of cost associated with new products, benefits or lines of business, product changes or benefit level changes;
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changes in the demographic characteristics of an account or market;
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changes or reductions of our utilization management functions such as preauthorization of services, concurrent review or requirements for physician referrals;
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•
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changes in our pharmacy volume rebates received from drug manufacturers;
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catastrophes, including acts of terrorism, public health epidemics, or severe weather (e.g. hurricanes and earthquakes);
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•
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medical cost inflation; and
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government mandated benefits or other regulatory changes, including any that result from the Health Care Reform Law.
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•
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claims relating to the methodologies for calculating premiums;
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•
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claims relating to the denial of health care benefit payments;
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•
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claims relating to the denial or rescission of insurance coverage;
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•
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challenges to the use of some software products used in administering claims;
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•
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claims relating to our administration of our Medicare Part D offerings;
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•
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medical malpractice actions based on our medical necessity decisions or brought against us on the theory that we are liable for providers' alleged malpractice;
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•
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claims arising from any adverse medical consequences resulting from our recommendations about the appropriateness of providers’ proposed medical treatment plans for patients;
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•
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allegations of anti-competitive and unfair business activities;
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•
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provider disputes over compensation or non-acceptance or termination of provider contracts or provider contract disputes relating to rate adjustments resulting from the Balance Budget and Emergency Deficit Control Act of 1985, as amended (commonly referred to as “sequestration”);
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•
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disputes related to ASO business, including actions alleging claim administration errors;
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•
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qui tam litigation brought by individuals who seek to sue on behalf of the government, alleging that we, as a government contractor, submitted false claims to the government including, among other allegations, resulting from coding and review practices under the Medicare risk-adjustment model;
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•
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claims related to the failure to disclose some business practices;
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•
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claims relating to customer audits and contract performance;
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•
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claims relating to dispensing of drugs associated with our in-house mail-order pharmacy; and
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•
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professional liability claims arising out of the delivery of healthcare and related services to the public.
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•
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At December 31,
2015
, under our contracts with CMS we provided health insurance coverage to approximately
587,400
individual Medicare Advantage members in Florida. These contracts accounted for approximately
14%
of our total premiums and services revenue for the year ended December 31,
2015
. The loss of these and other CMS contracts or significant changes in the Medicare program as a result of legislative or regulatory action, including reductions in premium payments to us or increases in member benefits without corresponding increases in premium payments to us, may have a material adverse effect on our results of operations, financial position, and cash flows.
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•
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At December 31,
2015
, our military services business primarily consisted of the TRICARE South Region contract which covers approximately
3,074,400
beneficiaries. For the year ended December 31,
2015
,
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•
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There is a possibility of temporary or permanent suspension from participating in government health care programs, including Medicare and Medicaid, if we are convicted of fraud or other criminal conduct in the performance of a health care program or if there is an adverse decision against us under the federal False Claims Act. As a government contractor, we may be subject to qui tam litigation brought by individuals who seek to sue on behalf of the government, alleging that the government contractor submitted false claims to the government. Litigation of this nature is filed under seal to allow the government an opportunity to investigate and to decide if it wishes to intervene and assume control of the litigation. If the government does not intervene, the lawsuit is unsealed, and the individual may continue to prosecute the action on his or her own.
|
•
|
CMS uses a risk-adjustment model which apportions premiums paid to Medicare Advantage, or MA, plans according to health severity of covered members. The risk-adjustment model pays more for enrollees with predictably higher costs. Under this model, rates paid to MA plans are based on actuarially determined bids, which include a process whereby our prospective payments are based on a comparison of our beneficiaries’ risk scores, derived from medical diagnoses, to those enrolled in the government’s traditional fee-for-service Medicare program (referred to as "Medicare FFS"). Under the risk-adjustment methodology, all MA plans must collect and submit the necessary diagnosis code information from hospital inpatient, hospital outpatient, and physician providers to CMS within prescribed deadlines. The CMS risk-adjustment model uses the diagnosis data to calculate the risk-adjusted premium payment to MA plans, which CMS adjusts for coding pattern differences between the health plans and the government fee-for-service program. We generally rely on providers, including certain providers in our network who are our employees, to code their claim submissions with appropriate diagnoses, which we send to CMS as the basis for our payment received from CMS under the actuarial risk-adjustment model. We also rely on these providers to document appropriately all medical data, including the diagnosis data submitted with claims. In addition, we conduct medical record reviews as part of our data and payment accuracy compliance efforts, to more accurately reflect diagnosis conditions under the risk adjustment model. These compliance efforts include the internal contract level audits described in more detail below.
|
•
|
Our CMS contracts which cover members’ prescription drugs under Medicare Part D contain provisions for risk sharing and certain payments for prescription drug costs for which we are not at risk. These provisions, certain of which are described below, affect our ultimate payments from CMS.
|
•
|
The Budget Control Act of 2011 increased the United States debt ceiling conditioned on deficit reductions to be achieved over the next ten years. The Budget Control Act of 2011 also established a twelve-member joint committee of Congress known as the Joint Select Committee on Deficit Reduction to propose legislation to reduce the United States federal deficit by $1.5 trillion for fiscal years 2012-2021. The failure of the Joint Select Committee on Deficit Reduction to achieve a targeted deficit reduction by December 23, 2011 triggered an automatic reduction, including aggregate reductions to Medicare payments to providers of up to 2 percent per fiscal year. These reductions took effect on April 1, 2013, and the Bipartisan Budget Act of 2013, enacted on December 26, 2013, extended the reductions for two years. We expect a corresponding substantial reduction in our obligations to providers. Due to the uncertainty around the application of any such reductions, there can be no assurances that we can completely offset any reductions to the Medicare healthcare programs applied by the Budget Control Act of 2011.
|
•
|
We are also subject to various other governmental audits and investigations. Under state laws, our HMOs and health insurance companies are audited by state departments of insurance for financial and contractual compliance. Our HMOs are audited for compliance with health services by state departments of health. Audits and investigations are also conducted by state attorneys general, CMS, the Office of the Inspector General of Health and Human Services, the Office of Personnel Management, the Department of Justice, the Department of Labor, and the Defense Contract Audit Agency. All of these activities could result in the loss of licensure or the right to participate in various programs, including a limitation on our ability to market or sell products, the imposition of fines, penalties and other civil and criminal sanctions, or changes in our business practices. The outcome of any current or future governmental or internal investigations cannot be accurately predicted, nor can we predict any resulting penalties, fines or other sanctions that may be imposed at the discretion of federal or state regulatory authorities. Nevertheless, it is reasonably possible that any such outcome of litigation, penalties, fines or other sanctions could be substantial, and the outcome of these matters may have a material adverse effect on our results of operations, financial position, and cash flows. Certain of these matters could also affect our reputation. In addition, disclosure of any adverse investigation or audit results or sanctions could negatively affect our industry or our reputation in various markets and make it more difficult for us to sell our products and services.
|
|
Medical
Centers |
|
Administrative
Offices |
|
|
|||||||||
|
Owned
|
|
Leased
|
|
Owned
|
|
Leased
|
|
Total
|
|||||
Florida
|
11
|
|
|
123
|
|
|
1
|
|
|
96
|
|
|
231
|
|
Texas
|
—
|
|
|
15
|
|
|
2
|
|
|
24
|
|
|
41
|
|
Kentucky
|
2
|
|
|
1
|
|
|
11
|
|
|
12
|
|
|
26
|
|
Virginia
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
|
16
|
|
California
|
—
|
|
|
2
|
|
|
—
|
|
|
13
|
|
|
15
|
|
Arizona
|
—
|
|
|
8
|
|
|
—
|
|
|
7
|
|
|
15
|
|
Louisiana
|
—
|
|
|
4
|
|
|
—
|
|
|
10
|
|
|
14
|
|
Ohio
|
—
|
|
|
1
|
|
|
—
|
|
|
13
|
|
|
14
|
|
Illinois
|
—
|
|
|
5
|
|
|
—
|
|
|
8
|
|
|
13
|
|
New York
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
13
|
|
Georgia
|
—
|
|
|
7
|
|
|
—
|
|
|
3
|
|
|
10
|
|
Tennessee
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
10
|
|
North Carolina
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
10
|
|
Nevada
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|
10
|
|
South Carolina
|
—
|
|
|
—
|
|
|
4
|
|
|
6
|
|
|
10
|
|
Indiana
|
—
|
|
|
2
|
|
|
—
|
|
|
7
|
|
|
9
|
|
Puerto Rico
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
9
|
|
New Jersey
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
8
|
|
Colorado
|
—
|
|
|
3
|
|
|
—
|
|
|
4
|
|
|
7
|
|
Pennsylvania
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
6
|
|
Wisconsin
|
—
|
|
|
—
|
|
|
1
|
|
|
5
|
|
|
6
|
|
Others
|
—
|
|
|
3
|
|
|
—
|
|
|
47
|
|
|
50
|
|
Total
|
13
|
|
|
187
|
|
|
19
|
|
|
324
|
|
|
543
|
|
|
High
|
|
Low
|
||||
Year Ended December 31, 2015
|
|
|
|
||||
First quarter
|
$
|
182.79
|
|
|
$
|
139.09
|
|
Second quarter
|
$
|
214.92
|
|
|
$
|
163.07
|
|
Third quarter
|
$
|
193.14
|
|
|
$
|
174.16
|
|
Fourth quarter
|
$
|
186.67
|
|
|
$
|
164.25
|
|
Year Ended December 31, 2014
|
|
|
|
||||
First quarter
|
$
|
118.78
|
|
|
$
|
95.59
|
|
Second quarter
|
$
|
128.95
|
|
|
$
|
104.74
|
|
Third quarter
|
$
|
135.51
|
|
|
$
|
115.97
|
|
Fourth quarter
|
$
|
149.07
|
|
|
$
|
124.17
|
|
Record
Date
|
|
Payment
Date
|
|
Amount
per Share
|
|
Total
Amount
|
|
|
|
|
|
|
(in millions)
|
2014 payments
|
|
|
|
|
|
|
12/31/2013
|
|
1/31/2014
|
|
$0.27
|
|
$42
|
3/31/2014
|
|
4/25/2014
|
|
$0.27
|
|
$42
|
6/30/2014
|
|
7/25/2014
|
|
$0.28
|
|
$43
|
9/30/2014
|
|
10/31/2014
|
|
$0.28
|
|
$43
|
2015 payments
|
|
|
|
|
|
|
12/31/2014
|
|
1/30/2015
|
|
$0.28
|
|
$42
|
3/31/2015
|
|
4/24/2015
|
|
$0.28
|
|
$42
|
6/30/2015
|
|
7/31/2015
|
|
$0.29
|
|
$43
|
9/30/2105
|
|
10/30/2015
|
|
$0.29
|
|
$43
|
|
12/31/2010
|
|
12/31/2011
|
|
12/31/2012
|
|
12/31/2013
|
|
12/31/2014
|
|
12/31/2015
|
||||||||||||
HUM
|
$
|
100
|
|
|
$
|
162
|
|
|
$
|
128
|
|
|
$
|
195
|
|
|
$
|
274
|
|
|
$
|
343
|
|
S&P 500
|
$
|
100
|
|
|
$
|
102
|
|
|
$
|
118
|
|
|
$
|
157
|
|
|
$
|
178
|
|
|
$
|
181
|
|
Peer Group
|
$
|
100
|
|
|
$
|
110
|
|
|
$
|
129
|
|
|
$
|
177
|
|
|
$
|
226
|
|
|
$
|
239
|
|
Period
|
Total Number
of Shares Purchased (1) |
|
Average
Price Paid per Share |
|
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) |
||||||
October 2015
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
November 2015
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
December 2015
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Total
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
|
(1)
|
In
September 2014
, the Board of Directors replaced a previous share repurchase authorization of up to
$1 billion
with a current authorization for repurchases of up to
$2 billion
of our common shares exclusive of shares repurchased in connection with employee stock plans, expiring on
December 31, 2016
.
Pursuant to the Merger Agreement, after July 2, 2015, we are prohibited from repurchasing any of our outstanding securities without the prior written consent of Aetna, other than repurchases of shares of our common stock in connection with the exercise of outstanding stock options or the vesting or settlement of outstanding restricted stock awards. Accordingly, as announced on July 3, 2015, we have suspended our share repurchase program. Our remaining repurchase authorization was
$1.04 billion
as of July 3, 2015.
|
(2)
|
Excludes
0.3 million
shares repurchased in connection with employee stock plans.
|
|
2015 (a)
|
|
2014 (b)
|
|
2013 (c)
|
|
2012 (d)
|
|
2011
|
||||||||||
|
(dollars in millions, except per common share results)
|
||||||||||||||||||
Summary of Operating Results:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Premiums
|
$
|
52,409
|
|
|
$
|
45,959
|
|
|
$
|
38,829
|
|
|
$
|
37,009
|
|
|
$
|
35,106
|
|
Services
|
1,406
|
|
|
2,164
|
|
|
2,109
|
|
|
1,726
|
|
|
1,360
|
|
|||||
Investment income
|
474
|
|
|
377
|
|
|
375
|
|
|
391
|
|
|
366
|
|
|||||
Total revenues
|
54,289
|
|
|
48,500
|
|
|
41,313
|
|
|
39,126
|
|
|
36,832
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Benefits
|
44,269
|
|
|
38,166
|
|
|
32,564
|
|
|
30,985
|
|
|
28,823
|
|
|||||
Operating costs
|
7,318
|
|
|
7,639
|
|
|
6,355
|
|
|
5,830
|
|
|
5,395
|
|
|||||
Depreciation and amortization
|
355
|
|
|
333
|
|
|
333
|
|
|
295
|
|
|
270
|
|
|||||
Total operating expenses
|
51,942
|
|
|
46,138
|
|
|
39,252
|
|
|
37,110
|
|
|
34,488
|
|
|||||
Income from operations
|
2,347
|
|
|
2,362
|
|
|
2,061
|
|
|
2,016
|
|
|
2,344
|
|
|||||
Interest expense
|
186
|
|
|
192
|
|
|
140
|
|
|
105
|
|
|
109
|
|
|||||
Gain on sale of business
|
270
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Income before income taxes
|
2,431
|
|
|
2,170
|
|
|
1,921
|
|
|
1,911
|
|
|
2,235
|
|
|||||
Provision for income taxes
|
1,155
|
|
|
1,023
|
|
|
690
|
|
|
689
|
|
|
816
|
|
|||||
Net income
|
$
|
1,276
|
|
|
$
|
1,147
|
|
|
$
|
1,231
|
|
|
$
|
1,222
|
|
|
$
|
1,419
|
|
Basic earnings per common share
|
$
|
8.54
|
|
|
$
|
7.44
|
|
|
$
|
7.81
|
|
|
$
|
7.56
|
|
|
$
|
8.58
|
|
Diluted earnings per common share
|
$
|
8.44
|
|
|
$
|
7.36
|
|
|
$
|
7.73
|
|
|
$
|
7.47
|
|
|
$
|
8.46
|
|
Dividends declared per
common share |
$
|
1.15
|
|
|
$
|
1.11
|
|
|
$
|
1.07
|
|
|
$
|
1.03
|
|
|
$
|
0.75
|
|
Financial Position:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and investments
|
$
|
11,681
|
|
|
$
|
11,482
|
|
|
$
|
10,938
|
|
|
$
|
11,153
|
|
|
$
|
10,830
|
|
Total assets
|
24,705
|
|
|
23,527
|
|
|
20,735
|
|
|
19,979
|
|
|
17,708
|
|
|||||
Benefits payable
|
4,976
|
|
|
4,475
|
|
|
3,893
|
|
|
3,779
|
|
|
3,754
|
|
|||||
Debt
|
3,821
|
|
|
3,825
|
|
|
2,600
|
|
|
2,611
|
|
|
1,659
|
|
|||||
Stockholders’ equity
|
10,346
|
|
|
9,646
|
|
|
9,316
|
|
|
8,847
|
|
|
8,063
|
|
|||||
Cash flows from operations
|
$
|
868
|
|
|
$
|
1,618
|
|
|
$
|
1,716
|
|
|
$
|
1,923
|
|
|
$
|
2,079
|
|
Key Financial Indicators:
|
|
|
|
|
|
|
|
|
|
||||||||||
Benefit ratio
|
84.5
|
%
|
|
83.0
|
%
|
|
83.9
|
%
|
|
83.7
|
%
|
|
82.1
|
%
|
|||||
Operating cost ratio
|
13.6
|
%
|
|
15.9
|
%
|
|
15.5
|
%
|
|
15.1
|
%
|
|
14.8
|
%
|
|||||
Membership by Segment:
|
|
|
|
|
|
|
|
|
|
||||||||||
Retail segment:
|
|
|
|
|
|
|
|
|
|
||||||||||
Medical membership
|
9,226,800
|
|
|
8,376,500
|
|
|
6,459,300
|
|
|
5,956,700
|
|
|
5,117,400
|
|
|||||
Specialty membership
|
1,153,100
|
|
|
1,165,800
|
|
|
1,042,500
|
|
|
948,700
|
|
|
782,500
|
|
|||||
Group segment:
|
|
|
|
|
|
|
|
|
|
||||||||||
Medical membership
|
4,963,400
|
|
|
5,430,200
|
|
|
5,501,600
|
|
|
5,573,400
|
|
|
5,500,600
|
|
|||||
Specialty membership
|
6,068,700
|
|
|
6,502,700
|
|
|
6,780,800
|
|
|
7,136,200
|
|
|
6,532,600
|
|
|||||
Other Businesses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Medical membership
|
32,600
|
|
|
35,000
|
|
|
23,400
|
|
|
558,700
|
|
|
566,600
|
|
|||||
Consolidated:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total medical membership
|
14,222,800
|
|
|
13,841,700
|
|
|
11,984,300
|
|
|
12,088,800
|
|
|
11,184,600
|
|
|||||
Total specialty membership
|
7,221,800
|
|
|
7,668,500
|
|
|
7,823,300
|
|
|
8,084,900
|
|
|
7,315,100
|
|
(a)
|
Includes a gain on the sale of Concentra Inc., net of transaction costs, of
$270 million
(
$238 million
after tax, or
$1.57
per diluted common share). Also includes benefits expense of
$176 million
(
$112 million
after tax, or
$0.74
per diluted common share) for a provision for probable future losses (premium deficiency) for individual commercial medical business compliant with the Health Care Reform Law for the 2016 coverage year.
|
(b)
|
Includes loss on extinguishment of debt of
$37 million
(
$23 million
after tax, or
$0.15
per diluted common share) for the redemption of senior notes.
|
(c)
|
Includes benefits expense of
$243 million
($154 million after tax, or $0.99 per diluted common share) for reserve strengthening associated with our non-strategic closed block of long-term care insurance policies.
|
(d)
|
Includes the acquired operations of Arcadian Management Services, Inc. from March 31, 2012, SeniorBridge Family Companies, Inc. from July 6, 2012, and Metropolitan Health Networks, Inc. from December 21, 2012.
|
•
|
Our
2015
results 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 growth in both membership and earnings. We offer providers a continuum of opportunities to increase the integration of care and offer assistance to providers in transitioning from a fee-for-service to a value-based arrangement. These include performance bonuses, shared savings and shared risk relationships. At December 31,
2015
, approximately
1,633,100
members, or
59.3%
, of our individual Medicare Advantage members were in value-based relationships under our integrated care delivery model, as compared to
1,301,000
members, or
53.6%
, at December 31,
2014
.
|
•
|
On June 1, 2015, we completed the sale of our wholly owned subsidiary, Concentra Inc., or Concentra, to MJ Acquisition Corporation, a joint venture between Select Medical Holdings Corporation and Welsh, Carson, Anderson & Stowe XII, L.P., a private equity fund, for approximately
$1,055 million
in cash, excluding approximately
$22 million
of transaction costs. In connection with the sale, we recognized a pre-tax gain, net of transaction costs, of
$270 million
, or
$1.57
per diluted common share in 2015.
|
•
|
During
2015
, we recorded transaction costs in connection with the Merger of approximately
$23.1 million
, or
$0.14
per diluted common share. Certain costs associated with the transaction are not deductible for tax purposes.
|
•
|
Excluding the impact of the sale of Concentra and transaction costs associated with the Merger, our pretax results for
2015
as compared to
2014
reflect year-over-year improvement in the Group and Healthcare Services segment pretax results and higher investment income, partially offset by a year-over-year decline in Retail segment pretax results as discussed in the detailed segment results discussion that follows.
|
•
|
Year-over-year comparisons of the operating cost ratio are impacted by an increase in 2015 of the non-deductible health insurance industry fee mandated by the Health Care Reform Law. Likewise, year-over-year comparisons of the benefit ratio reflect the increase in this fee in the pricing of our products for 2015 which reduces our benefit ratio.
|
•
|
Investment income
increased
$97 million
in
2015
, primarily due to higher realized capital gains in
2015
as a result of the repositioning of our portfolio given recent market volatility and anticipated changes to interest rates.
|
•
|
Year-over-year comparisons of diluted earnings per common share are favorably impacted by a lower number of shares used to compute diluted earnings per common share reflecting the impact of share repurchases.
|
•
|
Operating cash flow provided by operations was
$868 million
for the year ended December 31,
2015
as compared to operating cash flow of
$1.6 billion
for the year ended December 31,
2014
. The decrease in our operating cash flows primarily reflects the effect of significant growth in individual commercial medical and group Medicare Advantage membership in the prior year and changes in the timing of other working capital items related to the growth in our pharmacy business and growth in net receivables under the commercial risk adjustment, reinsurance, and risk corridor programs under the Health Care Reform Law, commonly referred to as the 3Rs. Prior year cash flows were favorably impacted from the typical pattern of claim payments that lagged premium receipts related to new membership. Individual commercial medical added
548,000
new members in
2014
compared to a decline of
90,400
members in
2015
. Likewise, group Medicare Advantage added
60,600
new members in
2014
compared to a decline of
5,600
members in
2015
.
|
•
|
In
2015
, we paid the federal government
$867 million
for the annual non-deductible health insurance industry fee compared to our payment of
$562 million
in
2014
. This fee is not deductible for tax purposes, which significantly increased our effective income tax rate beginning in 2014. The health insurance industry fee is further described below under the section titled "Health Care Reform."
The Consolidated Appropriations Act, 2016, enacted on December 18, 2015, included a one-time one year suspension in 2017 of the health insurer fee.
This will significantly reduce our effective tax rate in 2017.
|
•
|
During
2015
, we repurchased
1.85 million
shares in open market transactions for
$329 million
and paid dividends to stockholders of
$172 million
.
Pursuant to the Merger Agreement, after July 2, 2015, we are prohibited from repurchasing any of our outstanding securities without the prior written consent of Aetna, other than repurchases of shares of our common stock in connection with the exercise of outstanding stock options or the vesting or settlement of outstanding restricted stock awards. Accordingly, as announced on July 3, 2015, we have suspended our share repurchase program. Our remaining repurchase authorization was
$1.04 billion
as of July 3, 2015.
The Merger
does not impact our ability and intent to continue quarterly dividend payments prior to the closing of the Merger consistent with our historical dividend payments. Under the terms of the Merger Agreement, we have agreed with Aetna that our quarterly dividend will not exceed $0.29 per share prior to the closing of the Merger.
|
•
|
On April 6, 2015, CMS announced final 2016 Medicare benchmark payment rates and related technical factors impacting the bid benchmark premiums, which we refer to as the Final Rate Notice. We believe the Final Rate Notice, together with the impact of payment cuts associated with the Health Care Reform Law, quality bonuses,
|
•
|
In
2015
, our Retail segment pretax income decreased by
$409 million
, or
30.5%
, from
2014
primarily due to higher Medicare Advantage and individual commercial medical benefit ratios year-over-year, including the impact of benefits expense associated with a premium deficiency reserve for certain of our individual commercial products for the 2016 coverage year as described further below and in the results of operations discussion that follows. The higher benefit ratios were partially offset by declines in the Retail segment operating cost ratios, Medicare membership growth, and higher investment income year-over-year.
|
•
|
Individual Medicare Advantage operating results for 2015 included significant membership growth but were negatively impacted by certain developments related to our product pricing assumptions for 2015. These developments primarily related to lower-than-expected 2015 financial claim recovery levels (included in medical claims reserve development) and lower-than-anticipated reductions in inpatient admissions. Claims data from the fourth quarter of 2015 and early 2016 indicate that inpatient admissions continue to develop favorably versus expectations and claim recoveries have stabilized. We are closely monitoring these favorable trends.
|
•
|
Operating results for our individual commercial medical business compliant with the Health Care Reform Law have been challenged primarily due to unanticipated modifications in the program subsequent to the passing of the Health Care Reform Law, resulting in higher covered population morbidity and the ensuing enrollment and claims issues causing volatility in claims experience.
The benefit ratios associated with many of our individual commercial medical products, in particular Health Care Reform Law compliant offerings, significantly exceeded prior expectations for fiscal year 2015, driven primarily by the on-going impact of the transitional policies, special enrollment period exemptions associated with the program, and government-mandated product designs that attracted higher-utilizing members . Additionally, on June 30, 2015, CMS issued data with respect to the reinsurance and risk adjustment premium stabilization programs for the 2014 plan year which indicated a healthier risk profile comparison for our membership relative to state averages than had been previously anticipated. This resulted in adjustments to certain of the 3Rs during 2015.
|
•
|
Individual Medicare Advantage membership of
2,753,400
at December 31,
2015
increased
325,500
members, or
13.4%
, from
2,427,900
at December 31,
2014
reflecting net membership additions, particularly for our Health Maintenance Organization, or HMO, offerings, for the
2015
plan year. January
2016
individual Medicare Advantage membership approximated
2,811,000
,
increasing
approximately
57,600
members, or
2%
, from December 31,
2015
reflecting net membership additions during the recently completed
2016
annual election period for Medicare beneficiaries. For full year
2016
, we anticipate net membership growth in our individual Medicare Advantage offerings of 100,000 to 120,000.
|
•
|
Group Medicare Advantage membership of
484,100
at December 31,
2015
decreased
5,600
members, or
1.1%
, from
489,700
at December 31,
2014
. For full year
2016
, we expect a net membership decline in our Group Medicare Advantage offerings of 120,000 to 125,000 members primarily due to the loss of a large account that converted to a private exchange offering. Approximately 50% of members from that account selected an individual Humana offering for 2016, with the majority enrolling in a Medicare supplement plan.
|
•
|
Medicare stand-alone PDP membership of
4,557,900
at December 31,
2015
increased
563,900
members, or
14.1%
, from
3,994,000
at December 31,
2014
reflecting net membership additions, primarily for our Humana-Walmart plan offering, for the 2015 plan year
. January
2016
Medicare stand-alone PDP membership (excluding transitional growth from the LI-NET prescription drug plan program)
increased
approximately
240,000
members, or
5%
, from December 31,
2015
reflecting net membership additions, primarily for our Humana-Walmart plan offering, during the recently completed
2016
annual election period for Medicare beneficiaries. For full year
2016
, we anticipate net membership growth in our Medicare stand-alone PDP offerings of 300,000 to 330,000.
|
•
|
Our state-based Medicaid membership of
373,700
at December 31,
2015
increased
56,900
members, or
18.0%
, from
316,800
at December 31,
2014
primarily driven by the addition of members under our Florida Medicaid contract
.
|
•
|
Individual commercial medical membership of
1,057,700
at December 31,
2015
decreased
90,400
members, or
7.9%
, from
1,148,100
at December 31,
2014
primarily reflecting the loss of approximately 150,000 members due to termination by CMS for lack of proper eligibility documentation from the member as well as the loss of members who had subscribed to plans that were not compliant with the Health Care Reform Law. These declines were partially offset by an increase in membership in plans that are compliant with the Health Care Reform Law, primarily off-exchange
. Individual commercial medical membership in plans compliant with the Health Care Reform Law experienced growth in 2015, but at a lesser rate than in 2014. At December 31,
2015
, individual commercial medical membership in plans compliant with the Health Care Reform Law, both on-exchange and off-exchange, was
757,900
members,
an increase
of
71,600
members or
10.4%
from December 31,
2014
.
|
•
|
Group segment pretax income
grew
$107 million
, or
70.9%
, for the year ended December 31,
2015
primarily due to improvement in the operating cost ratio partially offset by an increase in the benefit ratio as discussed in the results of operations discussion that follows.
|
•
|
Membership in HumanaVitality
®
, our wellness and loyalty rewards program, rose
2.0%
to
3,932,300
at December 31,
2015
from
3,856,800
at December 31,
2014
.
|
•
|
Year-over-year comparisons of results of operations are impacted by the completion of the sale of Concentra on June 1, 2015.
|
•
|
As discussed in the detailed Healthcare Services segment results of operations discussion that follows, our Healthcare Services segment pretax income
increased
$243 million
, or
32.9%
, for the year ended December 31,
2015
. This increase was primarily due to higher earnings from our pharmacy solutions and home based services businesses as they serve our growing Medicare membership. High levels of Medicare membership growth as well as increased engagement of members in clinical programs have resulted in higher usage of services across this segment. In addition, improved operating efficiency in the pharmacy business primarily was driven by lower cost of goods associated with increased purchasing scale and lower cost-to-fill primarily due to improvements in technology.
|
•
|
Programs to enhance the quality of care for members are key elements of our integrated care delivery model. We have expanded our identification of and outreach to members in need of clinical intervention. At December 31,
2015
, we enrolled approximately
590,300
Medicare Advantage members with complex chronic conditions in the Humana Chronic Care Program, a
40.3%
increase
compared with approximately
420,700
members at December 31,
2014
, reflecting enhanced predictive modeling capabilities and focus on proactive clinical outreach and member engagement. We believe these initiatives lead to better health outcomes for our members and lower health care costs.
|
|
|
|
|
Change
|
|||||||||||
|
|
2015
|
|
2014
|
|
Dollars
|
|
Percentage
|
|||||||
|
|
(dollars in millions, except per
common share results) |
|
|
|||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|||||||
Premiums:
|
|
|
|
|
|
|
|
|
|||||||
Retail
|
|
$
|
45,805
|
|
|
$
|
39,452
|
|
|
$
|
6,353
|
|
|
16.1
|
%
|
Group
|
|
6,569
|
|
|
6,456
|
|
|
113
|
|
|
1.8
|
%
|
|||
Other Businesses
|
|
35
|
|
|
51
|
|
|
(16
|
)
|
|
(31.4
|
)%
|
|||
Total premiums
|
|
52,409
|
|
|
45,959
|
|
|
6,450
|
|
|
14.0
|
%
|
|||
Services:
|
|
|
|
|
|
|
|
|
|||||||
Retail
|
|
9
|
|
|
39
|
|
|
(30
|
)
|
|
(76.9
|
)%
|
|||
Group
|
|
698
|
|
|
763
|
|
|
(65
|
)
|
|
(8.5
|
)%
|
|||
Healthcare Services
|
|
685
|
|
|
1,353
|
|
|
(668
|
)
|
|
(49.4
|
)%
|
|||
Other Businesses
|
|
14
|
|
|
9
|
|
|
5
|
|
|
55.6
|
%
|
|||
Total services
|
|
1,406
|
|
|
2,164
|
|
|
(758
|
)
|
|
(35.0
|
)%
|
|||
Investment income
|
|
474
|
|
|
377
|
|
|
97
|
|
|
25.7
|
%
|
|||
Total revenues
|
|
54,289
|
|
|
48,500
|
|
|
5,789
|
|
|
11.9
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|||||||
Benefits
|
|
44,269
|
|
|
38,166
|
|
|
6,103
|
|
|
16.0
|
%
|
|||
Operating costs
|
|
7,318
|
|
|
7,639
|
|
|
(321
|
)
|
|
(4.2
|
)%
|
|||
Depreciation and amortization
|
|
355
|
|
|
333
|
|
|
22
|
|
|
6.6
|
%
|
|||
Total operating expenses
|
|
51,942
|
|
|
46,138
|
|
|
5,804
|
|
|
12.6
|
%
|
|||
Income from operations
|
|
2,347
|
|
|
2,362
|
|
|
(15
|
)
|
|
(0.6
|
)%
|
|||
Gain on sale of business
|
|
270
|
|
|
—
|
|
|
270
|
|
|
100.0
|
%
|
|||
Interest expense
|
|
186
|
|
|
192
|
|
|
(6
|
)
|
|
(3.1
|
)%
|
|||
Income before income taxes
|
|
2,431
|
|
|
2,170
|
|
|
261
|
|
|
12.0
|
%
|
|||
Provision for income taxes
|
|
1,155
|
|
|
1,023
|
|
|
132
|
|
|
12.9
|
%
|
|||
Net income
|
|
$
|
1,276
|
|
|
$
|
1,147
|
|
|
$
|
129
|
|
|
11.2
|
%
|
Diluted earnings per common share
|
|
$
|
8.44
|
|
|
$
|
7.36
|
|
|
$
|
1.08
|
|
|
14.7
|
%
|
Benefit ratio (a)
|
|
84.5
|
%
|
|
83.0
|
%
|
|
|
|
1.5
|
%
|
||||
Operating cost ratio (b)
|
|
13.6
|
%
|
|
15.9
|
%
|
|
|
|
(2.3
|
)%
|
||||
Effective tax rate
|
|
47.5
|
%
|
|
47.2
|
%
|
|
|
|
0.3
|
%
|
(a)
|
Represents total benefits expense as a percentage of premiums revenue.
|
(b)
|
Represents total operating costs, excluding depreciation and amortization, as a percentage of total revenues less investment income.
|
|
|
|
|
Change
|
||||||||
|
|
2015
|
|
2014
|
|
Members
|
|
Percentage
|
||||
Membership:
|
|
|
|
|
|
|
|
|
||||
Medical membership:
|
|
|
|
|
|
|
|
|
||||
Individual Medicare Advantage
|
|
2,753,400
|
|
|
2,427,900
|
|
|
325,500
|
|
|
13.4
|
%
|
Group Medicare Advantage
|
|
484,100
|
|
|
489,700
|
|
|
(5,600
|
)
|
|
(1.1
|
)%
|
Medicare stand-alone PDP
|
|
4,557,900
|
|
|
3,994,000
|
|
|
563,900
|
|
|
14.1
|
%
|
Total Retail Medicare
|
|
7,795,400
|
|
|
6,911,600
|
|
|
883,800
|
|
|
12.8
|
%
|
Individual commercial (a)
|
|
1,057,700
|
|
|
1,148,100
|
|
|
(90,400
|
)
|
|
(7.9
|
)%
|
State-based Medicaid
|
|
373,700
|
|
|
316,800
|
|
|
56,900
|
|
|
18.0
|
%
|
Total Retail medical members
|
|
9,226,800
|
|
|
8,376,500
|
|
|
850,300
|
|
|
10.2
|
%
|
Individual specialty membership (b)
|
|
1,153,100
|
|
|
1,165,800
|
|
|
(12,700
|
)
|
|
(1.1
|
)%
|
(a)
|
Individual commercial medical membership includes Medicare Supplement members.
|
(b)
|
Specialty products include dental, vision, 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.
|
|
|
|
|
Change
|
|||||||||||
|
|
2015
|
|
2014
|
|
Dollars
|
|
Percentage
|
|||||||
|
|
(in millions)
|
|
|
|||||||||||
Premiums and Services Revenue:
|
|
|
|
|
|
|
|
|
|||||||
Premiums:
|
|
|
|
|
|
|
|
|
|||||||
Individual Medicare Advantage
|
|
$
|
29,526
|
|
|
$
|
25,782
|
|
|
$
|
3,744
|
|
|
14.5
|
%
|
Group Medicare Advantage
|
|
5,588
|
|
|
5,490
|
|
|
98
|
|
|
1.8
|
%
|
|||
Medicare stand-alone PDP
|
|
3,846
|
|
|
3,404
|
|
|
442
|
|
|
13.0
|
%
|
|||
Total Retail Medicare
|
|
38,960
|
|
|
34,676
|
|
|
4,284
|
|
|
12.4
|
%
|
|||
Individual commercial
|
|
4,243
|
|
|
3,265
|
|
|
978
|
|
|
30.0
|
%
|
|||
State-based Medicaid
|
|
2,341
|
|
|
1,255
|
|
|
1,086
|
|
|
86.5
|
%
|
|||
Individual specialty
|
|
261
|
|
|
256
|
|
|
5
|
|
|
2.0
|
%
|
|||
Total premiums
|
|
45,805
|
|
|
39,452
|
|
|
6,353
|
|
|
16.1
|
%
|
|||
Services
|
|
9
|
|
|
39
|
|
|
(30
|
)
|
|
(76.9
|
)%
|
|||
Total premiums and services revenue
|
|
$
|
45,814
|
|
|
$
|
39,491
|
|
|
$
|
6,323
|
|
|
16.0
|
%
|
Income before income taxes
|
|
$
|
930
|
|
|
$
|
1,339
|
|
|
$
|
(409
|
)
|
|
(30.5
|
)%
|
Benefit ratio
|
|
86.7
|
%
|
|
84.9
|
%
|
|
|
|
1.8
|
%
|
||||
Operating cost ratio
|
|
11.2
|
%
|
|
11.6
|
%
|
|
|
|
(0.4
|
)%
|
•
|
Retail segment pretax income was
$930 million
in
2015
,
a decrease
of
$409 million
, or
30.5%
, compared to
2014
primarily driven by an increase in the benefit ratio for 2015, including the impact of recognizing a premium deficiency reserve of approximately
$176 million
for certain of our individual commercial medical products for the 2016 coverage year, partially offset by a decline in the operating cost ratio, Medicare Advantage membership growth, and higher investment income year-over-year.
|
•
|
Individual Medicare Advantage membership
increased
325,500
members, or
13.4%
, from December 31,
2014
to December 31,
2015
reflecting net membership additions, particularly for our HMO offerings, for the
2015
plan year.
|
•
|
Group Medicare Advantage membership
decreased
5,600
members, or
1.1%
, from December 31,
2014
to December 31,
2015
.
|
•
|
Medicare stand-alone PDP membership
increased
563,900
members, or
14.1%
, from December 31,
2014
to December 31,
2015
reflecting net membership additions, primarily for our Humana-Walmart plan offering, for the 2015 plan year
.
|
•
|
Individual commercial medical membership
decreased
90,400
members, or
7.9%
, from December 31,
2014
to December 31,
2015
primarily reflecting the loss of approximately 150,000 members due to termination by CMS for lack of proper eligibility documentation from the member as well as the loss of members who had subscribed to plans that were not compliant with the Health Care Reform Law. These declines were partially offset by an increase in membership in plans that are compliant with the Health Care Reform Law, primarily off-exchange
.
|
•
|
State-based Medicaid membership
increased
56,900
members, or
18.0%
, from December 31,
2014
to December 31,
2015
primarily driven by the addition of members under our Florida Medicaid contract
.
|
•
|
Individual specialty membership
decreased
12,700
members, or
1.1%
, from December 31,
2014
to December 31,
2015
primarily driven by a membership decline in supplemental health and financial protection product and vision offerings.
|
•
|
Retail segment premiums
increased
$6.4 billion
, or
16.1%
, from
2014
to
2015
primarily due to membership growth across our Medicare Advantage, state-based Medicaid, and Medicare stand-alone PDP lines of business, as well as a heavier percentage of individual commercial medical business in higher premium plans compliant with the Health Care Reform Law. Average Medicare Advantage membership
increased
11.8%
in
2015
.
|
•
|
The Retail segment benefit ratio of
86.7%
for
2015
increased
180
basis points from
2014
primarily due to higher than expected medical costs as compared to the assumptions used in our pricing, the recognition of a premium deficiency reserve in the fourth quarter of 2015 for certain of our individual commercial medical products for the 2016 coverage year, and unfavorable year-over-year comparisons of prior-period medical claims reserve development as discussed below. In addition, the increase reflects higher benefit ratios associated with a greater number of members from state-based contracts and the impact of the change in estimate for the 2014 net 3Rs receivables in 2015. These items were partially offset by the impact of the increase in the health insurance industry fee included in the pricing of our products. In addition, the 2015 period was favorably impacted by the release of reserves for future policy benefits as individual commercial medical members transitioned to plans compliant with the Health Care Reform Law.
|
•
|
The Retail segment’s benefits expense for
2015
included the beneficial effect of
$228 million
in favorable prior-year medical claims reserve development versus
$488 million
in
2014
. This favorable prior-year medical claims reserve development
decreased
the Retail segment benefit ratio by approximately
50
basis points in
2015
versus approximately
120
basis points in
2014
. The year-over-year decline in prior-period medical claims reserve development
primarily was due to the impact of lower financial claim recoveries due in part to our gradual implementation during 2014 of inpatient authorization review prior to admission as opposed to post adjudication, as well as higher than expected flu associated claims from the fourth quarter of 2014 and continued volatility in claims associated with individual commercial medical products.
|
•
|
The Retail segment operating cost ratio of
11.2%
for
2015
decreased
40
basis points from
2014
primarily reflecting administrative cost efficiencies associated with medical membership growth in the segment and other discretionary cost reductions, partially offset by the increase in the non-deductible health insurance industry fee. The non-deductible health insurance industry fee
increased
the operating cost ratio by approximately
160
basis points in
2015
as compared to
120
basis points in
2014
.
|
|
|
|
|
Change
|
||||||||
|
|
2015
|
|
2014
|
|
Members
|
|
Percentage
|
||||
Membership:
|
|
|
|
|
|
|
|
|
||||
Medical membership:
|
|
|
|
|
|
|
|
|
||||
Fully-insured commercial group
|
|
1,178,300
|
|
|
1,235,500
|
|
|
(57,200
|
)
|
|
(4.6
|
)%
|
ASO
|
|
710,700
|
|
|
1,104,300
|
|
|
(393,600
|
)
|
|
(35.6
|
)%
|
Military services
|
|
3,074,400
|
|
|
3,090,400
|
|
|
(16,000
|
)
|
|
(0.5
|
)%
|
Total group medical members
|
|
4,963,400
|
|
|
5,430,200
|
|
|
(466,800
|
)
|
|
(8.6
|
)%
|
Group specialty membership (a)
|
|
6,068,700
|
|
|
6,502,700
|
|
|
(434,000
|
)
|
|
(6.7
|
)%
|
(a)
|
Specialty products include dental, vision, and other voluntary benefit products. Members included in these products may not be unique to each product since members have the ability to enroll in multiple products.
|
|
|
|
|
Change
|
|||||||||||
|
|
2015
|
|
2014
|
|
Dollars
|
|
Percentage
|
|||||||
|
|
(in millions)
|
|
|
|||||||||||
Premiums and Services Revenue:
|
|
|
|
|
|
|
|
|
|||||||
Premiums:
|
|
|
|
|
|
|
|
|
|||||||
Fully-insured commercial group
|
|
$
|
5,493
|
|
|
$
|
5,339
|
|
|
$
|
154
|
|
|
2.9
|
%
|
Group specialty
|
|
1,055
|
|
|
1,098
|
|
|
(43
|
)
|
|
(3.9
|
)%
|
|||
Military services
|
|
21
|
|
|
19
|
|
|
2
|
|
|
10.5
|
%
|
|||
Total premiums
|
|
6,569
|
|
|
6,456
|
|
|
113
|
|
|
1.8
|
%
|
|||
Services
|
|
698
|
|
|
763
|
|
|
(65
|
)
|
|
(8.5
|
)%
|
|||
Total premiums and services revenue
|
|
$
|
7,267
|
|
|
$
|
7,219
|
|
|
$
|
48
|
|
|
0.7
|
%
|
Income before income taxes
|
|
$
|
258
|
|
|
$
|
151
|
|
|
$
|
107
|
|
|
70.9
|
%
|
Benefit ratio
|
|
80.2
|
%
|
|
79.5
|
%
|
|
|
|
0.7
|
%
|
||||
Operating cost ratio
|
|
24.0
|
%
|
|
26.5
|
%
|
|
|
|
(2.5
|
)%
|
•
|
Group segment pretax income
increased
$107 million
, or
70.9%
, to
$258 million
in
2015
primarily reflecting improvement in the operating cost ratio partially offset by an increase in the benefit ratio as discussed below.
|
•
|
Fully-insured commercial group medical membership
decreased
57,200
members, or
4.6%
from December 31,
2014
reflecting lower membership in both large and small group accounts.
|
•
|
Group ASO commercial medical membership
decreased
393,600
members, or
35.6%
, from December 31,
2014
to December 31,
2015
primarily due to 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.
|
•
|
Group specialty membership
decreased
434,000
members, or
6.7%
, from December 31,
2014
to December 31,
2015
primarily due to the loss of certain fully-insured group medical accounts that also had specialty coverage.
|
•
|
Group segment premiums
increased
$113 million
, or
1.8%
, from
2014
to
2015
primarily due to an increase in fully-insured commercial medical per member premiums partially offset by a net decline in fully-insured commercial medical membership.
|
•
|
Group segment services revenue
decreased
$65 million
, or
8.5%
, from
2014
to
2015
primarily due to a decline in group ASO commercial medical membership.
|
•
|
The Group segment benefit ratio
increased
70
basis points from
79.5%
in
2014
to
80.2%
in
2015
primarily reflecting the impact of higher specialty drug costs, net of rebates, as well as higher outpatient costs and lower prior-period medical claims reserve development, partially offset by an increase in the non-deductible health insurance industry fee included in the pricing of our products.
|
•
|
The Group segment’s benefits expense included the beneficial effect of
$7 million
in favorable prior-year medical claims reserve development versus
$29 million
in
2014
. This favorable prior-year medical claims reserve development
decreased
the Group segment benefit ratio by approximately
10
basis points in
2015
versus approximately
40
basis points in
2014
. The year-over-year decline in favorable prior-period medical
|
•
|
The Group segment operating cost ratio of
24.0%
for
2015
decreased
250
basis points from
26.5%
for
2014
, reflecting a decline in our group ASO commercial medical membership which carries a higher operating cost ratio than our fully-insured commercial medical membership, as well as operating cost efficiencies associated with our fully-insured business. Operating cost efficiencies were the result of both sustainable cost reduction initiatives and discretionary reductions. These declines were partially offset by the impact of an increase in the non-deductible health insurance industry fee. The non-deductible health insurance industry fee
increased
the operating cost ratio by approximately
140
basis points in
2015
as compared to
100
basis points in
2014
.
|
|
|
|
|
Change
|
|||||||||||
|
|
2015
|
|
2014
|
|
Dollars
|
|
Percentage
|
|||||||
|
|
(in millions)
|
|
|
|||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|||||||
Services:
|
|
|
|
|
|
|
|
|
|||||||
Provider services
|
|
$
|
515
|
|
|
$
|
1,147
|
|
|
$
|
(632
|
)
|
|
(55.1
|
)%
|
Home based services
|
|
140
|
|
|
107
|
|
|
33
|
|
|
30.8
|
%
|
|||
Pharmacy solutions
|
|
30
|
|
|
99
|
|
|
(69
|
)
|
|
(69.7
|
)%
|
|||
Total services revenues
|
|
685
|
|
|
1,353
|
|
|
(668
|
)
|
|
(49.4
|
)%
|
|||
Intersegment revenues:
|
|
|
|
|
|
|
|
|
|||||||
Pharmacy solutions
|
|
20,551
|
|
|
16,905
|
|
|
3,646
|
|
|
21.6
|
%
|
|||
Provider services
|
|
1,291
|
|
|
1,149
|
|
|
142
|
|
|
12.4
|
%
|
|||
Home based services
|
|
875
|
|
|
585
|
|
|
290
|
|
|
49.6
|
%
|
|||
Clinical programs
|
|
203
|
|
|
208
|
|
|
(5
|
)
|
|
(2.4
|
)%
|
|||
Total intersegment revenues
|
|
22,920
|
|
|
18,847
|
|
|
4,073
|
|
|
21.6
|
%
|
|||
Total services and intersegment revenues
|
|
$
|
23,605
|
|
|
$
|
20,200
|
|
|
$
|
3,405
|
|
|
16.9
|
%
|
Income before income taxes
|
|
$
|
981
|
|
|
$
|
738
|
|
|
$
|
243
|
|
|
32.9
|
%
|
Operating cost ratio
|
|
95.2
|
%
|
|
95.6
|
%
|
|
|
|
(0.4
|
)%
|
•
|
Healthcare Services segment pretax income of
$981 million
for
2015
increased
$243 million
, or
32.9%
, from
2014
primarily due to higher earnings from our pharmacy solutions and home based services businesses as they serve our growing Medicare membership.
|
•
|
Humana Pharmacy Solutions
®
script volumes for the Retail and Group segment membership increased to approximately
398 million
in
2015
,
up
21%
versus scripts of approximately
329 million
in
2014
. The increase primarily reflects growth associated with higher average medical membership for
2015
than in
2014
.
|
•
|
Services revenue
decreased
$668 million
, or
49.4%
, from
2014
to
$685 million
for
2015
primarily due to the completion of the sale of Concentra on June 1, 2015.
|
•
|
Intersegment revenues
increased
$4.1 billion
, or
21.6%
, from
2014
to
$22.9 billion
for
2015
primarily due to growth in our Medicare membership which resulted in higher utilization of our Healthcare Services segment businesses.
|
•
|
The Healthcare Services segment operating cost ratio of
95.2%
for
2015
decreased
40
basis points from
95.6%
for
2014
primarily due to lower operating costs in our pharmacy business together with discretionary cost reductions across the segment, partially offset by the increasing percentage of pharmacy business associated with lower margin specialty drugs. Improving operating efficiency in the pharmacy business was primarily driven by lower cost of goods associated with increased purchasing scale and lower cost-to-fill primarily due to improvements in technology.
|
|
|
|
|
Change
|
|||||||||||
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percentage
|
|||||||
|
|
(dollars in millions, except per
common share results)
|
|
|
|||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|||||||
Premiums:
|
|
|
|
|
|
|
|
|
|||||||
Retail
|
|
$
|
39,452
|
|
|
$
|
31,922
|
|
|
$
|
7,530
|
|
|
23.6
|
%
|
Group
|
|
6,456
|
|
|
6,237
|
|
|
219
|
|
|
3.5
|
%
|
|||
Other Businesses
|
|
51
|
|
|
670
|
|
|
(619
|
)
|
|
(92.4
|
)%
|
|||
Total premiums
|
|
45,959
|
|
|
38,829
|
|
|
7,130
|
|
|
18.4
|
%
|
|||
Services:
|
|
|
|
|
|
|
|
|
|||||||
Retail
|
|
39
|
|
|
18
|
|
|
21
|
|
|
116.7
|
%
|
|||
Group
|
|
763
|
|
|
735
|
|
|
28
|
|
|
3.8
|
%
|
|||
Healthcare Services
|
|
1,353
|
|
|
1,350
|
|
|
3
|
|
|
0.2
|
%
|
|||
Other Businesses
|
|
9
|
|
|
6
|
|
|
3
|
|
|
50.0
|
%
|
|||
Total services
|
|
2,164
|
|
|
2,109
|
|
|
55
|
|
|
2.6
|
%
|
|||
Investment income
|
|
377
|
|
|
375
|
|
|
2
|
|
|
0.5
|
%
|
|||
Total revenues
|
|
48,500
|
|
|
41,313
|
|
|
7,187
|
|
|
17.4
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|||||||
Benefits
|
|
38,166
|
|
|
32,564
|
|
|
5,602
|
|
|
17.2
|
%
|
|||
Operating costs
|
|
7,639
|
|
|
6,355
|
|
|
1,284
|
|
|
20.2
|
%
|
|||
Depreciation and amortization
|
|
333
|
|
|
333
|
|
|
—
|
|
|
—
|
%
|
|||
Total operating expenses
|
|
46,138
|
|
|
39,252
|
|
|
6,886
|
|
|
17.5
|
%
|
|||
Income from operations
|
|
2,362
|
|
|
2,061
|
|
|
301
|
|
|
14.6
|
%
|
|||
Interest expense
|
|
192
|
|
|
140
|
|
|
52
|
|
|
37.1
|
%
|
|||
Income before income taxes
|
|
2,170
|
|
|
1,921
|
|
|
249
|
|
|
13.0
|
%
|
|||
Provision for income taxes
|
|
1,023
|
|
|
690
|
|
|
333
|
|
|
48.3
|
%
|
|||
Net income
|
|
$
|
1,147
|
|
|
$
|
1,231
|
|
|
$
|
(84
|
)
|
|
(6.8
|
)%
|
Diluted earnings per common share
|
|
$
|
7.36
|
|
|
$
|
7.73
|
|
|
$
|
(0.37
|
)
|
|
(4.8
|
)%
|
Benefit ratio (a)
|
|
83.0
|
%
|
|
83.9
|
%
|
|
|
|
(0.9
|
)%
|
||||
Operating cost ratio (b)
|
|
15.9
|
%
|
|
15.5
|
%
|
|
|
|
0.4
|
%
|
||||
Effective tax rate
|
|
47.2
|
%
|
|
35.9
|
%
|
|
|
|
11.3
|
%
|
(a)
|
Represents total benefits expense as a percentage of premiums revenue.
|
(b)
|
Represents total operating costs, excluding depreciation and amortization, as a percentage of total revenues less investment income.
|
|
|
|
|
Change
|
||||||||
|
|
2014
|
|
2013
|
|
Members
|
|
Percentage
|
||||
Membership:
|
|
|
|
|
|
|
|
|
||||
Medical membership:
|
|
|
|
|
|
|
|
|
||||
Individual Medicare Advantage
|
|
2,427,900
|
|
|
2,068,700
|
|
|
359,200
|
|
|
17.4
|
%
|
Group Medicare Advantage
|
|
489,700
|
|
|
429,100
|
|
|
60,600
|
|
|
14.1
|
%
|
Medicare stand-alone PDP
|
|
3,994,000
|
|
|
3,275,900
|
|
|
718,100
|
|
|
21.9
|
%
|
Total Retail Medicare
|
|
6,911,600
|
|
|
5,773,700
|
|
|
1,137,900
|
|
|
19.7
|
%
|
Individual commercial (a)
|
|
1,148,100
|
|
|
600,100
|
|
|
548,000
|
|
|
91.3
|
%
|
State-based Medicaid
|
|
316,800
|
|
|
85,500
|
|
|
231,300
|
|
|
270.5
|
%
|
Total Retail medical members
|
|
8,376,500
|
|
|
6,459,300
|
|
|
1,917,200
|
|
|
29.7
|
%
|
Individual specialty membership (b)
|
|
1,165,800
|
|
|
1,042,500
|
|
|
123,300
|
|
|
11.8
|
%
|
(a)
|
Individual commercial medical membership includes Medicare Supplement members.
|
(b)
|
Specialty products include dental, vision, 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.
|
|
|
|
|
Change
|
|||||||||||
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percentage
|
|||||||
|
|
(in millions)
|
|
|
|||||||||||
Premiums and Services Revenue:
|
|
|
|
|
|
|
|
|
|||||||
Premiums:
|
|
|
|
|
|
|
|
|
|||||||
Individual Medicare Advantage
|
|
$
|
25,782
|
|
|
$
|
22,481
|
|
|
$
|
3,301
|
|
|
14.7
|
%
|
Group Medicare Advantage
|
|
5,490
|
|
|
4,710
|
|
|
780
|
|
|
16.6
|
%
|
|||
Medicare stand-alone PDP
|
|
3,404
|
|
|
3,033
|
|
|
371
|
|
|
12.2
|
%
|
|||
Total Retail Medicare
|
|
34,676
|
|
|
30,224
|
|
|
4,452
|
|
|
14.7
|
%
|
|||
Individual commercial
|
|
3,265
|
|
|
1,160
|
|
|
2,105
|
|
|
181.5
|
%
|
|||
State-based Medicaid
|
|
1,255
|
|
|
328
|
|
|
927
|
|
|
282.6
|
%
|
|||
Individual specialty
|
|
256
|
|
|
210
|
|
|
46
|
|
|
21.9
|
%
|
|||
Total premiums
|
|
39,452
|
|
|
31,922
|
|
|
7,530
|
|
|
23.6
|
%
|
|||
Services
|
|
39
|
|
|
18
|
|
|
21
|
|
|
116.7
|
%
|
|||
Total premiums and services revenue
|
|
$
|
39,491
|
|
|
$
|
31,940
|
|
|
$
|
7,551
|
|
|
23.6
|
%
|
Income before income taxes
|
|
$
|
1,339
|
|
|
$
|
1,490
|
|
|
$
|
(151
|
)
|
|
(10.1
|
)%
|
Benefit ratio
|
|
84.9
|
%
|
|
85.1
|
%
|
|
|
|
(0.2
|
)%
|
||||
Operating cost ratio
|
|
11.6
|
%
|
|
10.1
|
%
|
|
|
|
1.5
|
%
|
•
|
Retail segment pretax income was
$1.3 billion
in
2014
,
a decrease
of
$151 million
, or
10.1%
, compared to
2013
primarily driven by investment spending for health care exchanges and state-based contracts and higher specialty prescription drug costs associated with a new treatment for Hepatitis C, partially offset by Medicare Advantage and individual commercial medical membership growth as well as increased membership in our clinical programs.
|
•
|
Individual Medicare Advantage membership
increased
359,200
members, or
17.4%
, from December 31,
2013
to December 31,
2014
reflecting net membership additions, particularly for our HMO offerings, for the
2014
plan year.
|
•
|
Fully-insured group Medicare Advantage membership
increased
60,600
members, or
14.1%
, from December 31,
2013
to December 31,
2014
primarily due to the addition of a new large group account.
|
•
|
Medicare stand-alone PDP membership
increased
718,100
members, or
21.9%
, from December 31,
2013
to December 31,
2014
reflecting net membership additions, primarily for our Humana-Walmart plan offering, for the 2014 plan year.
|
•
|
Individual commercial medical membership
increased
548,000
members, or
91.3%
, from December 31,
2013
to December 31,
2014
primarily reflecting new sales, both on-exchange and off-exchange, of plans compliant with the Health Care Reform Law.
|
•
|
State-based Medicaid membership
increased
231,300
members, or
270.5%
, from December 31,
2013
to December 31,
2014
primarily driven by the addition of members under our Florida Medicaid and Florida Long-Term Support Services contracts as well as
18,300
dual eligible members from state-based contracts in Virginia and Illinois.
|
•
|
Individual specialty membership
increased
123,300
members, or
11.8%
, from December 31,
2013
to December 31,
2014
primarily driven by increased membership in dental and vision offerings.
|
•
|
Retail segment premiums
increased
$7.5 billion
, or
23.6%
, from
2013
to
2014
primarily due to membership growth across all lines of business, particularly for our Medicare Advantage, individual commercial medical, primarily on the health care exchanges, and state-based Medicaid businesses. Individual Medicare Advantage average membership
increased
16.6%
in
2014
. Individual Medicare Advantage per member premiums
decreased
approximately
1.7%
in
2014
compared to
2013
, primarily due to Medicare rate reductions and the impact of sequestration which became effective on April 1, 2013.
|
•
|
The Retail segment benefit ratio of
84.9%
for
2014
decreased
20
basis points from
2013
primarily due to increased membership in our clinical programs and the inclusion of the health insurance industry fee in the pricing of our products, partially offset by higher specialty prescription drug costs associated with a new treatment for Hepatitis C, higher planned clinical investment spending, and higher benefit ratios associated with members from state-based contracts.
|
•
|
The Retail segment’s benefits expense for
2014
included the beneficial effect of
$488 million
in favorable prior-year medical claims reserve development versus
$428 million
in
2013
. This favorable prior-year medical claims reserve development
decreased
the Retail segment benefit ratio by approximately
120
basis points in
2014
versus approximately
130
basis points in
2013
.
|
•
|
The Retail segment operating cost ratio of
11.6%
for
2014
increased
150
basis points from
2013
primarily due to the non-deductible health insurance industry fee mandated by the Health Care Reform Law and investment spending for health care exchanges and state-based contracts, partially offset by scale efficiencies from Medicare and individual commercial medical membership growth.
|
|
|
|
|
Change
|
||||||||
|
|
2014
|
|
2013
|
|
Members
|
|
Percentage
|
||||
Membership:
|
|
|
|
|
|
|
|
|
||||
Medical membership:
|
|
|
|
|
|
|
|
|
||||
Fully-insured commercial group
|
|
1,235,500
|
|
|
1,237,000
|
|
|
(1,500
|
)
|
|
(0.1
|
)%
|
ASO
|
|
1,104,300
|
|
|
1,162,800
|
|
|
(58,500
|
)
|
|
(5.0
|
)%
|
Military services
|
|
3,090,400
|
|
|
3,101,800
|
|
|
(11,400
|
)
|
|
(0.4
|
)%
|
Total group medical members
|
|
5,430,200
|
|
|
5,501,600
|
|
|
(71,400
|
)
|
|
(1.3
|
)%
|
Group specialty membership (a)
|
|
6,502,700
|
|
|
6,780,800
|
|
|
(278,100
|
)
|
|
(4.1
|
)%
|
(a)
|
Specialty products include dental, vision, and voluntary benefit products. Members included in these products may not be unique to each product since members have the ability to enroll in multiple products.
|
|
|
|
|
Change
|
|||||||||||
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percentage
|
|||||||
|
|
(in millions)
|
|
|
|||||||||||
Premiums and Services Revenue:
|
|
|
|
|
|
|
|
|
|||||||
Premiums:
|
|
|
|
|
|
|
|
|
|||||||
Fully-insured commercial group
|
|
$
|
5,339
|
|
|
$
|
5,117
|
|
|
$
|
222
|
|
|
4.3
|
%
|
Group specialty
|
|
1,098
|
|
|
1,095
|
|
|
3
|
|
|
0.3
|
%
|
|||
Military services
|
|
19
|
|
|
25
|
|
|
(6
|
)
|
|
(24.0
|
)%
|
|||
Total premiums
|
|
6,456
|
|
|
6,237
|
|
|
219
|
|
|
3.5
|
%
|
|||
Services
|
|
763
|
|
|
735
|
|
|
28
|
|
|
3.8
|
%
|
|||
Total premiums and services revenue
|
|
$
|
7,219
|
|
|
$
|
6,972
|
|
|
$
|
247
|
|
|
3.5
|
%
|
Income before income taxes
|
|
$
|
151
|
|
|
$
|
240
|
|
|
$
|
(89
|
)
|
|
(37.1
|
)%
|
Benefit ratio
|
|
79.5
|
%
|
|
77.7
|
%
|
|
|
|
1.8
|
%
|
||||
Operating cost ratio
|
|
26.5
|
%
|
|
26.5
|
%
|
|
|
|
—
|
%
|
•
|
Group segment pretax income
decreased
$89 million
, or
37.1%
, to
$151 million
in
2014
primarily reflecting higher utilization, mainly due to higher specialty prescription drug costs associated with a new treatment for Hepatitis C, as well as the continuing impact of transitional policy changes which allowed individuals to remain in plans not compliant with the Health Care Reform Law.
|
•
|
Fully-insured commercial group medical membership
decreased
1,500
members, or
0.1%
from December 31,
2013
as an increase in small group business membership was generally offset by lower membership in large group accounts. Approximately
65%
of our fully-insured commercial group medical membership was in small group accounts at December 31,
2014
compared to
61%
at December 31,
2013
.
|
•
|
Group ASO commercial medical membership
decreased
58,500
members, or
5.0%
, from December 31,
2013
to December 31,
2014
primarily due to continued pricing discipline in a highly competitive environment for self-funded accounts.
|
•
|
Group specialty membership
decreased
278,100
members, or
4.1%
, from December 31,
2013
to December 31,
2014
primarily due to declines in dental and vision membership related to our planned discontinuance of certain unprofitable product distribution partnerships.
|
•
|
Group segment premiums
increased
$219.0 million
, or
3.5%
, from
2013
to
2014
primarily due to higher fully-insured commercial group medical premiums per member that more than offset a slight decline in total membership for this segment.
|
•
|
The Group segment benefit ratio
increased
180
basis points from
77.7%
in
2013
to
79.5%
in
2014
primarily due to higher utilization, mainly due to higher specialty prescription drug costs associated with a new treatment for Hepatitis C, as well as the continuing impact of transitional policy changes, partially offset by the inclusion of the health insurance industry fee and other fees mandated by the Health Care Reform Law in our pricing.
|
•
|
The Group segment’s benefits expense included the beneficial effect of
$29 million
in favorable prior-year medical claims reserve development versus
$42 million
in
2013
. This favorable prior-year medical claims reserve development
decreased
the Group segment benefit ratio by approximately
40
basis points in
2014
versus approximately
70
basis points in
2013
.
|
•
|
The Group segment operating cost ratio of
26.5%
was unchanged from
2013
, reflecting the impact of the non-deductible health insurance industry fee and other fees mandated by the Health Care Reform Law as well as a higher percentage of small group commercial business which carries a higher operating cost ratio than large group business, offset by operating cost efficiencies.
|
|
|
|
|
Change
|
|||||||||||
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percentage
|
|||||||
|
|
(in millions)
|
|
|
|||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|||||||
Services:
|
|
|
|
|
|
|
|
|
|||||||
Provider services
|
|
$
|
1,147
|
|
|
$
|
1,195
|
|
|
$
|
(48
|
)
|
|
(4.0
|
)%
|
Home based services
|
|
107
|
|
|
94
|
|
|
13
|
|
|
13.8
|
%
|
|||
Pharmacy solutions
|
|
99
|
|
|
59
|
|
|
40
|
|
|
67.8
|
%
|
|||
Clinical programs
|
|
—
|
|
|
2
|
|
|
(2
|
)
|
|
(100.0
|
)%
|
|||
Total services revenues
|
|
1,353
|
|
|
1,350
|
|
|
3
|
|
|
0.2
|
%
|
|||
Intersegment revenues:
|
|
|
|
|
|
|
|
|
|||||||
Pharmacy solutions
|
|
16,905
|
|
|
13,079
|
|
|
3,826
|
|
|
29.3
|
%
|
|||
Provider services
|
|
1,149
|
|
|
1,102
|
|
|
47
|
|
|
4.3
|
%
|
|||
Home based services
|
|
585
|
|
|
326
|
|
|
259
|
|
|
79.4
|
%
|
|||
Clinical programs
|
|
208
|
|
|
186
|
|
|
22
|
|
|
11.8
|
%
|
|||
Total intersegment revenues
|
|
18,847
|
|
|
14,693
|
|
|
4,154
|
|
|
28.3
|
%
|
|||
Total services and intersegment revenues
|
|
$
|
20,200
|
|
|
$
|
16,043
|
|
|
$
|
4,157
|
|
|
25.9
|
%
|
Income before income taxes
|
|
$
|
738
|
|
|
$
|
520
|
|
|
$
|
218
|
|
|
41.9
|
%
|
Operating cost ratio
|
|
95.6
|
%
|
|
95.8
|
%
|
|
|
|
(0.2
|
)%
|
•
|
Healthcare Services segment pretax income of
$738 million
for
2014
increased
$218 million
from
2013
. The increase is primarily due to a
decline
in the operating cost ratio in
2014
on a revenue base that reflects growth from our pharmacy solutions and home based services businesses as they serve our growing Medicare membership.
|
•
|
Humana Pharmacy Solutions
®
script volumes for the Retail and Group segment membership increased to approximately
329 million
in
2014
,
up
20%
versus scripts of approximately
274 million
in
2013
. The increase primarily reflects growth associated with higher average medical membership for
2014
than in
2013
.
|
•
|
Services revenue for
2014
were relatively unchanged from
2013
,
increasing
$3 million
, or
0.2%
, to
$1.4 billion
for
2014
.
|
•
|
Intersegment revenues
increased
$4.2 billion
, or
28.3%
, from
2013
to
$18.8 billion
for
2014
primarily due to growth in our Medicare membership which resulted in higher utilization of our pharmacy solutions and home based services businesses.
|
•
|
The Healthcare Services segment operating cost ratio of
95.6%
for
2014
decreased
20
basis points from
95.8%
for
2013
primarily due to an improvement in the ratio for our pharmacy solutions business partially offset by our investment in home based services and other businesses across the segment.
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in millions)
|
||||||||||
Net cash provided by operating activities
|
$
|
868
|
|
|
$
|
1,618
|
|
|
$
|
1,716
|
|
Net cash provided by (used in) investing activities
|
320
|
|
|
(63
|
)
|
|
(1,182
|
)
|
|||
Net cash used in financing activities
|
(552
|
)
|
|
(758
|
)
|
|
(702
|
)
|
|||
Increase (decrease) in cash and cash equivalents
|
$
|
636
|
|
|
$
|
797
|
|
|
$
|
(168
|
)
|
|
|
|
|
|
|
|
Change
|
||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||
|
(in millions)
|
|
|
||||||||||||||||||||
IBNR (1)
|
$
|
3,730
|
|
|
$
|
3,254
|
|
|
$
|
2,586
|
|
|
$
|
476
|
|
|
$
|
668
|
|
|
$
|
34
|
|
Reported claims in process (2)
|
600
|
|
|
475
|
|
|
381
|
|
|
125
|
|
|
94
|
|
|
66
|
|
||||||
Premium deficiency reserve (3)
|
176
|
|
|
—
|
|
|
—
|
|
|
176
|
|
|
—
|
|
|
—
|
|
||||||
Other benefits payable (4)
|
470
|
|
|
746
|
|
|
926
|
|
|
(276
|
)
|
|
(180
|
)
|
|
14
|
|
||||||
Total benefits payable
|
$
|
4,976
|
|
|
$
|
4,475
|
|
|
$
|
3,893
|
|
|
501
|
|
|
582
|
|
|
114
|
|
|||
Payables from acquisition
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|||||||||
Change in benefits payable per cash
flow statement resulting in cash from operations |
|
|
|
|
|
|
$
|
501
|
|
|
$
|
582
|
|
|
$
|
109
|
|
(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 (i.e. a shorter time span results in a lower IBNR).
|
(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)
|
Premium deficiency reserve recognized in 2015 for our individual commercial medical business compliant with the Health Care Reform Law associated with the 2016 coverage year.
|
(4)
|
Other benefits payable include amounts owed to providers under capitated and risk sharing arrangements.
|
|
|
|
|
|
|
|
Change
|
||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Medicare
|
$
|
765
|
|
|
$
|
664
|
|
|
$
|
576
|
|
|
$
|
101
|
|
|
$
|
88
|
|
|
$
|
154
|
|
Commercial and other
|
420
|
|
|
381
|
|
|
219
|
|
|
39
|
|
|
162
|
|
|
59
|
|
||||||
Military services
|
77
|
|
|
106
|
|
|
87
|
|
|
(29
|
)
|
|
19
|
|
|
28
|
|
||||||
Allowance for doubtful accounts
|
(101
|
)
|
|
(98
|
)
|
|
(71
|
)
|
|
(3
|
)
|
|
(27
|
)
|
|
(24
|
)
|
||||||
Total net receivables
|
$
|
1,161
|
|
|
$
|
1,053
|
|
|
$
|
811
|
|
|
108
|
|
|
242
|
|
|
217
|
|
|||
Reconciliation to cash flow statement:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Provision for doubtful accounts
|
|
|
|
|
|
|
61
|
|
|
32
|
|
|
37
|
|
|||||||||
Change in receivables acquired,
held-for-sale, or disposed from sale of business |
|
|
|
|
|
|
11
|
|
|
(10
|
)
|
|
(3
|
)
|
|||||||||
Change in receivables per cash flow
statement resulting in cash from operations |
|
|
|
|
|
|
$
|
180
|
|
|
$
|
264
|
|
|
$
|
251
|
|
Payment
Date |
|
Amount
per Share |
|
Total
Amount |
||
|
|
|
|
(in millions)
|
||
2013
|
|
$1.06
|
|
$
|
167
|
|
2014
|
|
$1.10
|
|
$
|
170
|
|
2015
|
|
$1.14
|
|
$
|
170
|
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
|
Total
|
|
Less than
1 Year |
|
1-3 Years
|
|
3-5 Years
|
|
More than
5 Years |
||||||||||
|
|
(in millions)
|
||||||||||||||||||
Debt
|
|
$
|
4,099
|
|
|
$
|
299
|
|
|
$
|
800
|
|
|
$
|
400
|
|
|
$
|
2,600
|
|
Interest (1)
|
|
2,539
|
|
|
188
|
|
|
342
|
|
|
244
|
|
|
1,765
|
|
|||||
Operating leases (2)
|
|
697
|
|
|
173
|
|
|
286
|
|
|
148
|
|
|
90
|
|
|||||
Purchase obligations (3)
|
|
150
|
|
|
74
|
|
|
74
|
|
|
2
|
|
|
—
|
|
|||||
Future policy benefits payable and other long-term liabilities (4)
|
|
2,578
|
|
|
79
|
|
|
462
|
|
|
204
|
|
|
1,833
|
|
|||||
Total
|
|
$
|
10,063
|
|
|
$
|
813
|
|
|
$
|
1,964
|
|
|
$
|
998
|
|
|
$
|
6,288
|
|
(1)
|
Interest includes the estimated contractual interest payments under our debt agreements.
|
(2)
|
We lease facilities, computer hardware, and other furniture and equipment under long-term operating leases that are noncancelable and expire on various dates through
2026
. We sublease facilities or partial facilities to third party tenants for space not used in our operations which partially mitigates our operating lease commitments. An operating lease is a type of off-balance sheet arrangement. Assuming we acquired the asset, rather than leased such asset, we would have recognized a liability for the financing of these assets. See also Note 16 to the consolidated financial statements included in Item 8. – Financial Statements and Supplementary Data.
|
(3)
|
Purchase obligations include agreements to purchase services, primarily information technology related services, or to make improvements to real estate, in each case that are enforceable and legally binding on us and that specify all significant terms, including: fixed or minimum levels of service to be purchased; fixed, minimum or variable price provisions; and the appropriate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty.
|
(4)
|
Includes future policy benefits payable ceded to third parties through 100% coinsurance agreements as more fully described in Note 19 to the consolidated financial statements included in Item 8. – Financial Statements and Supplementary Data. We expect the assuming reinsurance carriers to fund these obligations and reflected these amounts as reinsurance recoverables included in other long-term assets on our consolidated balance sheet. Amounts payable in less than one year are included in trade accounts payable and accrued expenses in the consolidated balance sheet.
|
|
December 31, 2015
|
|
Percentage
of Total
|
|
December 31, 2014
|
|
Percentage
of Total
|
||||||
|
(dollars in millions)
|
||||||||||||
IBNR
|
$
|
3,730
|
|
|
75.0
|
%
|
|
$
|
3,254
|
|
|
72.7
|
%
|
Reported claims in process
|
600
|
|
|
12.1
|
%
|
|
475
|
|
|
10.6
|
%
|
||
Premium deficiency reserve
|
176
|
|
|
3.5
|
%
|
|
—
|
|
|
—
|
%
|
||
Other benefits payable
|
470
|
|
|
9.4
|
%
|
|
746
|
|
|
16.7
|
%
|
||
Total benefits payable
|
$
|
4,976
|
|
|
100.0
|
%
|
|
$
|
4,475
|
|
|
100.0
|
%
|
Completion Factor (a):
|
|
Claims Trend Factor (b):
|
||||
Factor
Change (c) |
|
Decrease in
Benefits Payable |
|
Factor
Change (c) |
|
Decrease in
Benefits Payable |
(dollars in millions)
|
||||||
0.60%
|
|
$(181)
|
|
(2.75)%
|
|
$(298)
|
0.50%
|
|
$(151)
|
|
(2.50)%
|
|
$(271)
|
0.40%
|
|
$(120)
|
|
(2.25)%
|
|
$(244)
|
0.30%
|
|
$(90)
|
|
(2.00)%
|
|
$(217)
|
0.20%
|
|
$(60)
|
|
(1.75)%
|
|
$(190)
|
0.10%
|
|
$(30)
|
|
(1.50)%
|
|
$(162)
|
—%
|
|
$—
|
|
(1.25)%
|
|
$(135)
|
(a)
|
Reflects estimated potential changes in benefits payable at December 31,
2015
caused by changes in completion factors for incurred months prior to the most recent two months.
|
(b)
|
Reflects estimated potential changes in benefits payable at December 31,
2015
caused by changes in annualized claims trend used for the estimation of per member per month incurred claims for the most recent two months.
|
(c)
|
The factor change indicated represents the percentage point change.
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
|
(in millions)
|
||||||||||
Balances at January 1
|
|
$
|
4,475
|
|
|
$
|
3,893
|
|
|
$
|
3,775
|
|
Less: Reinsurance recoverables
|
|
(78
|
)
|
|
—
|
|
|
—
|
|
|||
Balances at January 1, net
|
|
4,397
|
|
|
3,893
|
|
|
3,775
|
|
|||
Acquisitions
|
|
—
|
|
|
—
|
|
|
5
|
|
|||
Incurred related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
44,397
|
|
|
38,641
|
|
|
32,711
|
|
|||
Prior years
|
|
(236
|
)
|
|
(518
|
)
|
|
(474
|
)
|
|||
Total incurred
|
|
44,161
|
|
|
38,123
|
|
|
32,237
|
|
|||
Paid related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
(39,802
|
)
|
|
(34,357
|
)
|
|
(29,103
|
)
|
|||
Prior years
|
|
(4,041
|
)
|
|
(3,262
|
)
|
|
(3,021
|
)
|
|||
Total paid
|
|
(43,843
|
)
|
|
(37,619
|
)
|
|
(32,124
|
)
|
|||
Premium deficiency reserve
|
|
176
|
|
|
—
|
|
|
—
|
|
|||
Reinsurance recoverable
|
|
85
|
|
|
78
|
|
|
—
|
|
|||
Balances at December 31
|
|
$
|
4,976
|
|
|
$
|
4,475
|
|
|
$
|
3,893
|
|
|
Favorable Development by Changes in Key Assumptions
|
|||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
|
Amount
|
|
Factor
Change (a) |
|
Amount
|
|
Factor
Change (a) |
|
Amount
|
|
Factor
Change (a) |
|||||||||
|
(dollars in millions)
|
|||||||||||||||||||
Trend factors
|
$
|
(145
|
)
|
|
(1.5
|
)%
|
|
$
|
(266
|
)
|
|
(3.7
|
)%
|
|
$
|
(233
|
)
|
|
(3.4
|
)%
|
Completion factors
|
(91
|
)
|
|
0.4
|
%
|
|
(252
|
)
|
|
1.2
|
%
|
|
(241
|
)
|
|
1.2
|
%
|
|||
Total
|
$
|
(236
|
)
|
|
|
|
$
|
(518
|
)
|
|
|
|
$
|
(474
|
)
|
|
|
(a)
|
The factor change indicated represents the percentage point change.
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in millions)
|
||||||||||
Premium deficiency reserve for short-duration policies
|
$
|
176
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Military services
|
12
|
|
|
11
|
|
|
(27
|
)
|
|||
Future policy benefits
|
(80
|
)
|
|
32
|
|
|
354
|
|
|||
Total
|
$
|
108
|
|
|
$
|
43
|
|
|
$
|
327
|
|
|
|
December 31, 2015
|
|
Percentage
of Total |
|
December 31, 2014
|
|
Percentage
of Total |
||||||
|
|
|
|
|
|
|
|
|
||||||
|
|
(dollars in millions)
|
||||||||||||
U.S. Treasury and other U.S. government corporations and agencies:
|
|
|
|
|
|
|
|
|
||||||
U.S. Treasury and agency obligations
|
|
$
|
332
|
|
|
3.6
|
%
|
|
$
|
374
|
|
|
3.9
|
%
|
Mortgage-backed securities
|
|
1,891
|
|
|
20.8
|
%
|
|
1,498
|
|
|
15.7
|
%
|
||
Tax-exempt municipal securities
|
|
2,668
|
|
|
29.3
|
%
|
|
3,068
|
|
|
32.1
|
%
|
||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
||||||
Residential
|
|
13
|
|
|
0.1
|
%
|
|
17
|
|
|
0.2
|
%
|
||
Commercial
|
|
985
|
|
|
10.8
|
%
|
|
843
|
|
|
8.8
|
%
|
||
Asset-backed securities
|
|
263
|
|
|
2.9
|
%
|
|
29
|
|
|
0.3
|
%
|
||
Corporate debt securities
|
|
2,958
|
|
|
32.5
|
%
|
|
3,718
|
|
|
39.0
|
%
|
||
|
|
|
|
|
|
|
|
|
||||||
Total debt securities
|
|
$
|
9,110
|
|
|
100.0
|
%
|
|
$
|
9,547
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
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)
|
|||||||||||||||||||||||
December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
U.S. Treasury and other U.S. government
corporations and agencies: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
U.S. Treasury and agency obligations
|
$
|
195
|
|
|
$
|
(1
|
)
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
209
|
|
|
$
|
(1
|
)
|
|
Mortgage-backed securities
|
1,484
|
|
|
(20
|
)
|
|
86
|
|
|
(3
|
)
|
|
1,570
|
|
|
(23
|
)
|
|||||||
Tax-exempt municipal securities
|
843
|
|
|
(3
|
)
|
|
52
|
|
|
(1
|
)
|
|
895
|
|
|
(4
|
)
|
|||||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Residential
|
2
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|||||||
Commercial
|
626
|
|
|
(13
|
)
|
|
265
|
|
|
(28
|
)
|
|
891
|
|
|
(41
|
)
|
|||||||
Asset-backed securities
|
258
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
258
|
|
|
(2
|
)
|
|||||||
Corporate debt securities
|
918
|
|
|
(45
|
)
|
|
63
|
|
|
(10
|
)
|
|
981
|
|
|
(55
|
)
|
|||||||
Total debt securities
|
$
|
4,326
|
|
|
$
|
(84
|
)
|
|
$
|
484
|
|
|
$
|
(42
|
)
|
|
$
|
4,810
|
|
|
$
|
(126
|
)
|
|
|
Increase (decrease) in
pretax earnings given an interest rate decrease of X basis points |
|
Increase (decrease) in
pretax earnings given an interest rate increase of X basis points |
||||||||||||||||||||
|
|
(300)
|
|
(200)
|
|
(100)
|
|
100
|
|
200
|
|
300
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
As of December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment income (a)
|
|
$
|
(33
|
)
|
|
$
|
(27
|
)
|
|
$
|
(21
|
)
|
|
$
|
41
|
|
|
$
|
82
|
|
|
$
|
124
|
|
Interest expense (b)
|
|
3
|
|
|
3
|
|
|
3
|
|
|
(3
|
)
|
|
(6
|
)
|
|
(9
|
)
|
||||||
Pretax
|
|
$
|
(30
|
)
|
|
$
|
(24
|
)
|
|
$
|
(18
|
)
|
|
$
|
38
|
|
|
$
|
76
|
|
|
$
|
115
|
|
As of December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment income (a)
|
|
$
|
(20
|
)
|
|
$
|
(15
|
)
|
|
$
|
(9
|
)
|
|
$
|
42
|
|
|
$
|
85
|
|
|
$
|
128
|
|
Interest expense (b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Pretax
|
|
$
|
(20
|
)
|
|
$
|
(15
|
)
|
|
$
|
(9
|
)
|
|
$
|
42
|
|
|
$
|
85
|
|
|
$
|
128
|
|
(a)
|
As of
December 31, 2015
and
2014
, some of our investments had interest rates below 3% so the assumed hypothetical change in pretax earnings does not reflect the full 3% point reduction.
|
(b)
|
The interest rate under our senior notes is fixed. There were no borrowings outstanding under the credit agreement at
December 31, 2015
or
December 31, 2014
. There was
$299 million
outstanding under our commercial paper program at
December 31, 2015
. As of
December 31, 2015
, our interest rate under our commercial paper program was less than 1% so the assumed hypothetical change in pretax earnings does not reflect the full 1% point reduction. There were no borrowings outstanding under our commercial paper program at December 31,
2014
.
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in millions, except
share amounts)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,571
|
|
|
$
|
1,935
|
|
Investment securities
|
7,267
|
|
|
7,598
|
|
||
Receivables, less allowance for doubtful accounts
of $101 in 2015 and $98 in 2014 |
1,161
|
|
|
1,053
|
|
||
Other current assets
|
4,712
|
|
|
4,007
|
|
||
Assets held-for-sale
|
—
|
|
|
943
|
|
||
Total current assets
|
15,711
|
|
|
15,536
|
|
||
Property and equipment, net
|
1,384
|
|
|
1,228
|
|
||
Long-term investment securities
|
1,843
|
|
|
1,949
|
|
||
Goodwill
|
3,265
|
|
|
3,231
|
|
||
Other long-term assets
|
2,502
|
|
|
1,583
|
|
||
Total assets
|
$
|
24,705
|
|
|
$
|
23,527
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Benefits payable
|
$
|
4,976
|
|
|
$
|
4,475
|
|
Trade accounts payable and accrued expenses
|
2,212
|
|
|
2,095
|
|
||
Book overdraft
|
301
|
|
|
334
|
|
||
Unearned revenues
|
364
|
|
|
361
|
|
||
Short-term borrowings
|
299
|
|
|
—
|
|
||
Liabilities held-for-sale
|
—
|
|
|
206
|
|
||
Total current liabilities
|
8,152
|
|
|
7,471
|
|
||
Long-term debt
|
3,821
|
|
|
3,825
|
|
||
Future policy benefits payable
|
2,151
|
|
|
2,349
|
|
||
Other long-term liabilities
|
235
|
|
|
236
|
|
||
Total liabilities
|
14,359
|
|
|
13,881
|
|
||
Commitments and contingencies (Note 16)
|
|
|
|
||||
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;
198,372,059 shares issued at December 31, 2015 and 197,951,551 shares issued at December 31, 2014 |
33
|
|
|
33
|
|
||
Capital in excess of par value
|
2,530
|
|
|
2,330
|
|
||
Retained earnings
|
11,017
|
|
|
9,916
|
|
||
Accumulated other comprehensive income
|
58
|
|
|
223
|
|
||
Treasury stock, at cost, 50,084,043 shares at December 31, 2015
and 48,347,541 shares at December 31, 2014 |
(3,292
|
)
|
|
(2,856
|
)
|
||
Total stockholders’ equity
|
10,346
|
|
|
9,646
|
|
||
Total liabilities and stockholders’ equity
|
$
|
24,705
|
|
|
$
|
23,527
|
|
|
For the year ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in millions, except per share results)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
Premiums
|
$
|
52,409
|
|
|
$
|
45,959
|
|
|
$
|
38,829
|
|
Services
|
1,406
|
|
|
2,164
|
|
|
2,109
|
|
|||
Investment income
|
474
|
|
|
377
|
|
|
375
|
|
|||
Total revenues
|
54,289
|
|
|
48,500
|
|
|
41,313
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Benefits
|
44,269
|
|
|
38,166
|
|
|
32,564
|
|
|||
Operating costs
|
7,318
|
|
|
7,639
|
|
|
6,355
|
|
|||
Depreciation and amortization
|
355
|
|
|
333
|
|
|
333
|
|
|||
Total operating expenses
|
51,942
|
|
|
46,138
|
|
|
39,252
|
|
|||
Income from operations
|
2,347
|
|
|
2,362
|
|
|
2,061
|
|
|||
Gain on sale of business
|
270
|
|
|
—
|
|
|
—
|
|
|||
Interest expense
|
186
|
|
|
192
|
|
|
140
|
|
|||
Income before income taxes
|
2,431
|
|
|
2,170
|
|
|
1,921
|
|
|||
Provision for income taxes
|
1,155
|
|
|
1,023
|
|
|
690
|
|
|||
Net income
|
$
|
1,276
|
|
|
$
|
1,147
|
|
|
$
|
1,231
|
|
Basic earnings per common share
|
$
|
8.54
|
|
|
$
|
7.44
|
|
|
$
|
7.81
|
|
Diluted earnings per common share
|
$
|
8.44
|
|
|
$
|
7.36
|
|
|
$
|
7.73
|
|
Dividends declared per common share
|
$
|
1.15
|
|
|
$
|
1.11
|
|
|
$
|
1.07
|
|
|
For the year ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in millions)
|
||||||||||
Net income
|
$
|
1,276
|
|
|
$
|
1,147
|
|
|
$
|
1,231
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||||||
Change in gross unrealized investment gains/losses
|
(114
|
)
|
|
122
|
|
|
(338
|
)
|
|||
Effect of income taxes
|
42
|
|
|
(44
|
)
|
|
124
|
|
|||
Total change in unrealized investment
gains/losses, net of tax |
(72
|
)
|
|
78
|
|
|
(214
|
)
|
|||
Reclassification adjustment for net realized
gains included in investment income |
(146
|
)
|
|
(20
|
)
|
|
(22
|
)
|
|||
Effect of income taxes
|
53
|
|
|
7
|
|
|
8
|
|
|||
Total reclassification adjustment, net of tax
|
(93
|
)
|
|
(13
|
)
|
|
(14
|
)
|
|||
Other comprehensive (loss) income, net of tax
|
(165
|
)
|
|
65
|
|
|
(228
|
)
|
|||
Comprehensive income
|
$
|
1,111
|
|
|
$
|
1,212
|
|
|
$
|
1,003
|
|
|
Common Stock
|
|
Capital In
Excess of
Par Value
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Treasury
Stock
|
|
Total
Stockholders’
Equity
|
|||||||||||||||
|
Issued
Shares
|
|
Amount
|
|
||||||||||||||||||||||
|
(dollars in millions, share amounts in thousands)
|
|||||||||||||||||||||||||
Balances, January 1, 2013
|
194,471
|
|
|
$
|
32
|
|
|
$
|
2,101
|
|
|
$
|
7,881
|
|
|
$
|
386
|
|
|
$
|
(1,553
|
)
|
|
$
|
8,847
|
|
Net income
|
|
|
|
|
|
|
1,231
|
|
|
|
|
|
|
1,231
|
|
|||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
(228
|
)
|
|
|
|
(228
|
)
|
|||||||||||
Common stock repurchases
|
|
|
|
|
|
|
|
|
|
|
(531
|
)
|
|
(531
|
)
|
|||||||||||
Dividends and dividend
equivalents |
|
|
|
|
—
|
|
|
(170
|
)
|
|
|
|
|
|
(170
|
)
|
||||||||||
Stock-based compensation
|
|
|
|
|
92
|
|
|
|
|
|
|
|
|
92
|
|
|||||||||||
Restricted stock unit vesting
|
563
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||
Stock option exercises
|
1,242
|
|
|
1
|
|
|
66
|
|
|
|
|
|
|
|
|
67
|
|
|||||||||
Stock option and restricted
stock tax benefit |
|
|
|
|
8
|
|
|
|
|
|
|
|
|
8
|
|
|||||||||||
Balances, December 31, 2013
|
196,276
|
|
|
33
|
|
|
2,267
|
|
|
8,942
|
|
|
158
|
|
|
(2,084
|
)
|
|
9,316
|
|
||||||
Net income
|
|
|
|
|
|
|
1,147
|
|
|
|
|
|
|
1,147
|
|
|||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
65
|
|
|
|
|
65
|
|
|||||||||||
Common stock repurchases
|
|
|
|
|
(100
|
)
|
|
|
|
|
|
(772
|
)
|
|
(872
|
)
|
||||||||||
Dividends and dividend
equivalents |
|
|
|
|
—
|
|
|
(173
|
)
|
|
|
|
|
|
(173
|
)
|
||||||||||
Stock-based compensation
|
|
|
|
|
98
|
|
|
|
|
|
|
|
|
98
|
|
|||||||||||
Restricted stock unit vesting
|
966
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||
Stock option exercises
|
710
|
|
|
—
|
|
|
52
|
|
|
|
|
|
|
|
|
52
|
|
|||||||||
Stock option and restricted
stock tax benefit |
|
|
|
|
13
|
|
|
|
|
|
|
|
|
13
|
|
|||||||||||
Balances, December 31, 2014
|
197,952
|
|
|
33
|
|
|
2,330
|
|
|
9,916
|
|
|
223
|
|
|
(2,856
|
)
|
|
9,646
|
|
||||||
Net income
|
|
|
|
|
|
|
1,276
|
|
|
|
|
|
|
1,276
|
|
|||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
(165
|
)
|
|
|
|
(165
|
)
|
|||||||||||
Common stock repurchases
|
|
|
|
|
100
|
|
|
|
|
|
|
(485
|
)
|
|
(385
|
)
|
||||||||||
Dividends and dividend
equivalents |
|
|
|
|
—
|
|
|
(175
|
)
|
|
|
|
|
|
(175
|
)
|
||||||||||
Stock-based compensation
|
|
|
|
|
109
|
|
|
|
|
|
|
|
|
109
|
|
|||||||||||
Restricted stock unit vesting
|
159
|
|
|
—
|
|
|
(49
|
)
|
|
|
|
|
|
49
|
|
|
—
|
|
||||||||
Stock option exercises
|
261
|
|
|
—
|
|
|
23
|
|
|
|
|
|
|
|
|
23
|
|
|||||||||
Stock option and restricted
stock tax benefit |
|
|
|
|
17
|
|
|
|
|
|
|
|
|
17
|
|
|||||||||||
Balances, December 31, 2015
|
198,372
|
|
|
$
|
33
|
|
|
$
|
2,530
|
|
|
$
|
11,017
|
|
|
$
|
58
|
|
|
$
|
(3,292
|
)
|
|
$
|
10,346
|
|
|
For the year ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in millions)
|
||||||||||
Cash flows from operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
1,276
|
|
|
$
|
1,147
|
|
|
$
|
1,231
|
|
Adjustments to reconcile net income to net cash
provided by operating activities: |
|
|
|
|
|
||||||
Gain on sale of business
|
(270
|
)
|
|
—
|
|
|
—
|
|
|||
Depreciation
|
354
|
|
|
328
|
|
|
309
|
|
|||
Amortization
|
93
|
|
|
121
|
|
|
117
|
|
|||
Stock-based compensation
|
109
|
|
|
98
|
|
|
92
|
|
|||
Net realized capital gains
|
(146
|
)
|
|
(20
|
)
|
|
(22
|
)
|
|||
(Benefit) provision for deferred income taxes
|
(2
|
)
|
|
(64
|
)
|
|
42
|
|
|||
Provision for doubtful accounts
|
61
|
|
|
32
|
|
|
37
|
|
|||
Changes in operating assets and liabilities, net of
effect of businesses acquired and dispositions: |
|
|
|
|
|
||||||
Receivables
|
(180
|
)
|
|
(264
|
)
|
|
(251
|
)
|
|||
Other assets
|
(872
|
)
|
|
(952
|
)
|
|
(330
|
)
|
|||
Benefits payable
|
501
|
|
|
582
|
|
|
109
|
|
|||
Other liabilities
|
(129
|
)
|
|
413
|
|
|
313
|
|
|||
Unearned revenues
|
3
|
|
|
155
|
|
|
(24
|
)
|
|||
Other
|
70
|
|
|
42
|
|
|
93
|
|
|||
Net cash provided by operating activities
|
868
|
|
|
1,618
|
|
|
1,716
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Acquisitions, net of cash acquired
|
(38
|
)
|
|
(18
|
)
|
|
(187
|
)
|
|||
Proceeds from sale of business
|
1,061
|
|
|
72
|
|
|
34
|
|
|||
Purchases of property and equipment
|
(523
|
)
|
|
(528
|
)
|
|
(441
|
)
|
|||
Proceeds from sales of property and equipment
|
1
|
|
|
—
|
|
|
4
|
|
|||
Purchases of investment securities
|
(6,739
|
)
|
|
(2,883
|
)
|
|
(3,261
|
)
|
|||
Maturities of investment securities
|
1,065
|
|
|
885
|
|
|
1,077
|
|
|||
Proceeds from sales of investment securities
|
5,493
|
|
|
2,409
|
|
|
1,592
|
|
|||
Net cash provided by (used in) investing activities
|
320
|
|
|
(63
|
)
|
|
(1,182
|
)
|
|||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Receipts (withdrawals) from contract deposits, net
|
(296
|
)
|
|
(919
|
)
|
|
(150
|
)
|
|||
Proceeds from issuance of senior notes, net
|
—
|
|
|
1,733
|
|
|
—
|
|
|||
Proceeds from issuance of commercial paper, net
|
298
|
|
|
—
|
|
|
—
|
|
|||
Repayment of long-term debt
|
—
|
|
|
(500
|
)
|
|
—
|
|
|||
Common stock repurchases
|
(385
|
)
|
|
(872
|
)
|
|
(531
|
)
|
|||
Dividends paid
|
(172
|
)
|
|
(172
|
)
|
|
(168
|
)
|
|||
Excess tax benefit from stock-based compensation
|
15
|
|
|
12
|
|
|
8
|
|
|||
Change in book overdraft
|
(33
|
)
|
|
(69
|
)
|
|
79
|
|
|||
Proceeds from stock option exercises and other, net
|
21
|
|
|
29
|
|
|
60
|
|
|||
Net cash used in financing activities
|
(552
|
)
|
|
(758
|
)
|
|
(702
|
)
|
|||
Increase (decrease) in cash and cash equivalents
|
636
|
|
|
797
|
|
|
(168
|
)
|
|||
Cash and cash equivalents at beginning of year
|
1,935
|
|
|
1,138
|
|
|
1,306
|
|
|||
Cash and cash equivalents at end of year
|
$
|
2,571
|
|
|
$
|
1,935
|
|
|
$
|
1,138
|
|
Supplemental cash flow disclosures:
|
|
|
|
|
|
||||||
Interest payments
|
$
|
187
|
|
|
$
|
143
|
|
|
$
|
146
|
|
Income tax payments, net
|
$
|
1,179
|
|
|
$
|
1,030
|
|
|
$
|
734
|
|
Details of businesses acquired in purchase transactions:
|
|
|
|
|
|
||||||
Fair value of assets acquired, net of cash acquired
|
$
|
38
|
|
|
$
|
18
|
|
|
$
|
196
|
|
Less: Fair value of liabilities assumed
|
—
|
|
|
—
|
|
|
(9
|
)
|
|||
Cash paid for acquired businesses, net of cash acquired
|
$
|
38
|
|
|
$
|
18
|
|
|
$
|
187
|
|
|
June 1, 2015
|
|
December 31, 2014
|
||||
Assets
|
(in millions)
|
||||||
Receivables, net
|
$
|
130
|
|
|
$
|
115
|
|
Property and equipment, net
|
197
|
|
|
191
|
|
||
Goodwill
|
480
|
|
|
480
|
|
||
Other intangible assets, net
|
124
|
|
|
132
|
|
||
Other assets
|
27
|
|
|
25
|
|
||
Total assets disposed/held-for-sale
|
$
|
958
|
|
|
$
|
943
|
|
Liabilities
|
|
|
|
||||
Trade accounts payable and accrued expenses
|
81
|
|
|
90
|
|
||
Other liabilities
|
114
|
|
|
116
|
|
||
Total liabilities disposed/held-for-sale
|
$
|
195
|
|
|
$
|
206
|
|
Net assets disposed
|
$
|
763
|
|
|
$
|
737
|
|
|
Amortized
Cost |
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Fair
Value |
||||||||
|
(in millions)
|
||||||||||||||
December 31, 2015
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and other U.S. government
corporations and agencies: |
|
|
|
|
|
|
|
||||||||
U.S. Treasury and agency obligations
|
$
|
331
|
|
|
$
|
2
|
|
|
$
|
(1
|
)
|
|
$
|
332
|
|
Mortgage-backed securities
|
1,902
|
|
|
12
|
|
|
(23
|
)
|
|
1,891
|
|
||||
Tax-exempt municipal securities
|
2,611
|
|
|
61
|
|
|
(4
|
)
|
|
2,668
|
|
||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
||||||||
Residential
|
13
|
|
|
—
|
|
|
—
|
|
|
13
|
|
||||
Commercial
|
1,024
|
|
|
2
|
|
|
(41
|
)
|
|
985
|
|
||||
Asset-backed securities
|
264
|
|
|
1
|
|
|
(2
|
)
|
|
263
|
|
||||
Corporate debt securities
|
2,873
|
|
|
140
|
|
|
(55
|
)
|
|
2,958
|
|
||||
Total debt securities
|
$
|
9,018
|
|
|
$
|
218
|
|
|
$
|
(126
|
)
|
|
$
|
9,110
|
|
December 31, 2014
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and other U.S. government
corporations and agencies: |
|
|
|
|
|
|
|
||||||||
U.S. Treasury and agency obligations
|
$
|
365
|
|
|
$
|
10
|
|
|
$
|
(1
|
)
|
|
$
|
374
|
|
Mortgage-backed securities
|
1,453
|
|
|
50
|
|
|
(5
|
)
|
|
1,498
|
|
||||
Tax-exempt municipal securities
|
2,931
|
|
|
140
|
|
|
(3
|
)
|
|
3,068
|
|
||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
||||||||
Residential
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
||||
Commercial
|
846
|
|
|
16
|
|
|
(19
|
)
|
|
843
|
|
||||
Asset-backed securities
|
28
|
|
|
1
|
|
|
—
|
|
|
29
|
|
||||
Corporate debt securities
|
3,432
|
|
|
299
|
|
|
(13
|
)
|
|
3,718
|
|
||||
Total debt securities
|
$
|
9,072
|
|
|
$
|
516
|
|
|
$
|
(41
|
)
|
|
$
|
9,547
|
|
|
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)
|
|||||||||||||||||||||||
December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
U.S. Treasury and other U.S. government
corporations and agencies: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
U.S. Treasury and agency obligations
|
$
|
195
|
|
|
$
|
(1
|
)
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
209
|
|
|
$
|
(1
|
)
|
|
Mortgage-backed securities
|
1,484
|
|
|
(20
|
)
|
|
86
|
|
|
(3
|
)
|
|
1,570
|
|
|
(23
|
)
|
|||||||
Tax-exempt municipal securities
|
843
|
|
|
(3
|
)
|
|
52
|
|
|
(1
|
)
|
|
895
|
|
|
(4
|
)
|
|||||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Residential
|
2
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|||||||
Commercial
|
626
|
|
|
(13
|
)
|
|
265
|
|
|
(28
|
)
|
|
891
|
|
|
(41
|
)
|
|||||||
Asset-backed securities
|
258
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
258
|
|
|
(2
|
)
|
|||||||
Corporate debt securities
|
918
|
|
|
(45
|
)
|
|
63
|
|
|
(10
|
)
|
|
981
|
|
|
(55
|
)
|
|||||||
Total debt securities
|
$
|
4,326
|
|
|
$
|
(84
|
)
|
|
$
|
484
|
|
|
$
|
(42
|
)
|
|
$
|
4,810
|
|
|
$
|
(126
|
)
|
|
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
U.S. Treasury and other U.S. government
corporations and agencies: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
U.S. Treasury and agency obligations
|
$
|
79
|
|
|
$
|
—
|
|
|
$
|
80
|
|
|
$
|
(1
|
)
|
|
$
|
159
|
|
|
$
|
(1
|
)
|
|
Mortgage-backed securities
|
22
|
|
|
—
|
|
|
320
|
|
|
(5
|
)
|
|
342
|
|
|
(5
|
)
|
|||||||
Tax-exempt municipal securities
|
131
|
|
|
(1
|
)
|
|
118
|
|
|
(2
|
)
|
|
249
|
|
|
(3
|
)
|
|||||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Residential
|
1
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|||||||
Commercial
|
31
|
|
|
(1
|
)
|
|
267
|
|
|
(18
|
)
|
|
298
|
|
|
(19
|
)
|
|||||||
Asset-backed securities
|
13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|||||||
Corporate debt securities
|
219
|
|
|
(6
|
)
|
|
128
|
|
|
(7
|
)
|
|
347
|
|
|
(13
|
)
|
|||||||
Total debt securities
|
$
|
496
|
|
|
$
|
(8
|
)
|
|
$
|
917
|
|
|
$
|
(33
|
)
|
|
$
|
1,413
|
|
|
$
|
(41
|
)
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in millions)
|
||||||||||
Gross realized gains
|
$
|
179
|
|
|
$
|
29
|
|
|
$
|
33
|
|
Gross realized losses
|
(33
|
)
|
|
(9
|
)
|
|
(11
|
)
|
|||
Net realized capital gains
|
$
|
146
|
|
|
$
|
20
|
|
|
$
|
22
|
|
|
Amortized
Cost |
|
Fair
Value |
||||
|
(in millions)
|
||||||
Due within one year
|
$
|
438
|
|
|
$
|
439
|
|
Due after one year through five years
|
1,829
|
|
|
1,871
|
|
||
Due after five years through ten years
|
1,244
|
|
|
1,264
|
|
||
Due after ten years
|
2,304
|
|
|
2,384
|
|
||
Mortgage and asset-backed securities
|
3,203
|
|
|
3,152
|
|
||
Total debt securities
|
$
|
9,018
|
|
|
$
|
9,110
|
|
|
|
|
Fair Value Measurements Using
|
||||||||||||
|
Fair Value
|
|
Quoted Prices
in Active Markets (Level 1) |
|
Other
Observable Inputs (Level 2) |
|
Unobservable
Inputs (Level 3) |
||||||||
|
(in millions)
|
||||||||||||||
December 31, 2015
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
2,229
|
|
|
$
|
2,229
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Debt securities:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and other U.S. government corporations and agencies:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and agency obligations
|
332
|
|
|
—
|
|
|
332
|
|
|
—
|
|
||||
Mortgage-backed securities
|
1,891
|
|
|
—
|
|
|
1,891
|
|
|
—
|
|
||||
Tax-exempt municipal securities
|
2,668
|
|
|
—
|
|
|
2,663
|
|
|
5
|
|
||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
||||||||
Residential
|
13
|
|
|
—
|
|
|
13
|
|
|
—
|
|
||||
Commercial
|
985
|
|
|
—
|
|
|
985
|
|
|
—
|
|
||||
Asset-backed securities
|
263
|
|
|
—
|
|
|
263
|
|
|
—
|
|
||||
Corporate debt securities
|
2,958
|
|
|
—
|
|
|
2,952
|
|
|
6
|
|
||||
Total debt securities
|
9,110
|
|
|
—
|
|
|
9,099
|
|
|
11
|
|
||||
Total invested assets
|
$
|
11,339
|
|
|
$
|
2,229
|
|
|
$
|
9,099
|
|
|
$
|
11
|
|
December 31, 2014
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
1,712
|
|
|
$
|
1,712
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Debt securities:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and other U.S. government corporations and agencies:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and agency obligations
|
374
|
|
|
—
|
|
|
374
|
|
|
—
|
|
||||
Mortgage-backed securities
|
1,498
|
|
|
—
|
|
|
1,498
|
|
|
—
|
|
||||
Tax-exempt municipal securities
|
3,068
|
|
|
—
|
|
|
3,060
|
|
|
8
|
|
||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
||||||||
Residential
|
17
|
|
|
—
|
|
|
17
|
|
|
—
|
|
||||
Commercial
|
843
|
|
|
—
|
|
|
843
|
|
|
—
|
|
||||
Asset-backed securities
|
29
|
|
|
—
|
|
|
28
|
|
|
1
|
|
||||
Corporate debt securities
|
3,718
|
|
|
—
|
|
|
3,695
|
|
|
23
|
|
||||
Total debt securities
|
9,547
|
|
|
—
|
|
|
9,515
|
|
|
32
|
|
||||
Total invested assets
|
$
|
11,259
|
|
|
$
|
1,712
|
|
|
$
|
9,515
|
|
|
$
|
32
|
|
|
For the years ended December 31,
|
||||||||||||||||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||||||||||||||||||||||||||
|
Private
Placements |
|
Auction
Rate Securities |
|
Total
|
|
Private
Placements |
|
Auction
Rate Securities |
|
Total
|
|
Private
Placements |
|
Auction
Rate Securities |
|
Total
|
||||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||||||
Beginning balance at January 1
|
$
|
24
|
|
|
$
|
8
|
|
|
$
|
32
|
|
|
$
|
24
|
|
|
$
|
13
|
|
|
$
|
37
|
|
|
$
|
25
|
|
|
$
|
13
|
|
|
$
|
38
|
|
Total gains or losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Realized in earnings
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Unrealized in other
comprehensive income |
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Purchases
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Sales
|
(17
|
)
|
|
(3
|
)
|
|
(20
|
)
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Settlements
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||||||
Balance at December 31
|
$
|
6
|
|
|
$
|
5
|
|
|
$
|
11
|
|
|
$
|
24
|
|
|
$
|
8
|
|
|
$
|
32
|
|
|
$
|
24
|
|
|
$
|
13
|
|
|
$
|
37
|
|
|
|
2015
|
|
2014
|
||||||||||||
|
|
Risk
Corridor Settlement |
|
CMS
Subsidies/ Discounts |
|
Risk
Corridor Settlement |
|
CMS
Subsidies/ Discounts |
||||||||
|
|
(in millions)
|
||||||||||||||
Other current assets
|
|
$
|
25
|
|
|
$
|
2,082
|
|
|
$
|
105
|
|
|
$
|
1,690
|
|
Trade accounts payable and accrued expenses
|
|
(47
|
)
|
|
(63
|
)
|
|
(36
|
)
|
|
(32
|
)
|
||||
Net current (liability) asset
|
|
$
|
(22
|
)
|
|
$
|
2,019
|
|
|
$
|
69
|
|
|
$
|
1,658
|
|
|
2015
|
|
2014
|
||||||||||||||||||||||||
|
Risk Adjustment
Settlement |
|
Reinsurance
Recoverables |
|
Risk
Corridor Settlement |
|
Risk Adjustment
Settlement |
|
Reinsurance
Recoverables |
|
Risk
Corridor Settlement |
||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
2014 Coverage Year
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Premiums receivable
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
131
|
|
|
$
|
—
|
|
|
$
|
—
|
|
||||
Other current assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
586
|
|
|
55
|
|
||||||||||
Trade accounts payable and
accrued expenses |
—
|
|
|
—
|
|
|
—
|
|
|
(89
|
)
|
|
—
|
|
|
(4
|
)
|
||||||||||
Net current asset
|
4
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
586
|
|
|
51
|
|
||||||||||
Other long-term assets
|
—
|
|
|
—
|
|
|
215
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Other long-term liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Net long-term asset
|
—
|
|
|
—
|
|
|
215
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Total 2014 coverage year net asset
|
4
|
|
|
—
|
|
|
215
|
|
|
42
|
|
|
586
|
|
|
51
|
|
||||||||||
2015 Coverage Year
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Premiums receivable
|
122
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Other current assets
|
—
|
|
|
610
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Trade accounts payable and
accrued expenses |
(223
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Net current (liability) asset
|
(101
|
)
|
|
610
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Other long-term assets
|
10
|
|
|
—
|
|
|
244
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Other long-term liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Net long-term asset
|
10
|
|
|
—
|
|
|
244
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Total 2015 coverage year net (liability) asset
|
(91
|
)
|
|
610
|
|
|
244
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Total net (liability) asset
|
$
|
(87
|
)
|
|
$
|
610
|
|
|
$
|
459
|
|
|
$
|
42
|
|
|
$
|
586
|
|
|
$
|
51
|
|
|
|
2015
|
|
2014
|
||||
|
|
(in millions)
|
||||||
Land
|
|
$
|
20
|
|
|
$
|
18
|
|
Buildings and leasehold improvements
|
|
633
|
|
|
602
|
|
||
Equipment
|
|
645
|
|
|
631
|
|
||
Computer software
|
|
1,424
|
|
|
1,656
|
|
||
|
|
2,722
|
|
|
2,907
|
|
||
Accumulated depreciation
|
|
(1,338
|
)
|
|
(1,679
|
)
|
||
Property and equipment, net
|
|
$
|
1,384
|
|
|
$
|
1,228
|
|
|
|
Retail
|
|
Group
|
|
Healthcare Services
|
|
Total
|
||||||||
|
|
(in millions)
|
||||||||||||||
Balance at January 1, 2014
|
|
$
|
1,069
|
|
|
$
|
385
|
|
|
$
|
1,799
|
|
|
$
|
3,253
|
|
Acquisitions
|
|
—
|
|
|
—
|
|
|
19
|
|
|
19
|
|
||||
Dispositions
|
|
—
|
|
|
—
|
|
|
(40
|
)
|
|
(40
|
)
|
||||
Subsequent payments/adjustments
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||
Balance at December 31, 2014
|
|
1,069
|
|
|
385
|
|
|
1,777
|
|
|
3,231
|
|
||||
Acquisitions
|
|
—
|
|
|
—
|
|
|
35
|
|
|
35
|
|
||||
Dispositions
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||
Balance at December 31, 2015
|
|
$
|
1,069
|
|
|
$
|
385
|
|
|
$
|
1,811
|
|
|
$
|
3,265
|
|
|
|
Weighted
Average Life |
|
2015
|
|
2014
|
||||||||||||||||||||
|
|
Cost
|
|
Accumulated
Amortization |
|
Net
|
|
Cost
|
|
Accumulated
Amortization |
|
Net
|
||||||||||||||
|
|
|
|
(in millions)
|
||||||||||||||||||||||
Other intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer contracts/relationships
|
|
9.8 years
|
|
$
|
566
|
|
|
$
|
292
|
|
|
$
|
274
|
|
|
$
|
657
|
|
|
$
|
326
|
|
|
$
|
331
|
|
Trade names and technology
|
|
8.3 years
|
|
104
|
|
|
54
|
|
|
50
|
|
|
115
|
|
|
50
|
|
|
65
|
|
||||||
Provider contracts
|
|
14.6 years
|
|
51
|
|
|
24
|
|
|
27
|
|
|
52
|
|
|
21
|
|
|
31
|
|
||||||
Noncompetes and other
|
|
8.2 years
|
|
32
|
|
|
26
|
|
|
6
|
|
|
41
|
|
|
28
|
|
|
13
|
|
||||||
Total other intangible assets
|
|
9.8 years
|
|
$
|
753
|
|
|
$
|
396
|
|
|
$
|
357
|
|
|
$
|
865
|
|
|
$
|
425
|
|
|
$
|
440
|
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
|
(in millions)
|
||||||||||
Balances at January 1
|
|
$
|
4,475
|
|
|
$
|
3,893
|
|
|
$
|
3,775
|
|
Less: Reinsurance recoverables
|
|
(78
|
)
|
|
—
|
|
|
—
|
|
|||
Balances at January 1, net
|
|
4,397
|
|
|
3,893
|
|
|
3,775
|
|
|||
Acquisitions
|
|
—
|
|
|
—
|
|
|
5
|
|
|||
Incurred related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
44,397
|
|
|
38,641
|
|
|
32,711
|
|
|||
Prior years
|
|
(236
|
)
|
|
(518
|
)
|
|
(474
|
)
|
|||
Total incurred
|
|
44,161
|
|
|
38,123
|
|
|
32,237
|
|
|||
Paid related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
(39,802
|
)
|
|
(34,357
|
)
|
|
(29,103
|
)
|
|||
Prior years
|
|
(4,041
|
)
|
|
(3,262
|
)
|
|
(3,021
|
)
|
|||
Total paid
|
|
(43,843
|
)
|
|
(37,619
|
)
|
|
(32,124
|
)
|
|||
Premium deficiency reserve
|
|
176
|
|
|
—
|
|
|
—
|
|
|||
Reinsurance recoverable
|
|
85
|
|
|
78
|
|
|
—
|
|
|||
Balances at December 31
|
|
$
|
4,976
|
|
|
$
|
4,475
|
|
|
$
|
3,893
|
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
|
(in millions)
|
||||||||||
Premium deficiency reserve for short-duration policies
|
|
$
|
176
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Military services
|
|
12
|
|
|
11
|
|
|
(27
|
)
|
|||
Future policy benefits
|
|
(80
|
)
|
|
32
|
|
|
354
|
|
|||
Total
|
|
$
|
108
|
|
|
$
|
43
|
|
|
$
|
327
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in millions)
|
||||||||||
Current provision:
|
|
|
|
|
|
||||||
Federal
|
$
|
1,067
|
|
|
$
|
1,006
|
|
|
$
|
595
|
|
States and Puerto Rico
|
90
|
|
|
81
|
|
|
53
|
|
|||
Total current provision
|
1,157
|
|
|
1,087
|
|
|
648
|
|
|||
Deferred (benefit) provision
|
(2
|
)
|
|
(64
|
)
|
|
42
|
|
|||
Provision for income taxes
|
$
|
1,155
|
|
|
$
|
1,023
|
|
|
$
|
690
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in millions)
|
||||||||||
Income tax provision at federal statutory rate
|
$
|
851
|
|
|
$
|
759
|
|
|
$
|
672
|
|
States, net of federal benefit, and Puerto Rico
|
44
|
|
|
48
|
|
|
32
|
|
|||
Tax exempt investment income
|
(24
|
)
|
|
(27
|
)
|
|
(26
|
)
|
|||
Health insurer fee
|
314
|
|
|
204
|
|
|
—
|
|
|||
Nondeductible executive compensation
|
18
|
|
|
22
|
|
|
6
|
|
|||
Concentra sale
|
(67
|
)
|
|
—
|
|
|
—
|
|
|||
Other, net
|
19
|
|
|
17
|
|
|
6
|
|
|||
Provision for income taxes
|
$
|
1,155
|
|
|
$
|
1,023
|
|
|
$
|
690
|
|
|
Assets (Liabilities)
|
||||||
|
2015
|
|
2014
|
||||
|
(in millions)
|
||||||
Future policy benefits payable
|
$
|
200
|
|
|
$
|
320
|
|
Compensation and other accrued expenses
|
130
|
|
|
168
|
|
||
Benefits payable
|
267
|
|
|
138
|
|
||
Net operating loss carryforward
|
47
|
|
|
52
|
|
||
Deferred acquisition costs
|
64
|
|
|
57
|
|
||
Unearned revenues
|
22
|
|
|
21
|
|
||
Other
|
13
|
|
|
17
|
|
||
Total deferred income tax assets
|
743
|
|
|
773
|
|
||
Valuation allowance
|
(42
|
)
|
|
(48
|
)
|
||
Total deferred income tax assets, net of valuation allowance
|
701
|
|
|
725
|
|
||
Depreciable property and intangible assets
|
(363
|
)
|
|
(346
|
)
|
||
Investment securities
|
(37
|
)
|
|
(168
|
)
|
||
Prepaid expenses
|
(45
|
)
|
|
(55
|
)
|
||
Total deferred income tax liabilities
|
(445
|
)
|
|
(569
|
)
|
||
Total net deferred income tax assets
|
$
|
256
|
|
|
$
|
156
|
|
Amounts recognized in the consolidated balance sheets:
|
|
|
|
||||
Other current assets
|
$
|
—
|
|
|
$
|
79
|
|
Other long-term assets
|
256
|
|
|
77
|
|
||
Total net deferred income tax assets
|
$
|
256
|
|
|
$
|
156
|
|
|
2015
|
|
2014
|
||||
|
(in millions)
|
||||||
Long-term debt:
|
|
||||||
Senior notes:
|
|
||||||
$500 million, 7.20% due June 15, 2018
|
$
|
503
|
|
|
$
|
504
|
|
$300 million, 6.30% due August 1, 2018
|
309
|
|
|
312
|
|
||
$400 million, 2.625% due October 1, 2019
|
400
|
|
|
400
|
|
||
$600 million, 3.15% due December 1, 2022
|
598
|
|
|
598
|
|
||
$600 million, 3.85% due October 1, 2024
|
599
|
|
|
599
|
|
||
$250 million, 8.15% due June 15, 2038
|
266
|
|
|
266
|
|
||
$400 million, 4.625% due December 1, 2042
|
400
|
|
|
400
|
|
||
$750 million, 4.95% due October 1, 2044
|
746
|
|
|
746
|
|
||
Total long-term debt
|
$
|
3,821
|
|
|
$
|
3,825
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in millions)
|
||||||||||
Stock-based compensation expense by type:
|
|
|
|
|
|
||||||
Restricted stock
|
$
|
99
|
|
|
$
|
91
|
|
|
$
|
84
|
|
Stock options
|
10
|
|
|
7
|
|
|
8
|
|
|||
Total stock-based compensation expense
|
109
|
|
|
98
|
|
|
92
|
|
|||
Tax benefit recognized
|
(26
|
)
|
|
(22
|
)
|
|
(22
|
)
|
|||
Stock-based compensation expense, net of tax
|
$
|
83
|
|
|
$
|
76
|
|
|
$
|
70
|
|
|
Shares
|
|
Weighted-
Average Grant-Date Fair Value |
|||
|
(shares in thousands)
|
|||||
Nonvested restricted stock at December 31, 2014
|
3,635
|
|
|
$
|
85.52
|
|
Granted
|
837
|
|
|
165.26
|
|
|
Vested
|
(919
|
)
|
|
84.95
|
|
|
Forfeited
|
(188
|
)
|
|
98.92
|
|
|
Nonvested restricted stock at December 31, 2015
|
3,365
|
|
|
$
|
104.58
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Weighted-average fair value at grant date
|
$
|
36.91
|
|
|
$
|
22.45
|
|
|
$
|
21.80
|
|
Expected option life (years)
|
4.2 years
|
|
|
4.3 years
|
|
|
4.4 years
|
|
|||
Expected volatility
|
27.4
|
%
|
|
27.6
|
%
|
|
38.8
|
%
|
|||
Risk-free interest rate at grant date
|
1.4
|
%
|
|
1.3
|
%
|
|
0.8
|
%
|
|||
Dividend yield
|
0.7
|
%
|
|
1.1
|
%
|
|
1.5
|
%
|
|
Shares Under
Option |
|
Weighted-Average
Exercise Price |
|||
|
(shares in thousands)
|
|||||
Options outstanding at December 31, 2014
|
768
|
|
|
$
|
82.45
|
|
Granted
|
377
|
|
|
164.80
|
|
|
Exercised
|
(304
|
)
|
|
76.25
|
|
|
Forfeited
|
(6
|
)
|
|
83.58
|
|
|
Options outstanding at December 31, 2015
|
835
|
|
|
$
|
121.89
|
|
Options exercisable at December 31, 2015
|
203
|
|
|
$
|
78.30
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
(dollars in millions, except per
common share results, number of shares/options in thousands) |
||||||||||
Net income available for common stockholders
|
$
|
1,276
|
|
|
$
|
1,147
|
|
|
$
|
1,231
|
|
Weighted-average outstanding shares of common stock used to
compute basic earnings per common share |
149,455
|
|
|
154,187
|
|
|
157,503
|
|
|||
Dilutive effect of:
|
|
|
|
|
|
||||||
Employee stock options
|
192
|
|
|
230
|
|
|
322
|
|
|||
Restricted stock
|
1,495
|
|
|
1,457
|
|
|
1,326
|
|
|||
Shares used to compute diluted earnings per common share
|
151,142
|
|
|
155,874
|
|
|
159,151
|
|
|||
Basic earnings per common share
|
$
|
8.54
|
|
|
$
|
7.44
|
|
|
$
|
7.81
|
|
Diluted earnings per common share
|
$
|
8.44
|
|
|
$
|
7.36
|
|
|
$
|
7.73
|
|
Number of antidilutive stock options and restricted stock awards
excluded from computation |
415
|
|
|
320
|
|
|
704
|
|
Payment
Date |
|
Amount
per Share |
|
Total
Amount |
|
|
|
|
(in millions)
|
2013
|
|
$1.06
|
|
$167
|
2014
|
|
$1.10
|
|
$170
|
2015
|
|
$1.14
|
|
$170
|
|
|
|
|
Year Ended December 31,
|
|||||||||||||||||||||
|
|
|
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||||
Authorization Date
|
|
Purchase Not to Exceed
|
|
Shares
|
|
Cost
|
|
Shares
|
|
Cost
|
|
Shares
|
|
Cost
|
|||||||||||
|
|
(in millions)
|
|||||||||||||||||||||||
September 2014
|
|
$
|
2,000
|
|
|
1.85
|
|
|
$
|
329
|
|
|
4.10
|
|
|
$
|
635
|
|
(a)
|
—
|
|
|
$
|
—
|
|
April 2014
|
|
1,000
|
|
|
—
|
|
|
—
|
|
|
1.50
|
|
|
184
|
|
|
—
|
|
|
—
|
|
||||
April 2013
|
|
1,000
|
|
|
—
|
|
|
—
|
|
|
0.10
|
|
|
11
|
|
|
4.55
|
|
|
420
|
|
||||
April 2012
|
|
1,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.22
|
|
|
82
|
|
||||
Total repurchases
|
|
|
|
1.85
|
|
|
$
|
329
|
|
|
5.70
|
|
|
$
|
830
|
|
|
5.77
|
|
|
$
|
502
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in millions)
|
||||||||||
Rent expense
|
$
|
201
|
|
|
$
|
226
|
|
|
$
|
227
|
|
Sublease rental income
|
(25
|
)
|
|
(14
|
)
|
|
(11
|
)
|
|||
Net rent expense
|
$
|
176
|
|
|
$
|
212
|
|
|
$
|
216
|
|
|
Minimum
Lease Payments |
|
Sublease
Rental Receipts |
|
Net Lease
Commitments |
||||||
|
(in millions)
|
||||||||||
For the years ending December 31,:
|
|
|
|
|
|
||||||
2016
|
$
|
173
|
|
|
$
|
(16
|
)
|
|
$
|
157
|
|
2017
|
159
|
|
|
(16
|
)
|
|
143
|
|
|||
2018
|
127
|
|
|
(14
|
)
|
|
113
|
|
|||
2019
|
94
|
|
|
(11
|
)
|
|
83
|
|
|||
2020
|
54
|
|
|
(7
|
)
|
|
47
|
|
|||
Thereafter
|
90
|
|
|
(45
|
)
|
|
45
|
|
|||
Total
|
$
|
697
|
|
|
$
|
(109
|
)
|
|
$
|
588
|
|
|
Retail
|
|
Group
|
|
Healthcare Services
|
|
Other Businesses
|
|
Eliminations/
Corporate |
|
Consolidated
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenues—external customers
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Premiums:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Individual Medicare Advantage
|
$
|
29,526
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29,526
|
|
Group Medicare Advantage
|
5,588
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,588
|
|
||||||
Medicare stand-alone PDP
|
3,846
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,846
|
|
||||||
Total Medicare
|
38,960
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38,960
|
|
||||||
Fully-insured
|
4,243
|
|
|
5,493
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,736
|
|
||||||
Specialty
|
261
|
|
|
1,055
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,316
|
|
||||||
Medicaid and other
|
2,341
|
|
|
21
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
2,397
|
|
||||||
Total premiums
|
45,805
|
|
|
6,569
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
52,409
|
|
||||||
Services revenue:
|
|
|
|
|
|
|
|
||||||||||||||||
Provider
|
—
|
|
|
40
|
|
|
655
|
|
|
—
|
|
|
—
|
|
|
695
|
|
||||||
ASO and other
|
9
|
|
|
658
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
681
|
|
||||||
Pharmacy
|
—
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
30
|
|
||||||
Total services revenue
|
9
|
|
|
698
|
|
|
685
|
|
|
14
|
|
|
—
|
|
|
1,406
|
|
||||||
Total revenues—external customers
|
45,814
|
|
|
7,267
|
|
|
685
|
|
|
49
|
|
|
—
|
|
|
53,815
|
|
||||||
Intersegment revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Services
|
—
|
|
|
93
|
|
|
17,997
|
|
|
—
|
|
|
(18,090
|
)
|
|
—
|
|
||||||
Products
|
—
|
|
|
—
|
|
|
4,923
|
|
|
—
|
|
|
(4,923
|
)
|
|
—
|
|
||||||
Total intersegment revenues
|
—
|
|
|
93
|
|
|
22,920
|
|
|
—
|
|
|
(23,013
|
)
|
|
—
|
|
||||||
Investment income
|
134
|
|
|
26
|
|
|
—
|
|
|
76
|
|
|
238
|
|
|
474
|
|
||||||
Total revenues
|
45,948
|
|
|
7,386
|
|
|
23,605
|
|
|
125
|
|
|
(22,775
|
)
|
|
54,289
|
|
||||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||||||||||
Benefits
|
39,708
|
|
|
5,266
|
|
|
—
|
|
|
87
|
|
|
(792
|
)
|
|
44,269
|
|
||||||
Operating costs
|
5,118
|
|
|
1,769
|
|
|
22,481
|
|
|
14
|
|
|
(22,064
|
)
|
|
7,318
|
|
||||||
Depreciation and amortization
|
192
|
|
|
93
|
|
|
143
|
|
|
—
|
|
|
(73
|
)
|
|
355
|
|
||||||
Total operating expenses
|
45,018
|
|
|
7,128
|
|
|
22,624
|
|
|
101
|
|
|
(22,929
|
)
|
|
51,942
|
|
||||||
Income from operations
|
930
|
|
|
258
|
|
|
981
|
|
|
24
|
|
|
154
|
|
|
2,347
|
|
||||||
Gain on sale of business
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
270
|
|
|
270
|
|
||||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
186
|
|
|
186
|
|
||||||
Income before income taxes
|
$
|
930
|
|
|
$
|
258
|
|
|
$
|
981
|
|
|
$
|
24
|
|
|
$
|
238
|
|
|
$
|
2,431
|
|
|
Retail
|
|
Group
|
|
Healthcare Services
|
|
Other Businesses
|
|
Eliminations/
Corporate |
|
Consolidated
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenues—external customers
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Premiums:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Individual Medicare Advantage
|
$
|
25,782
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25,782
|
|
Group Medicare Advantage
|
5,490
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,490
|
|
||||||
Medicare stand-alone PDP
|
3,404
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,404
|
|
||||||
Total Medicare
|
34,676
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,676
|
|
||||||
Fully-insured
|
3,265
|
|
|
5,339
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,604
|
|
||||||
Specialty
|
256
|
|
|
1,098
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,354
|
|
||||||
Medicaid and other
|
1,255
|
|
|
19
|
|
|
—
|
|
|
51
|
|
|
—
|
|
|
1,325
|
|
||||||
Total premiums
|
39,452
|
|
|
6,456
|
|
|
—
|
|
|
51
|
|
|
—
|
|
|
45,959
|
|
||||||
Services revenue:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Provider
|
—
|
|
|
23
|
|
|
1,254
|
|
|
—
|
|
|
—
|
|
|
1,277
|
|
||||||
ASO and other
|
39
|
|
|
740
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
788
|
|
||||||
Pharmacy
|
—
|
|
|
—
|
|
|
99
|
|
|
—
|
|
|
—
|
|
|
99
|
|
||||||
Total services revenue
|
39
|
|
|
763
|
|
|
1,353
|
|
|
9
|
|
|
—
|
|
|
2,164
|
|
||||||
Total revenues—external customers
|
39,491
|
|
|
7,219
|
|
|
1,353
|
|
|
60
|
|
|
—
|
|
|
48,123
|
|
||||||
Intersegment revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Services
|
—
|
|
|
78
|
|
|
15,098
|
|
|
—
|
|
|
(15,176
|
)
|
|
—
|
|
||||||
Products
|
—
|
|
|
—
|
|
|
3,749
|
|
|
—
|
|
|
(3,749
|
)
|
|
—
|
|
||||||
Total intersegment revenues
|
—
|
|
|
78
|
|
|
18,847
|
|
|
—
|
|
|
(18,925
|
)
|
|
—
|
|
||||||
Investment income
|
97
|
|
|
23
|
|
|
—
|
|
|
60
|
|
|
197
|
|
|
377
|
|
||||||
Total revenues
|
39,588
|
|
|
7,320
|
|
|
20,200
|
|
|
120
|
|
|
(18,728
|
)
|
|
48,500
|
|
||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Benefits
|
33,508
|
|
|
5,130
|
|
|
—
|
|
|
102
|
|
|
(574
|
)
|
|
38,166
|
|
||||||
Operating costs
|
4,576
|
|
|
1,936
|
|
|
19,307
|
|
|
17
|
|
|
(18,197
|
)
|
|
7,639
|
|
||||||
Depreciation and amortization
|
165
|
|
|
103
|
|
|
155
|
|
|
—
|
|
|
(90
|
)
|
|
333
|
|
||||||
Total operating expenses
|
38,249
|
|
|
7,169
|
|
|
19,462
|
|
|
119
|
|
|
(18,861
|
)
|
|
46,138
|
|
||||||
Income from operations
|
1,339
|
|
|
151
|
|
|
738
|
|
|
1
|
|
|
133
|
|
|
2,362
|
|
||||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
192
|
|
|
192
|
|
||||||
Income (loss) before income taxes
|
$
|
1,339
|
|
|
$
|
151
|
|
|
$
|
738
|
|
|
$
|
1
|
|
|
$
|
(59
|
)
|
|
$
|
2,170
|
|
|
Retail
|
|
Group
|
|
Healthcare Services
|
|
Other Businesses
|
|
Eliminations/
Corporate |
|
Consolidated
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenues—external customers
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Premiums:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Individual Medicare Advantage
|
$
|
22,481
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,481
|
|
Group Medicare Advantage
|
4,710
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,710
|
|
||||||
Medicare stand-alone PDP
|
3,033
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,033
|
|
||||||
Total Medicare
|
30,224
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,224
|
|
||||||
Fully-insured
|
1,160
|
|
|
5,117
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,277
|
|
||||||
Specialty
|
210
|
|
|
1,095
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,305
|
|
||||||
Medicaid and other
|
328
|
|
|
25
|
|
|
—
|
|
|
670
|
|
|
—
|
|
|
1,023
|
|
||||||
Total premiums
|
31,922
|
|
|
6,237
|
|
|
—
|
|
|
670
|
|
|
—
|
|
|
38,829
|
|
||||||
Services revenue:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Provider
|
—
|
|
|
21
|
|
|
1,291
|
|
|
—
|
|
|
—
|
|
|
1,312
|
|
||||||
ASO and other
|
18
|
|
|
714
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
738
|
|
||||||
Pharmacy
|
—
|
|
|
—
|
|
|
59
|
|
|
—
|
|
|
—
|
|
|
59
|
|
||||||
Total services revenue
|
18
|
|
|
735
|
|
|
1,350
|
|
|
6
|
|
|
—
|
|
|
2,109
|
|
||||||
Total revenues—external customers
|
31,940
|
|
|
6,972
|
|
|
1,350
|
|
|
676
|
|
|
—
|
|
|
40,938
|
|
||||||
Intersegment revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Services
|
—
|
|
|
51
|
|
|
11,890
|
|
|
—
|
|
|
(11,941
|
)
|
|
—
|
|
||||||
Products
|
—
|
|
|
—
|
|
|
2,803
|
|
|
—
|
|
|
(2,803
|
)
|
|
—
|
|
||||||
Total intersegment revenues
|
—
|
|
|
51
|
|
|
14,693
|
|
|
—
|
|
|
(14,744
|
)
|
|
—
|
|
||||||
Investment income
|
92
|
|
|
24
|
|
|
—
|
|
|
59
|
|
|
200
|
|
|
375
|
|
||||||
Total revenues
|
32,032
|
|
|
7,047
|
|
|
16,043
|
|
|
735
|
|
|
(14,544
|
)
|
|
41,313
|
|
||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Benefits
|
27,164
|
|
|
4,847
|
|
|
—
|
|
|
962
|
|
|
(409
|
)
|
|
32,564
|
|
||||||
Operating costs
|
3,232
|
|
|
1,860
|
|
|
15,372
|
|
|
56
|
|
|
(14,165
|
)
|
|
6,355
|
|
||||||
Depreciation and amortization
|
146
|
|
|
100
|
|
|
151
|
|
|
6
|
|
|
(70
|
)
|
|
333
|
|
||||||
Total operating expenses
|
30,542
|
|
|
6,807
|
|
|
15,523
|
|
|
1,024
|
|
|
(14,644
|
)
|
|
39,252
|
|
||||||
Income (loss) from operations
|
1,490
|
|
|
240
|
|
|
520
|
|
|
(289
|
)
|
|
100
|
|
|
2,061
|
|
||||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
140
|
|
|
140
|
|
||||||
Income (loss) before income taxes
|
$
|
1,490
|
|
|
$
|
240
|
|
|
$
|
520
|
|
|
$
|
(289
|
)
|
|
$
|
(40
|
)
|
|
$
|
1,921
|
|
|
2015
|
|
2014
|
||||||||||||
|
Deferred
acquisition costs |
|
Future policy
benefits payable |
|
Deferred
acquisition costs |
|
Future policy
benefits payable |
||||||||
|
(in millions)
|
||||||||||||||
Other long-term assets
|
$
|
135
|
|
|
$
|
—
|
|
|
$
|
167
|
|
|
$
|
—
|
|
Trade accounts payable and accrued expenses
|
—
|
|
|
(64
|
)
|
|
—
|
|
|
(68
|
)
|
||||
Long-term liabilities
|
—
|
|
|
(2,151
|
)
|
|
—
|
|
|
(2,349
|
)
|
||||
Total asset (liability)
|
$
|
135
|
|
|
$
|
(2,215
|
)
|
|
$
|
167
|
|
|
$
|
(2,417
|
)
|
Reinsurer
|
|
Total
Recoverable |
|
A.M. Best Rating
at December 31, 2015 |
||
|
|
(in millions)
|
|
|
||
Protective Life Insurance Company
|
|
$
|
184
|
|
|
A+ (superior)
|
Munich American Reassurance Company
|
|
155
|
|
|
A+ (superior
|
|
Employers Reassurance Corporation
|
|
91
|
|
|
A- (excellent)
|
|
General Re Life Corporation
|
|
90
|
|
|
A++ (superior)
|
|
All others
|
|
148
|
|
|
A+ to B++ (superior to good)
|
|
|
|
$
|
668
|
|
|
|
|
2015
|
||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth (2)
|
||||||||
|
(in millions, except per share results)
|
||||||||||||||
Total revenues
|
$
|
13,833
|
|
|
$
|
13,732
|
|
|
$
|
13,363
|
|
|
$
|
13,361
|
|
Income before income taxes
|
744
|
|
|
793
|
|
|
648
|
|
|
246
|
|
||||
Net income
|
430
|
|
|
431
|
|
|
314
|
|
|
101
|
|
||||
Basic earnings per common share
|
$
|
2.86
|
|
|
$
|
2.88
|
|
|
$
|
2.11
|
|
|
$
|
0.68
|
|
Diluted earnings per common share
(1)
|
$
|
2.82
|
|
|
$
|
2.85
|
|
|
$
|
2.09
|
|
|
$
|
0.67
|
|
|
|
|
|
|
|
|
|
||||||||
|
2014
|
||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
(in millions, except per share results)
|
||||||||||||||
Total revenues
|
$
|
11,712
|
|
|
$
|
12,222
|
|
|
$
|
12,238
|
|
|
$
|
12,328
|
|
Income before income taxes
|
686
|
|
|
646
|
|
|
551
|
|
|
287
|
|
||||
Net income
|
368
|
|
|
344
|
|
|
290
|
|
|
145
|
|
||||
Basic earnings per common share
|
$
|
2.37
|
|
|
$
|
2.22
|
|
|
$
|
1.87
|
|
|
$
|
0.96
|
|
Diluted earnings per common share
(1)
|
$
|
2.35
|
|
|
$
|
2.19
|
|
|
$
|
1.85
|
|
|
$
|
0.94
|
|
(1)
|
The calculation of diluted earnings per common share is based on the weighted average shares outstanding during each quarter and, accordingly, the sum may not equal the total for the year.
|
(2)
|
The fourth quarter of 2015 includes an expense of
$176 million
(
$112 million
after tax, or
$0.74
per diluted common share) for a premium deficiency reserve associated with our individual commercial medical policies compliant with the Health Care Reform Law associated with the 2016 coverage year.
|
Name
|
|
Age
|
|
Position
|
|
First
Elected
Officer
|
|
|
Bruce D. Broussard
|
|
53
|
|
President and Chief Executive Officer, Director
|
|
12/11
|
|
(1)
|
|
|
|
|
|
|
|
||
James E. Murray
|
|
62
|
|
Executive Vice President and Chief Operating Officer
|
|
08/90
|
|
(2)
|
|
|
|
|
|
|
|
||
Roy A. Beveridge, M.D.
|
|
58
|
|
Senior Vice President and Chief Medical Officer
|
|
06/13
|
|
(3)
|
|
|
|
|
|
|
|
||
Jody L. Bilney
|
|
54
|
|
Senior Vice President and Chief Consumer Officer
|
|
04/13
|
|
(4)
|
|
|
|
|
|
|
|
||
Christopher H. Hunter
|
|
47
|
|
Senior Vice President and Chief Strategy Officer
|
|
01/14
|
|
(5)
|
|
|
|
|
|
|
|
||
Timothy S. Huval
|
|
49
|
|
Senior Vice President and Chief Human Resources Officer
|
|
12/12
|
|
(6)
|
|
|
|
|
|
|
|
||
Brian A. Kane
|
|
43
|
|
Senior Vice President and Chief Financial Officer
|
|
06/14
|
|
(7)
|
|
|
|
|
|
|
|
||
Christopher Kay
|
|
50
|
|
Senior Vice President and Chief Innovation Officer
|
|
03/14
|
|
(8)
|
|
|
|
|
|
|
|
||
Brian P. LeClaire
|
|
55
|
|
Senior Vice President and Chief Information Officer
|
|
08/11
|
|
(9)
|
|
|
|
|
|
|
|
||
Heidi S. Margulis
|
|
62
|
|
Senior Vice President – Corporate Affairs
|
|
12/95
|
|
(10)
|
|
|
|
|
|
|
|
||
Christopher M. Todoroff
|
|
53
|
|
Senior Vice President and General Counsel
|
|
08/08
|
|
(11)
|
|
|
|
|
|
|
|
||
Cynthia H. Zipperle
|
|
53
|
|
Vice President, Chief Accounting Officer and Controller
|
|
12/14
|
|
(12)
|
(1)
|
Mr. Broussard currently serves as Director, President and Chief Executive Officer (Principal Executive Officer), having held these positions since January 1, 2013. Mr. Broussard was elected President upon joining the Company in December 2011 and served in that capacity through December 2012. Prior to joining the Company, Mr. Broussard was Chief Executive Officer of McKesson Specialty/US Oncology, Inc. US Oncology was purchased by McKesson in December 2010. At US Oncology, Mr. Broussard served in a number of senior executive roles, including Chief Financial Officer, Chief Executive Officer, and Chairman of the Board.
|
(2)
|
Mr. Murray currently serves as Executive Vice President and Chief Operating Officer, having held this position since December 2011. Mr. Murray has held the position of Chief Operating Officer since February 2006, and was the Chief Operating Officer – Market and Business Segment Operations from September 2002 to February 2006. Mr. Murray joined the Company in December 1989.
|
(3)
|
Dr. Beveridge currently serves as Senior Vice President and Chief Medical Officer, having held this position since joining the Company in June 2013. Prior to joining the Company, Dr. Beveridge served as Chief Medical Officer for McKesson Specialty Health from December 2010 until June 2013. Prior to McKesson’s acquisition
|
(4)
|
Ms. Bilney currently serves as Senior Vice President and Chief Consumer Officer, having held this position since joining the Company in April 2013. Prior to joining the Company, Ms. Bilney served as Executive Vice President and Chief Brand Officer for Bloomin’ Brands, Inc. from 2006 until April 2013.
|
(5)
|
Mr. Hunter currently serves as Senior Vice President and Chief Strategy Officer, having held this position since joining the Company in January 2014. Prior to joining the Company, Mr. Hunter served as President of Provider Markets at The TriZetto Group, Inc. from July 2012 until December 2013, and as Senior Vice President, Emerging Markets at BlueCross BlueShield of Tennessee from 2009 through July 2012. While at BlueCross BlueShield of Tennessee, Mr. Hunter was simultaneously President and Chief Executive Officer of Onlife Health, a national health and wellness subsidiary of BlueCross BlueShield of Tennessee.
|
(6)
|
Mr. Huval currently serves as Senior Vice President and Chief Human Resources Officer, having been elected to this position in December 2012. Prior to joining the Company, Mr. Huval spent 10 years at Bank of America in multiple senior-level roles, including Human Resources executive and Chief Information Officer for Global Wealth & Investment Management, as well as Human Resources executive for both Global Treasury Services and Technology & Global Operations.
|
(7)
|
Mr. Kane currently serves as Senior Vice President and Chief Financial Officer, having been elected to this position in June 2014. Prior to joining the Company, Mr. Kane spent nearly 17 years at Goldman, Sachs & Co. As a managing director, he was responsible for client relationships as well as for leading strategic and financing transactions for a number of companies in multiple industries.
|
(8)
|
Mr. Kay currently serves of Senior Vice President and Chief Innovation Officer, having been elected to this position in March 2014. Prior to joining the Company, Mr. Kay was most recently Managing Director and CEO of Citi Ventures, Citigroup’s global corporate venturing arm. Prior to joining Citi in 2007, Mr. Kay held several leadership positions at Target over a 12-year period.
|
(9)
|
Mr. LeClaire currently serves as Senior Vice President and Chief Information Officer, having held this position since January 2014. Prior to that, he served as Senior Vice President and Chief Service and Information Officer from August 2011 to January 2014, and as Chief Technology Officer from 2002 to August 2011. Mr. LeClaire joined the Company in August 1999.
|
(10)
|
Ms. Margulis currently serves as Senior Vice President – Corporate Affairs, having held this position since January 2000. Ms. Margulis joined the Company in November 1985.
|
(11)
|
Mr. Todoroff currently serves as Senior Vice President and General Counsel, having held this position since August 2008. Prior to joining the Company, Mr. Todoroff served as Vice President, Senior Corporate Counsel and Corporate Secretary for Aetna Inc. from 2006 through July 2008. Mr. Todoroff joined Aetna’s Legal Department in 1995 and held various positions of increasing responsibility.
|
(12)
|
Mrs. Zipperle currently serves as Vice President, Chief Accounting Officer and Controller, having held this position since December 2014. Mrs. Zipperle previously served as the Vice President - Finance from January 2013 until her election to her current role, and as the Assistant Controller from January 1998 until January 2013.
|
•
|
a determination of independence for each member of our Board of Directors;
|
•
|
the name, membership, role, and charter of each of the various committees of our Board of Directors;
|
•
|
the name(s) of the directors designated as a financial expert under rules and regulations promulgated by the SEC;
|
•
|
the responsibility of the Company’s Lead Independent Director, if applicable, to convene, set the agenda for, and lead executive sessions of the non-management directors;
|
•
|
the pre-approval process of non-audit services provided by our independent accountants;
|
•
|
our by-laws and Certificate of Incorporation;
|
•
|
our Majority Vote policy;
|
•
|
our Related Persons Transaction Policy;
|
•
|
the process by which interested parties can communicate with directors;
|
•
|
the process by which stockholders can make director nominations (pursuant to our By-laws);
|
•
|
our Corporate Governance Guidelines;
|
•
|
our Policy Regarding Transactions in Company Securities, Inside Information and Confidentiality;
|
•
|
Stock Ownership Guidelines for directors and for executive officers;
|
•
|
the Humana Inc. Ethics Every Day and any waivers thereto; and
|
•
|
the Code of Conduct for the Chief Executive Officer and Senior Financial Officers and any waivers thereto.
|
Plan category
|
(a)
Number of securities
to be issued upon
exercise of outstanding
options, warrants
and rights
|
|
(b)
Weighted-average
exercise price of
outstanding
options, warrants
and rights
|
|
(c)
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a)) |
|
|
||||
Equity compensation plans approved by
security holders (1)
|
835,123
|
|
|
$
|
121.889
|
|
|
8,734,399
|
|
|
(2)(3)
|
Equity compensation plans not approved
by security holders
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
Total
|
835,123
|
|
|
$
|
121.889
|
|
|
8,734,399
|
|
|
|
(1)
|
The above table does not include awards of shares of restricted stock or restricted stock units. For information concerning these awards, see Note 13.
|
(2)
|
The Humana Inc. 2011 Stock Incentive Plan was approved by stockholders at the Annual Meeting held on April 21, 2011. On July 5, 2011, 18.5 million shares were registered with the Securities and Exchange Commission on Form S-8.
|
(3)
|
Of the number listed above,
3,814,148
can be issued as restricted stock at
December 31, 2015
(giving effect to the provision that one restricted share is equivalent to 2.29 stock options in the 2011 Plan).
|
(3)
|
Exhibits:
|
2.1
|
Agreement and Plan of Merger, dated as of July 2, 2015 among Aetna Inc., Echo Merger Sub, Inc., Echo Merger Sub, LLC and Humana Inc. (incorporated herein by reference to Exhibit 2.1 to Humana Inc.’s Current Report on Form 8-K filed on July 7, 2015).
|
|
|
3(a)
|
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).
|
|
|
(b)
|
By-Laws of Humana Inc., as amended on January 4, 2007 (incorporated herein by reference to Exhibit 3 to Humana Inc.’s Annual Report on Form 10-K for the year ended December 31, 2006).
|
|
|
4(a)
|
Indenture, dated as of August 5, 2003, by and between Humana Inc. and The Bank of New York, as trustee (incorporated herein by reference to Exhibit 4.1 to Humana Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003).
|
|
|
(b)
|
First Supplemental Indenture, dated as of August 5, 2003, by and between Humana Inc. and The Bank of New York, as trustee (incorporated herein by reference to Exhibit 4.2 to Humana Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003).
|
|
|
(c)
|
Second Supplemental Indenture, dated as of May 31, 2006, by and between Humana Inc. and The Bank of New York Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.1 to Humana Inc.’s Current Report on Form 8-K filed on May 31, 2006).
|
|
|
(d)
|
Third Supplemental Indenture, dated as of June 5, 2008, by and between Humana Inc. and The Bank of New York Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.1 to Humana Inc.’s Current Report on Form 8-K filed on June 5, 2008).
|
|
|
(e)
|
Fourth Supplemental Indenture, dated as of June 5, 2008, by and between Humana Inc. and The Bank of New York Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.3 to Humana Inc.’s Current Report on Form 8-K filed on June 5, 2008).
|
|
|
(f)
|
Indenture, dated as of March 30, 2006, by and between Humana Inc. and The Bank of New York Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.2 to Humana Inc.’s Registration Statement on Form S-3 filed on March 31, 2006).
|
|
|
(g)
|
There are no instruments defining the rights of holders with respect to long-term debt in excess of 10 percent of the total assets of Humana Inc. on a consolidated basis. Other long-term indebtedness of Humana Inc. is described herein in Note 12 to Consolidated Financial Statements. Humana Inc. agrees to furnish copies of all such instruments defining the rights of the holders of such indebtedness not otherwise filed as an Exhibit to this Annual Report on Form 10-K to the Commission upon request.
|
|
|
(h)
|
Fifth Supplemental Indenture, dated as of December 10, 2012, by and between Humana Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.1 to Humana Inc.’s Current Report on Form 8-K filed on December 10, 2012).
|
|
|
(i)
|
Sixth Supplemental Indenture, dated as of December 10, 2012, by and between Humana Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.3 to Humana Inc.’s Current Report on Form 8-K filed on December 10, 2012).
|
|
|
(j)
|
Seventh Supplemental Indenture, dated as of September 19, 2014, by and between Humana Inc. and The Bank of New York, Mellon Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.2 to Humana Inc.’s Current Report on Form 8-K filed on September 19, 2014).
|
|
|
(k)
|
Eighth Supplemental Indenture, dated as of September 19, 2014, by and between Humana Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.4 to Humana Inc.’s Current Report on Form 8-K filed on September 19, 2014).
|
|
|
(l)
|
Ninth Supplemental Indenture, dated as of September 19, 2014, by and between Humana Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.6 to Humana Inc.’s Current Report on Form 8-K filed on September 19, 2014).
|
|
|
10(a)*†
|
Form of Company’s Restricted Stock Unit Agreement and Agreement not to Compete or Solicit under the 2011 Stock Incentive Plan (with retirement provisions)
|
|
|
(b)*†
|
Form of Company’s Restricted Stock Unit Agreement and Agreement not to Compete or Solicit under the 2011 Stock Incentive Plan (without retirement provisions).
|
|
|
(c)*
|
Humana Inc. Amended and Restated 2003 Stock Incentive Plan (incorporated herein by reference to Appendix A to Humana Inc.’s Proxy Statement with respect to the Annual Meeting of Stockholders held on April 27, 2006).
|
|
|
(d)*
|
Humana Inc. Executive Management Incentive Compensation Plan, as amended and restated February 1, 2008 (incorporated herein by reference to Appendix A to Humana Inc.’s Proxy Statement with respect to the Annual Meeting of Stockholders held on April 24, 2008).
|
|
|
(e)*
|
Form of Change of Control Agreement (incorporated herein by reference to Exhibit 10.2 to Humana Inc.’s current report on Form 8-K filed on February 24, 2014).
|
|
|
(f)*
|
Trust under Humana Inc. Deferred Compensation Plans (incorporated herein by reference to Exhibit 10(p) to Humana Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999).
|
|
|
(g)*
|
The Humana Inc. Deferred Compensation Plan for Non-Employee Directors (as amended on October 18, 2012) (incorporated herein by reference to Exhibit 10(m) to Humana Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012).
|
|
|
(h)*
|
Severance policy as amended and restated on October 23, 2007 (incorporated herein by reference to Exhibit 10(r) to Humana Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007).
|
|
|
(i)*
|
Humana Inc. Deferred Compensation Plan (incorporated herein by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-8 (Reg. No. 333-171616), filed on January 7, 2011).
|
|
|
(j)*
|
Humana Retirement Equalization Plan, as amended and restated as of January 1, 2011 (incorporated herein by reference to Exhibit 10(p) to Humana Inc.’s Annual Report on Form 10-K filed on February 17, 2011).
|
|
|
(k)*
|
Letter agreement with Humana Inc. officers concerning health insurance availability (incorporated herein by reference to Exhibit 10(mm) to Humana Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 1994).
|
|
|
(l)*
|
Executive Long-Term Disability Program (incorporated herein by reference to Exhibit 10(a) to Humana Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004).
|
|
|
(m)*
|
Indemnity Agreement (incorporated herein by reference to Appendix B to Humana Inc.’s Proxy Statement with respect to the Annual Meeting of Stockholders held on January 8, 1987).
|
|
|
(n)* **
|
Form of Company’s Restricted Stock Unit Agreement with Time/Performance Vesting and Agreement not to Compete or Solicit, under the 2011 Stock Incentive Plan (incorporated herein by reference to Exhibit 10(t) to Humana Inc.’s Annual Report on Form 10-K/A filed on January 30, 2014).
|
|
|
(o)*†
|
Form of Company’s Restricted Stock Unit Agreement and Agreement not to Solicit under the 2011 Stock Incentive Plan (with retirement provisions).
|
|
|
(p)*
|
Summary of the Company’s Financial Planning Program for our executive officers (incorporated herein by reference to Exhibit 10(v) to Humana’s Inc.’s Annual Report on Form 10-K filed on February 22, 2013.
|
|
|
(q)*†
|
Form of Company’s Restricted Stock Unit Agreement and Agreement not to Solicit under the 2011 Stock Incentive Plan (without retirement provisions).
|
|
|
(r)
|
Five-Year Credit Agreement, dated as of July 9, 2013 (incorporated herein by reference to Exhibit 10 to Humana Inc.’s Current Report on Form 8-K filed on July 10, 2013).
|
|
|
(s)
|
Form of CMS Coordinated Care Plan Agreement (incorporated herein by reference to Exhibit 10.1 to Humana Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005).
|
|
|
(t)
|
Form of CMS Private Fee for Service Agreement (incorporated herein by reference to Exhibit 10.2 to Humana Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005).
|
|
|
(u)
|
Addendum to Agreement Providing for the Operation of a Medicare Voluntary Prescription Drug Plan (incorporated herein by reference to Exhibit 10.3 to Humana Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005).
|
|
|
(v)
|
Addendum to Agreement Providing for the Operation of an Employer/Union-only Group Medicare Advantage Prescription Drug Plan (incorporated herein by reference to Exhibit 10.4 to Humana Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005).
|
|
|
(w)
|
Addendum to Agreement Providing for the Operation of an Employer/Union-only Group Medicare Advantage-Only Plan (incorporated herein by reference to Exhibit 10.5 to Humana Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005).
|
|
|
(x)
|
Addendum to Agreement Providing for the Operation of a Medicare Advantage Regional Coordinated Care Plan (incorporated herein by reference to Exhibit 10.6 to Humana Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005).
|
|
|
(y)
|
Explanatory Note regarding Medicare Prescription Drug Plan Contracts between Humana and CMS (incorporated herein by reference to Exhibit 10(nn) to Humana Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005).
|
|
|
(z)*
|
Humana Inc. 2011 Stock Incentive Plan (incorporated herein by reference to Appendix A to Humana Inc.’s Proxy Statement with respect to the Annual Meeting of Stockholders held on April 21, 2011).
|
|
|
(aa)*
|
Form of Company’s Stock Option Agreement under the 2011 Stock Incentive Plan (Non-Qualified Stock Options with Non-Compete/Non-Solicit) (incorporated herein by reference to Exhibit 10(oo) to Humana Inc.’s Annual Report on Form 10-K filed on February 24, 2012).
|
|
|
(bb)*
|
Form of Company’s Stock Option Agreement under the 2011 Stock Incentive Plan (Incentive Stock Options with Non-Compete/Non-Solicit) (incorporated herein by reference to Exhibit 10(pp) to Humana Inc.’s Annual Report on Form 10-K filed on February 24, 2012).
|
|
|
(cc)*
|
Form of Company’s Restricted Stock Unit Agreement and Agreement not to Compete or Solicit under the 2011 Stock Incentive Plan (incorporated herein by reference to Exhibit 10(rr) to Humana Inc.’s Annual Report on Form 10-K filed on February 24, 2012).
|
|
|
101
|
The following materials from Humana Inc.'s Annual Report on Form 10-K formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets at
December 31, 2015
and
2014
; (ii) the Consolidated Statements of Income for the years ended
December 31, 2015
,
2014
and
2013
; (iii) the Consolidated Statements of Comprehensive Income for the years ended
December 31, 2015
,
2014
and
2013
; (iv) the Consolidated Statements of Stockholders’ Equity as of
December 31, 2015
,
2014
, and
2013
; (v) the Consolidated Statements of Cash Flows for the years ended
December 31, 2015
,
2014
and
2013
; and (vi) Notes to Consolidated Financial Statements.
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in millions, except share
amounts) |
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,389
|
|
|
$
|
1,211
|
|
Investment securities
|
256
|
|
|
201
|
|
||
Receivable from operating subsidiaries
|
1,124
|
|
|
873
|
|
||
Other current assets
|
224
|
|
|
180
|
|
||
Total current assets
|
2,993
|
|
|
2,465
|
|
||
Property and equipment, net
|
1,011
|
|
|
885
|
|
||
Investments in subsidiaries
|
14,276
|
|
|
13,983
|
|
||
Other long-term assets
|
437
|
|
|
114
|
|
||
Total assets
|
$
|
18,717
|
|
|
$
|
17,447
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Payable to operating subsidiaries
|
$
|
3,322
|
|
|
$
|
3,130
|
|
Current portion of notes payable to operating subsidiaries
|
28
|
|
|
28
|
|
||
Book overdraft
|
38
|
|
|
54
|
|
||
Short-term borrowings
|
299
|
|
|
—
|
|
||
Other current liabilities
|
572
|
|
|
562
|
|
||
Total current liabilities
|
4,259
|
|
|
3,774
|
|
||
Long-term debt
|
3,821
|
|
|
3,825
|
|
||
Notes payable to operating subsidiaries
|
9
|
|
|
9
|
|
||
Other long-term liabilities
|
282
|
|
|
193
|
|
||
Total liabilities
|
8,371
|
|
|
7,801
|
|
||
Commitments and contingencies
|
|
|
|
||||
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;
198,372,059 shares issued at December 31, 2015 and 197,951,551 shares issued at December 31, 2014 |
33
|
|
|
33
|
|
||
Capital in excess of par value
|
2,530
|
|
|
2,330
|
|
||
Retained earnings
|
11,017
|
|
|
9,916
|
|
||
Accumulated other comprehensive income
|
58
|
|
|
223
|
|
||
Treasury stock, at cost, 50,084,043 shares at December 31, 2015
and 48,347,541 shares at December 31, 2014 |
(3,292
|
)
|
|
(2,856
|
)
|
||
Total stockholders’ equity
|
10,346
|
|
|
9,646
|
|
||
Total liabilities and stockholders’ equity
|
$
|
18,717
|
|
|
$
|
17,447
|
|
|
For the year ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in millions)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
Management fees charged to operating subsidiaries
|
$
|
1,469
|
|
|
$
|
1,509
|
|
|
$
|
1,370
|
|
Investment and other income, net
|
5
|
|
|
4
|
|
|
3
|
|
|||
|
1,474
|
|
|
1,513
|
|
|
1,373
|
|
|||
Expenses:
|
|
|
|
|
|
||||||
Operating costs
|
1,370
|
|
|
1,434
|
|
|
1,366
|
|
|||
Depreciation
|
252
|
|
|
212
|
|
|
193
|
|
|||
Interest
|
186
|
|
|
192
|
|
|
141
|
|
|||
|
1,808
|
|
|
1,838
|
|
|
1,700
|
|
|||
Loss before gain on sale of business, income taxes and equity in net earnings of subsidiaries
|
(334
|
)
|
|
(325
|
)
|
|
(327
|
)
|
|||
Gain on sale of business
|
270
|
|
|
—
|
|
|
—
|
|
|||
Loss before income taxes and equity in net earnings of subsidiaries
|
(64
|
)
|
|
(325
|
)
|
|
(327
|
)
|
|||
Benefit for income taxes
|
(70
|
)
|
|
(81
|
)
|
|
(107
|
)
|
|||
Income (loss) before equity in net earnings of subsidiaries
|
6
|
|
|
(244
|
)
|
|
(220
|
)
|
|||
Equity in net earnings of subsidiaries
|
1,270
|
|
|
1,391
|
|
|
1,451
|
|
|||
Net income
|
$
|
1,276
|
|
|
$
|
1,147
|
|
|
$
|
1,231
|
|
|
For the year ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in millions)
|
||||||||||
Net income
|
$
|
1,276
|
|
|
$
|
1,147
|
|
|
$
|
1,231
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||||||
Change in gross unrealized investment gains/losses
|
(114
|
)
|
|
122
|
|
|
(338
|
)
|
|||
Effect of income taxes
|
42
|
|
|
(44
|
)
|
|
124
|
|
|||
Total change in unrealized investment
gains/losses, net of tax |
(72
|
)
|
|
78
|
|
|
(214
|
)
|
|||
Reclassification adjustment for net realized
gains included in investment income |
(146
|
)
|
|
(20
|
)
|
|
(22
|
)
|
|||
Effect of income taxes
|
53
|
|
|
7
|
|
|
8
|
|
|||
Total reclassification adjustment, net of tax
|
(93
|
)
|
|
(13
|
)
|
|
(14
|
)
|
|||
Other comprehensive (loss) income, net of tax
|
(165
|
)
|
|
65
|
|
|
(228
|
)
|
|||
Comprehensive income
|
$
|
1,111
|
|
|
$
|
1,212
|
|
|
$
|
1,003
|
|
|
For the year ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in millions)
|
||||||||||
Net cash provided by operating activities
|
$
|
953
|
|
|
$
|
1,499
|
|
|
$
|
1,554
|
|
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Proceeds from sale of business
|
1,055
|
|
|
—
|
|
|
—
|
|
|||
Acquisitions
|
—
|
|
|
—
|
|
|
—
|
|
|||
Capital contributions to operating subsidiaries
|
(833
|
)
|
|
(442
|
)
|
|
(521
|
)
|
|||
Purchases of investment securities
|
(507
|
)
|
|
(629
|
)
|
|
(320
|
)
|
|||
Proceeds from sale of investment securities
|
18
|
|
|
606
|
|
|
35
|
|
|||
Maturities of investment securities
|
108
|
|
|
149
|
|
|
104
|
|
|||
Purchases of property and equipment, net
|
(378
|
)
|
|
(380
|
)
|
|
(223
|
)
|
|||
Net cash used in investing activities
|
(537
|
)
|
|
(696
|
)
|
|
(925
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of senior notes, net
|
—
|
|
|
1,733
|
|
|
—
|
|
|||
Proceeds from issuance of commercial paper, net
|
298
|
|
|
—
|
|
|
—
|
|
|||
Repayment of long-term debt
|
—
|
|
|
(500
|
)
|
|
—
|
|
|||
Change in book overdraft
|
(16
|
)
|
|
(5
|
)
|
|
7
|
|
|||
Common stock repurchases
|
(385
|
)
|
|
(872
|
)
|
|
(531
|
)
|
|||
Dividends paid
|
(172
|
)
|
|
(172
|
)
|
|
(168
|
)
|
|||
Tax benefit from stock-based compensation
|
15
|
|
|
12
|
|
|
8
|
|
|||
Proceeds from stock option exercises and other
|
22
|
|
|
51
|
|
|
65
|
|
|||
Net cash (used in) provided by financing activities
|
(238
|
)
|
|
247
|
|
|
(619
|
)
|
|||
Increase in cash and cash equivalents
|
178
|
|
|
1,050
|
|
|
10
|
|
|||
Cash and cash equivalents at beginning of year
|
1,211
|
|
|
161
|
|
|
151
|
|
|||
Cash and cash equivalents at end of year
|
$
|
1,389
|
|
|
$
|
1,211
|
|
|
$
|
161
|
|
|
|
|
|
|
|
Additions
|
|
|
|
|
||||||||||||||
|
|
Balance at
Beginning of Period |
|
Acquired/(Disposed)
Balances |
|
Charged
(Credited) to Costs and Expenses |
|
Charged to
Other Accounts (1) |
|
Deductions
or Write-offs |
|
Balance at
End of Period |
||||||||||||
Allowance for loss on receivables:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2015
|
|
$
|
137
|
|
|
$
|
(39
|
)
|
|
$
|
61
|
|
|
$
|
(7
|
)
|
|
$
|
(51
|
)
|
|
$
|
101
|
|
2014
|
|
118
|
|
|
—
|
|
|
32
|
|
|
28
|
|
|
(41
|
)
|
|
137
|
|
||||||
2013
|
|
94
|
|
|
—
|
|
|
37
|
|
|
18
|
|
|
(31
|
)
|
|
118
|
|
||||||
Deferred tax asset valuation allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2015
|
|
(48
|
)
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
(42
|
)
|
||||||
2014
|
|
(28
|
)
|
|
—
|
|
|
(20
|
)
|
|
—
|
|
|
—
|
|
|
(48
|
)
|
||||||
2013
|
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
(1)
|
Represents changes in retroactive membership adjustments to premiums revenue and contractual allowances adjustments to services revenue as more fully described in Note 2 to the consolidated financial statements included in this annual report on Form 10-K.
|
|
H
UMANA
I
NC
.
|
||
|
|
|
|
|
By:
|
|
/s/ BRIAN A. KANE
|
|
|
|
Brian A. Kane
|
|
|
|
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
|
|
Date:
|
|
February 18, 2016
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ BRIAN A. KANE
|
|
Senior Vice President and Chief Financial Officer
(Principal Financial Officer) |
|
February 18, 2016
|
Brian A. Kane
|
|
|
|
|
|
|
|
|
|
/s/ CYNTHIA H. ZIPPERLE
|
|
Vice President, Chief Accounting Officer
and Controller (Principal Accounting Officer)
|
|
February 18, 2016
|
Cynthia H. Zipperle
|
|
|
|
|
|
|
|
|
|
/s/ BRUCE D. BROUSSARD
|
|
President and Chief Executive Officer,
Director (Principal Executive Officer)
|
|
February 18, 2016
|
Bruce D. Broussard
|
|
|
|
|
|
|
|
|
|
/s/ KURT J. HILZINGER
|
|
Chairman of the Board
|
|
February 18, 2016
|
Kurt J. Hilzinger
|
|
|
|
|
|
|
|
|
|
/s/ FRANK A. D’AMELIO
|
|
Director
|
|
February 18, 2016
|
Frank A. D’Amelio
|
|
|
|
|
|
|
|
|
|
/s/ W. ROY DUNBAR
|
|
Director
|
|
February 18, 2016
|
W. Roy Dunbar
|
|
|
|
|
|
|
|
|
|
/s/ DAVID A. JONES, JR.
|
|
Director
|
|
February 18, 2016
|
David A. Jones, Jr.
|
|
|
|
|
|
|
|
|
|
/s/ WILLIAM J. MCDONALD
|
|
Director
|
|
February 18, 2016
|
William J. McDonald
|
|
|
|
|
|
|
|
|
|
/s/ WILLIAM E. MITCHELL
|
|
Director
|
|
February 18, 2016
|
William E. Mitchell
|
|
|
|
|
|
|
|
|
|
/s/ DAVID B. NASH, M.D.
|
|
Director
|
|
February 18, 2016
|
David B. Nash, M.D.
|
|
|
|
|
|
|
|
|
|
/s/ JAMES J. O’BRIEN
|
|
Director
|
|
February 18, 2016
|
James J. O’Brien
|
|
|
|
|
|
|
|
|
|
/s/ MARISSA T. PETERSON
|
|
Director
|
|
February 18, 2016
|
Marissa T. Peterson
|
|
|
|
|
|
|
"Company"
|
|
|
|
|
|
|
ATTEST:
|
|
HUMANA INC.
|
||
|
|
|
|
|
BY:
|
/s/ JOAN O. LENAHAN
|
|
BY:
|
/s/ BRUCE D. BROUSSARD
|
|
JOAN O. LENAHAN
|
|
|
BRUCE D. BROUSSARD
|
|
Vice President and Corporate Secretary
|
|
|
President & Chief Executive Officer
|
|
|
|
|
|
|
|
|
“Grantee”
|
|
|
|
|
|
|
|
|
|
<first_name><middle_name><last_name>
|
|
|
|
"Company"
|
|
|
|
|
|
|
ATTEST:
|
|
HUMANA INC.
|
||
|
|
|
|
|
BY:
|
/s/ JOAN O. LENAHAN
|
|
BY:
|
/s/ BRUCE D. BROUSSARD
|
|
JOAN O. LENAHAN
|
|
|
BRUCE D. BROUSSARD
|
|
Vice President and Corporate Secretary
|
|
|
President & Chief Executive Officer
|
|
|
|
|
|
|
|
|
“Grantee”
|
|
|
|
|
|
|
|
|
|
<first_name><middle_name><last_name>
|
|
|
|
"Company"
|
|
|
|
|
|
|
ATTEST:
|
|
HUMANA INC.
|
||
|
|
|
|
|
BY:
|
/s/ JOAN O. LENAHAN
|
|
BY:
|
/s/ BRUCE D. BROUSSARD
|
|
JOAN O. LENAHAN
|
|
|
BRUCE D. BROUSSARD
|
|
Vice President and Corporate Secretary
|
|
|
President & Chief Executive Officer
|
|
|
|
|
|
|
|
|
“Optionee”
|
|
|
|
|
|
|
|
|
|
<first_name><middle_name><last_name>
|
|
|
|
"Company"
|
|
|
|
|
|
|
ATTEST:
|
|
HUMANA INC.
|
||
|
|
|
|
|
BY:
|
/s/ JOAN O. LENAHAN
|
|
BY:
|
/s/ BRUCE D. BROUSSARD
|
|
JOAN O. LENAHAN
|
|
|
BRUCE D. BROUSSARD
|
|
Vice President and Corporate Secretary
|
|
|
President & Chief Executive Officer
|
|
|
|
|
|
|
|
|
“Optionee”
|
|
|
|
|
|
|
|
|
|
<first_name><middle_name><last_name>
|
|
|
|
"Company"
|
|
|
|
|
|
|
ATTEST:
|
|
HUMANA INC.
|
||
|
|
|
|
|
BY:
|
/s/ JOAN O. LENAHAN
|
|
BY:
|
/s/ BRUCE D. BROUSSARD
|
|
JOAN O. LENAHAN
|
|
|
BRUCE D. BROUSSARD
|
|
Vice President and Corporate Secretary
|
|
|
President & Chief Executive Officer
|
|
|
|
|
|
|
|
|
“Grantee”
|
|
|
|
|
|
|
|
|
|
<first_name><middle_name><last_name>
|
|
|
|
"Company"
|
|
|
|
|
|
|
ATTEST:
|
|
HUMANA INC.
|
||
|
|
|
|
|
BY:
|
/s/ JOAN O. LENAHAN
|
|
BY:
|
/s/ BRUCE D. BROUSSARD
|
|
JOAN O. LENAHAN
|
|
|
BRUCE D. BROUSSARD
|
|
Vice President and Corporate Secretary
|
|
|
President & Chief Executive Officer
|
|
|
|
|
|
|
|
|
“Grantee”
|
|
|
|
|
|
|
|
|
|
<first_name><middle_name><last_name>
|
|
For the twelve months ended December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
|
(Dollars in millions)
|
||||||||||||||||||
Income before income taxes
|
$
|
2,431
|
|
|
$
|
2,170
|
|
|
$
|
1,921
|
|
|
$
|
1,911
|
|
|
$
|
2,235
|
|
Fixed charges
|
253
|
|
|
267
|
|
|
216
|
|
|
178
|
|
|
178
|
|
|||||
Total earnings
|
$
|
2,684
|
|
|
$
|
2,437
|
|
|
$
|
2,137
|
|
|
$
|
2,089
|
|
|
$
|
2,413
|
|
Interest charged to expense
|
$
|
186
|
|
|
$
|
192
|
|
|
$
|
140
|
|
|
$
|
105
|
|
|
$
|
109
|
|
One-third of rent expense
|
67
|
|
|
75
|
|
|
76
|
|
|
73
|
|
|
69
|
|
|||||
Total fixed charges
|
$
|
253
|
|
|
$
|
267
|
|
|
$
|
216
|
|
|
$
|
178
|
|
|
$
|
178
|
|
Ratio of earnings to fixed charges (1)(2)
|
10.6x
|
|
|
9.1x
|
|
|
9.9x
|
|
|
11.7x
|
|
|
13.6x
|
|
|||||
|
|
|
|
|
|
|
|
|
|
(1)
|
For the purposes of determining the ratio of earnings to fixed charges, earnings consist of income before income taxes and fixed charges. Fixed charges include gross interest expense, amortization of deferred financing expenses and an amount equivalent to interest included in rental charges. One-third of rental expense represents a reasonable approximation of the interest amount.
|
(2)
|
There are no shares of preferred stock outstanding.
|
1.
|
SeniorBridge Family Companies (AZ), Inc.
|
1.
|
SeniorBridge Family Companies (MD), Inc.
|
1.
|
Kanawha Insurance Company
|
1.
|
Cariten Health Plan Inc.
|
1.
|
I have reviewed this annual report on Form 10-K of Humana Inc.;
|
2.
|
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
Date:
|
|
February 18, 2016
|
|
|
|
|
|
Signature:
|
|
/s/ BRUCE D. BROUSSARD
|
|
|
|
Bruce D. Broussard
Principal Executive Officer
|
|
1.
|
I have reviewed this annual report on Form 10-K of Humana Inc.;
|
2.
|
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
Date:
|
|
February 18, 2016
|
|
|
|
|
|
Signature:
|
|
/s/ BRIAN A. KANE
|
|
|
|
Brian A. Kane
Principal Financial Officer
|
|
/s/ BRUCE D. BROUSSARD
|
|
Bruce D. Broussard
President and Chief Executive Officer,
Director (Principal Executive Officer)
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/s/ BRIAN A. KANE
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Brian A. Kane
Senior Vice President and Chief Financial Officer
(Principal Financial Officer) |
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