☒
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QUARTERLY 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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(Exact name of registrant as specified in its charter)
|
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Delaware
|
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61-0647538
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(State or other jurisdiction of incorporation or organization)
|
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(I.R.S. Employer Identification No.)
|
Title of each class
|
Trading Symbol
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Name of each exchange on which registered
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Common stock, $0.16 2/3 par value
|
HUM
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New York Stock Exchange
|
Large accelerated filer
|
☒
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Accelerated filer
|
☐
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Non-accelerated filer
|
☐
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Smaller reporting company
|
☐
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Emerging growth company
|
☐
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Class of Common Stock
|
Outstanding at June 30, 2019
|
$0.16 2/3 par value
|
135,089,290 shares
|
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Page
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Part I: Financial Information
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Item 1.
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Financial Statements (Unaudited)
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Certifications
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June 30,
2019 |
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December 31,
2018 |
||||
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(in millions, except share amounts)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
4,778
|
|
|
$
|
2,343
|
|
Investment securities
|
9,991
|
|
|
10,026
|
|
||
Receivables, less allowance for doubtful accounts of $73 in 2019
and $79 in 2018 |
904
|
|
|
1,015
|
|
||
Other current assets
|
4,487
|
|
|
3,564
|
|
||
Total current assets
|
20,160
|
|
|
16,948
|
|
||
Property and equipment, net
|
1,796
|
|
|
1,735
|
|
||
Long-term investment securities
|
411
|
|
|
411
|
|
||
Equity method investment in Kindred at Home
|
1,056
|
|
|
1,047
|
|
||
Goodwill
|
3,922
|
|
|
3,897
|
|
||
Other long-term assets
|
1,568
|
|
|
1,375
|
|
||
Total assets
|
$
|
28,913
|
|
|
$
|
25,413
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Benefits payable
|
$
|
5,842
|
|
|
$
|
4,862
|
|
Trade accounts payable and accrued expenses
|
3,832
|
|
|
3,067
|
|
||
Book overdraft
|
204
|
|
|
171
|
|
||
Unearned revenues
|
312
|
|
|
283
|
|
||
Short-term debt
|
1,349
|
|
|
1,694
|
|
||
Total current liabilities
|
11,539
|
|
|
10,077
|
|
||
Long-term debt
|
4,377
|
|
|
4,375
|
|
||
Future policy benefits payable
|
214
|
|
|
219
|
|
||
Other long-term liabilities
|
911
|
|
|
581
|
|
||
Total liabilities
|
17,041
|
|
|
15,252
|
|
||
Commitments and contingencies (Note 14)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $1 par; 10,000,000 shares authorized; none issued
|
—
|
|
|
—
|
|
||
Common stock, $0.16 2/3 par; 300,000,000 shares authorized;
198,627,992 shares issued at June 30, 2019 and 198,594,841 shares issued at December 31, 2018 |
33
|
|
|
33
|
|
||
Capital in excess of par value
|
2,763
|
|
|
2,535
|
|
||
Retained earnings
|
16,429
|
|
|
15,072
|
|
||
Accumulated other comprehensive income (loss)
|
112
|
|
|
(159
|
)
|
||
Treasury stock, at cost, 63,538,702 shares at June 30, 2019 and
63,028,169 shares at December 31, 2018 |
(7,465
|
)
|
|
(7,320
|
)
|
||
Total stockholders’ equity
|
11,872
|
|
|
10,161
|
|
||
Total liabilities and stockholders’ equity
|
$
|
28,913
|
|
|
$
|
25,413
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in millions, except per share results)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Premiums
|
$
|
15,776
|
|
|
$
|
13,713
|
|
|
$
|
31,427
|
|
|
$
|
27,524
|
|
Services
|
355
|
|
|
382
|
|
|
710
|
|
|
709
|
|
||||
Investment income
|
114
|
|
|
164
|
|
|
215
|
|
|
305
|
|
||||
Total revenues
|
16,245
|
|
|
14,259
|
|
|
32,352
|
|
|
28,538
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Benefits
|
13,318
|
|
|
11,536
|
|
|
26,811
|
|
|
23,206
|
|
||||
Operating costs
|
1,703
|
|
|
1,761
|
|
|
3,363
|
|
|
3,510
|
|
||||
Depreciation and amortization
|
109
|
|
|
100
|
|
|
216
|
|
|
200
|
|
||||
Total operating expenses
|
15,130
|
|
|
13,397
|
|
|
30,390
|
|
|
26,916
|
|
||||
Income from operations
|
1,115
|
|
|
862
|
|
|
1,962
|
|
|
1,622
|
|
||||
Loss on sale of business
|
—
|
|
|
790
|
|
|
—
|
|
|
790
|
|
||||
Interest expense
|
60
|
|
|
53
|
|
|
122
|
|
|
106
|
|
||||
Other income, net
|
(174
|
)
|
|
—
|
|
|
(135
|
)
|
|
—
|
|
||||
Income before income taxes and equity in net earnings
|
1,229
|
|
|
19
|
|
|
1,975
|
|
|
726
|
|
||||
Provision (benefit) for income taxes
|
301
|
|
|
(174
|
)
|
|
484
|
|
|
42
|
|
||||
Equity in net earnings of Kindred at Home
|
12
|
|
|
—
|
|
|
15
|
|
|
—
|
|
||||
Net income
|
$
|
940
|
|
|
$
|
193
|
|
|
$
|
1,506
|
|
|
$
|
684
|
|
Basic earnings per common share
|
$
|
6.96
|
|
|
$
|
1.40
|
|
|
$
|
11.14
|
|
|
$
|
4.96
|
|
Diluted earnings per common share
|
$
|
6.94
|
|
|
$
|
1.39
|
|
|
$
|
11.10
|
|
|
$
|
4.93
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in millions)
|
||||||||||||||
Net income
|
$
|
940
|
|
|
$
|
193
|
|
|
$
|
1,506
|
|
|
$
|
684
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Change in gross unrealized investment
gains/losses |
169
|
|
|
(9
|
)
|
|
365
|
|
|
(212
|
)
|
||||
Effect of income taxes
|
(40
|
)
|
|
2
|
|
|
(85
|
)
|
|
54
|
|
||||
Total change in unrealized
investment gains/losses, net of tax |
129
|
|
|
(7
|
)
|
|
280
|
|
|
(158
|
)
|
||||
Reclassification adjustment for net
realized gains |
(6
|
)
|
|
(23
|
)
|
|
(6
|
)
|
|
(52
|
)
|
||||
Effect of income taxes
|
2
|
|
|
8
|
|
|
2
|
|
|
15
|
|
||||
Total reclassification adjustment, net
of tax |
(4
|
)
|
|
(15
|
)
|
|
(4
|
)
|
|
(37
|
)
|
||||
Other comprehensive income (loss), net
of tax |
125
|
|
|
(22
|
)
|
|
276
|
|
|
(195
|
)
|
||||
Comprehensive loss attributable to equity method investment in Kindred at Home
|
(3
|
)
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
||||
Comprehensive income
|
$
|
1,062
|
|
|
$
|
171
|
|
|
$
|
1,777
|
|
|
$
|
489
|
|
|
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)
|
|||||||||||||||||||||||||
Three months ended June 30, 2019
|
||||||||||||||||||||||||||
Balances, March 31, 2019
|
198,595
|
|
|
$
|
33
|
|
|
$
|
2,722
|
|
|
$
|
15,563
|
|
|
$
|
(10
|
)
|
|
$
|
(7,467
|
)
|
|
$
|
10,841
|
|
Net income
|
|
|
|
|
|
|
940
|
|
|
|
|
|
|
940
|
|
|||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
122
|
|
|
|
|
|
122
|
|
||||||
Common stock repurchases
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|||||||||
Dividends and dividend
equivalents |
|
|
|
|
—
|
|
|
(74
|
)
|
|
|
|
|
|
|
(74
|
)
|
|||||||||
Stock-based compensation
|
|
|
|
|
43
|
|
|
|
|
|
|
|
|
|
43
|
|
||||||||||
Restricted stock unit vesting
|
32
|
|
|
—
|
|
|
(3
|
)
|
|
|
|
|
|
|
2
|
|
|
(1
|
)
|
|||||||
Stock option exercises
|
1
|
|
|
—
|
|
|
1
|
|
|
|
|
|
|
|
|
1
|
|
|||||||||
Balances, June 30, 2019
|
198,628
|
|
|
$
|
33
|
|
|
$
|
2,763
|
|
|
$
|
16,429
|
|
|
$
|
112
|
|
|
$
|
(7,465
|
)
|
|
$
|
11,872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Three months ended June 30, 2018
|
||||||||||||||||||||||||||
Balances, March 31, 2018
|
198,585
|
|
|
$
|
33
|
|
|
$
|
2,626
|
|
|
$
|
14,086
|
|
|
$
|
(154
|
)
|
|
$
|
(6,510
|
)
|
|
$
|
10,081
|
|
Net income
|
|
|
|
|
|
|
193
|
|
|
|
|
|
|
193
|
|
|||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
(22
|
)
|
|
|
|
|
(22
|
)
|
||||||
Common stock repurchases
|
|
|
|
|
—
|
|
|
|
|
|
|
|
(42
|
)
|
|
(42
|
)
|
|||||||||
Dividends and dividend
equivalents |
|
|
|
|
—
|
|
|
(68
|
)
|
|
|
|
|
|
|
(68
|
)
|
|||||||||
Stock-based compensation
|
|
|
|
|
34
|
|
|
|
|
|
|
|
|
|
34
|
|
||||||||||
Restricted stock unit vesting
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
|
|
|
|
|
23
|
|
|
22
|
|
|||||||
Stock option exercises
|
6
|
|
|
—
|
|
|
13
|
|
|
|
|
|
|
|
|
13
|
|
|||||||||
Balances, June 30, 2018
|
198,591
|
|
|
$
|
33
|
|
|
$
|
2,672
|
|
|
$
|
14,211
|
|
|
$
|
(176
|
)
|
|
$
|
(6,529
|
)
|
|
$
|
10,211
|
|
|
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)
|
|||||||||||||||||||||||||
Six months ended June 30, 2019
|
||||||||||||||||||||||||||
Balances, December 31, 2018
|
198,595
|
|
|
$
|
33
|
|
|
$
|
2,535
|
|
|
$
|
15,072
|
|
|
$
|
(159
|
)
|
|
$
|
(7,320
|
)
|
|
$
|
10,161
|
|
Net income
|
|
|
|
|
|
|
1,506
|
|
|
|
|
|
|
1,506
|
|
|||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
271
|
|
|
|
|
|
271
|
|
||||||
Common stock repurchases
|
|
|
|
|
150
|
|
|
|
|
|
|
|
(160
|
)
|
|
(10
|
)
|
|||||||||
Dividends and dividend
equivalents |
|
|
|
|
—
|
|
|
(149
|
)
|
|
|
|
|
|
|
(149
|
)
|
|||||||||
Stock-based compensation
|
|
|
|
|
76
|
|
|
|
|
|
|
|
|
|
76
|
|
||||||||||
Restricted stock unit vesting
|
32
|
|
|
—
|
|
|
(3
|
)
|
|
|
|
|
|
|
3
|
|
|
—
|
|
|||||||
Stock option exercises
|
1
|
|
|
—
|
|
|
5
|
|
|
|
|
|
|
12
|
|
|
17
|
|
||||||||
Balances, June 30, 2019
|
198,628
|
|
|
$
|
33
|
|
|
$
|
2,763
|
|
|
$
|
16,429
|
|
|
$
|
112
|
|
|
$
|
(7,465
|
)
|
|
$
|
11,872
|
|
Six months ended June 30, 2018
|
||||||||||||||||||||||||||
Balances, December 31, 2017
|
198,572
|
|
|
$
|
33
|
|
|
$
|
2,445
|
|
|
$
|
13,670
|
|
|
$
|
19
|
|
|
$
|
(6,325
|
)
|
|
$
|
9,842
|
|
Net income
|
|
|
|
|
|
|
684
|
|
|
|
|
|
|
684
|
|
|||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
(195
|
)
|
|
|
|
|
(199
|
)
|
||||||
Common stock repurchases
|
|
|
|
|
200
|
|
|
|
|
|
|
|
(293
|
)
|
|
(93
|
)
|
|||||||||
Dividends and dividend
equivalents |
|
|
|
|
—
|
|
|
(139
|
)
|
|
|
|
|
|
|
(139
|
)
|
|||||||||
Stock-based compensation
|
|
|
|
|
69
|
|
|
|
|
|
|
|
|
|
69
|
|
||||||||||
Restricted stock unit vesting
|
—
|
|
|
—
|
|
|
(60
|
)
|
|
|
|
|
|
|
60
|
|
|
—
|
|
|||||||
Stock option exercises
|
19
|
|
|
—
|
|
|
18
|
|
|
|
|
|
|
29
|
|
|
47
|
|
||||||||
Balances, June 30, 2018
|
198,591
|
|
|
$
|
33
|
|
|
$
|
2,672
|
|
|
$
|
14,211
|
|
|
$
|
(176
|
)
|
|
$
|
(6,529
|
)
|
|
$
|
10,211
|
|
|
For the six months ended
June 30, |
||||||
|
2019
|
|
2018
|
||||
|
(in millions)
|
||||||
Cash flows from operating activities
|
|
|
|
||||
Net income
|
$
|
1,506
|
|
|
$
|
684
|
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
||||
Loss on sale of business
|
—
|
|
|
790
|
|
||
Net realized capital gains
|
(5
|
)
|
|
(82
|
)
|
||
Equity in net earnings of Kindred at Home
|
(15
|
)
|
|
—
|
|
||
Stock-based compensation
|
76
|
|
|
69
|
|
||
Depreciation
|
240
|
|
|
218
|
|
||
Amortization
|
36
|
|
|
51
|
|
||
Benefit for deferred income taxes
|
(21
|
)
|
|
(304
|
)
|
||
Changes in operating assets and liabilities, net of effect of
businesses acquired and dispositions: |
|
|
|
||||
Receivables
|
123
|
|
|
(619
|
)
|
||
Other assets
|
(548
|
)
|
|
(1,658
|
)
|
||
Benefits payable
|
980
|
|
|
410
|
|
||
Other liabilities
|
(116
|
)
|
|
680
|
|
||
Unearned revenues
|
29
|
|
|
3,252
|
|
||
Other
|
45
|
|
|
70
|
|
||
Net cash provided by operating activities
|
2,330
|
|
|
3,561
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Acquisitions, net of cash acquired
|
—
|
|
|
(354
|
)
|
||
Purchases of property and equipment
|
(296
|
)
|
|
(272
|
)
|
||
Purchases of investment securities
|
(3,135
|
)
|
|
(2,624
|
)
|
||
Maturities of investment securities
|
894
|
|
|
555
|
|
||
Proceeds from sales of investment securities
|
2,626
|
|
|
2,408
|
|
||
Net cash provided by (used in) investing activities
|
89
|
|
|
(287
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Receipts from contract deposits, net
|
473
|
|
|
1,515
|
|
||
(Repayments) proceeds from issuance of commercial paper, net
|
(356
|
)
|
|
243
|
|
||
Change in book overdraft
|
33
|
|
|
(67
|
)
|
||
Common stock repurchases
|
(10
|
)
|
|
(93
|
)
|
||
Dividends paid
|
(142
|
)
|
|
(126
|
)
|
||
Proceeds from stock option exercises and other, net
|
18
|
|
|
43
|
|
||
Net cash provided by financing activities
|
16
|
|
|
1,515
|
|
||
Increase in cash and cash equivalents
|
2,435
|
|
|
4,789
|
|
||
Cash and cash equivalents at beginning of period
|
2,343
|
|
|
4,042
|
|
||
Cash and cash equivalents at end of period
|
$
|
4,778
|
|
|
$
|
8,831
|
|
Supplemental cash flow disclosures:
|
|
|
|
||||
Interest payments
|
$
|
110
|
|
|
$
|
98
|
|
Income tax payments, net
|
$
|
346
|
|
|
$
|
405
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
|
(in millions)
|
||||||||||||||
June 30, 2019
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and other U.S. government
corporations and agencies: |
|
|
|
|
|
|
|
||||||||
U.S. Treasury and agency obligations
|
$
|
370
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
372
|
|
Mortgage-backed securities
|
3,459
|
|
|
69
|
|
|
(8
|
)
|
|
3,520
|
|
||||
Tax-exempt municipal securities
|
1,632
|
|
|
28
|
|
|
(1
|
)
|
|
1,659
|
|
||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
||||||||
Residential
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Commercial
|
621
|
|
|
17
|
|
|
—
|
|
|
638
|
|
||||
Asset-backed securities
|
1,037
|
|
|
2
|
|
|
(3
|
)
|
|
1,036
|
|
||||
Corporate debt securities
|
3,125
|
|
|
56
|
|
|
(5
|
)
|
|
3,176
|
|
||||
Total debt securities
|
$
|
10,245
|
|
|
$
|
174
|
|
|
$
|
(17
|
)
|
|
$
|
10,402
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and other U.S. government
corporations and agencies: |
|
|
|
|
|
|
|
||||||||
U.S. Treasury and agency obligations
|
$
|
419
|
|
|
$
|
1
|
|
|
$
|
(3
|
)
|
|
$
|
417
|
|
Mortgage-backed securities
|
2,595
|
|
|
3
|
|
|
(54
|
)
|
|
2,544
|
|
||||
Tax-exempt municipal securities
|
2,805
|
|
|
3
|
|
|
(37
|
)
|
|
2,771
|
|
||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
||||||||
Residential
|
55
|
|
|
—
|
|
|
—
|
|
|
55
|
|
||||
Commercial
|
537
|
|
|
—
|
|
|
(14
|
)
|
|
523
|
|
||||
Asset-backed securities
|
991
|
|
|
1
|
|
|
(7
|
)
|
|
985
|
|
||||
Corporate debt securities
|
3,239
|
|
|
1
|
|
|
(98
|
)
|
|
3,142
|
|
||||
Total debt securities
|
$
|
10,641
|
|
|
$
|
9
|
|
|
$
|
(213
|
)
|
|
$
|
10,437
|
|
|
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)
|
||||||||||||||||||||||
June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury and other U.S.
government corporations and agencies: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury and agency
obligations |
$
|
34
|
|
|
$
|
—
|
|
|
$
|
71
|
|
|
$
|
—
|
|
|
$
|
105
|
|
|
$
|
—
|
|
Mortgage-backed
securities |
38
|
|
|
—
|
|
|
546
|
|
|
(8
|
)
|
|
584
|
|
|
(8
|
)
|
||||||
Tax-exempt municipal
securities |
—
|
|
|
—
|
|
|
294
|
|
|
(1
|
)
|
|
294
|
|
|
(1
|
)
|
||||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Residential
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||||
Commercial
|
—
|
|
|
—
|
|
|
70
|
|
|
—
|
|
|
70
|
|
|
—
|
|
||||||
Asset-backed securities
|
308
|
|
|
(1
|
)
|
|
452
|
|
|
(2
|
)
|
|
760
|
|
|
(3
|
)
|
||||||
Corporate debt securities
|
9
|
|
|
(1
|
)
|
|
552
|
|
|
(4
|
)
|
|
561
|
|
|
(5
|
)
|
||||||
Total debt securities
|
$
|
389
|
|
|
$
|
(2
|
)
|
|
$
|
1,986
|
|
|
$
|
(15
|
)
|
|
$
|
2,375
|
|
|
$
|
(17
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury and other U.S.
government corporations and agencies: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury and agency
obligations |
$
|
179
|
|
|
$
|
(1
|
)
|
|
$
|
153
|
|
|
$
|
(2
|
)
|
|
$
|
332
|
|
|
$
|
(3
|
)
|
Mortgage-backed
securities |
956
|
|
|
(16
|
)
|
|
1,019
|
|
|
(38
|
)
|
|
1,975
|
|
|
(54
|
)
|
||||||
Tax-exempt municipal
securities |
809
|
|
|
(9
|
)
|
|
1,648
|
|
|
(28
|
)
|
|
2,457
|
|
|
(37
|
)
|
||||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Residential
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
|
—
|
|
||||||
Commercial
|
372
|
|
|
(8
|
)
|
|
133
|
|
|
(6
|
)
|
|
505
|
|
|
(14
|
)
|
||||||
Asset-backed securities
|
824
|
|
|
(7
|
)
|
|
40
|
|
|
—
|
|
|
864
|
|
|
(7
|
)
|
||||||
Corporate debt securities
|
1,434
|
|
|
(35
|
)
|
|
1,439
|
|
|
(63
|
)
|
|
2,873
|
|
|
(98
|
)
|
||||||
Total debt securities
|
$
|
4,574
|
|
|
$
|
(76
|
)
|
|
$
|
4,447
|
|
|
$
|
(137
|
)
|
|
$
|
9,021
|
|
|
$
|
(213
|
)
|
|
Three months ended
June 30, |
Six months ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
2019
|
|
2018
|
||||||||
|
(in millions)
|
|||||||||||||
Gross realized gains
|
$
|
8
|
|
|
$
|
63
|
|
$
|
18
|
|
|
$
|
94
|
|
Gross realized losses
|
(1
|
)
|
|
(10
|
)
|
(13
|
)
|
|
(12
|
)
|
||||
Net realized capital (losses) gains
|
$
|
7
|
|
|
$
|
53
|
|
$
|
5
|
|
|
$
|
82
|
|
|
Amortized
Cost |
|
Fair
Value |
||||
|
(in millions)
|
||||||
Due within one year
|
$
|
628
|
|
|
$
|
628
|
|
Due after one year through five years
|
2,332
|
|
|
2,357
|
|
||
Due after five years through ten years
|
1,694
|
|
|
1,734
|
|
||
Due after ten years
|
473
|
|
|
488
|
|
||
Mortgage and asset-backed securities
|
5,118
|
|
|
5,195
|
|
||
Total debt securities
|
$
|
10,245
|
|
|
$
|
10,402
|
|
|
Fair Value Measurements Using
|
||||||||||||||
|
Fair
Value |
|
Quoted Prices
in Active Markets (Level 1) |
|
Other
Observable Inputs (Level 2) |
|
Unobservable
Inputs (Level 3) |
||||||||
|
(in millions)
|
||||||||||||||
June 30, 2019
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
4,553
|
|
|
$
|
4,553
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Debt securities:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and other U.S. government
corporations and agencies: |
|
|
|
|
|
|
|
||||||||
U.S. Treasury and agency obligations
|
372
|
|
|
—
|
|
|
372
|
|
|
—
|
|
||||
Mortgage-backed securities
|
3,520
|
|
|
—
|
|
|
3,520
|
|
|
—
|
|
||||
Tax-exempt municipal securities
|
1,659
|
|
|
—
|
|
|
1,659
|
|
|
—
|
|
||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
||||||||
Residential
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Commercial
|
638
|
|
|
—
|
|
|
638
|
|
|
—
|
|
||||
Asset-backed securities
|
1,036
|
|
|
—
|
|
|
1,036
|
|
|
—
|
|
||||
Corporate debt securities
|
3,176
|
|
|
—
|
|
|
3,176
|
|
|
—
|
|
||||
Total debt securities
|
10,402
|
|
|
—
|
|
|
10,402
|
|
|
—
|
|
||||
Total invested assets
|
$
|
14,955
|
|
|
$
|
4,553
|
|
|
$
|
10,402
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
2,024
|
|
|
$
|
2,024
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Debt securities:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and other U.S. government
corporations and agencies: |
|
|
|
|
|
|
|
||||||||
U.S. Treasury and agency obligations
|
417
|
|
|
—
|
|
|
417
|
|
|
—
|
|
||||
Mortgage-backed securities
|
2,544
|
|
|
—
|
|
|
2,544
|
|
|
—
|
|
||||
Tax-exempt municipal securities
|
2,771
|
|
|
—
|
|
|
2,771
|
|
|
—
|
|
||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
||||||||
Residential
|
55
|
|
|
—
|
|
|
55
|
|
|
—
|
|
||||
Commercial
|
523
|
|
|
—
|
|
|
523
|
|
|
—
|
|
||||
Asset-backed securities
|
985
|
|
|
—
|
|
|
985
|
|
|
—
|
|
||||
Corporate debt securities
|
3,142
|
|
|
—
|
|
|
3,142
|
|
|
—
|
|
||||
Total debt securities
|
10,437
|
|
|
—
|
|
|
10,437
|
|
|
—
|
|
||||
Total invested assets
|
$
|
12,461
|
|
|
$
|
2,024
|
|
|
$
|
10,437
|
|
|
$
|
—
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||
Risk
Corridor Settlement |
|
CMS
Subsidies/ Discounts |
|
Risk
Corridor Settlement |
|
CMS
Subsidies/ Discounts |
|||||||||
|
(in millions)
|
||||||||||||||
Other current assets
|
$
|
11
|
|
|
$
|
388
|
|
|
$
|
15
|
|
|
$
|
172
|
|
Trade accounts payable and accrued expenses
|
(48
|
)
|
|
(1,259
|
)
|
|
(103
|
)
|
|
(503
|
)
|
||||
Net current liability
|
(37
|
)
|
|
(871
|
)
|
|
(88
|
)
|
|
(331
|
)
|
||||
Other long-term assets
|
26
|
|
|
—
|
|
|
7
|
|
|
—
|
|
||||
Other long-term liabilities
|
(137
|
)
|
|
—
|
|
|
(89
|
)
|
|
—
|
|
||||
Net long-term liability
|
(111
|
)
|
|
—
|
|
|
(82
|
)
|
|
—
|
|
||||
Total net liability
|
$
|
(148
|
)
|
|
$
|
(871
|
)
|
|
$
|
(170
|
)
|
|
$
|
(331
|
)
|
|
Retail
|
|
Group and Specialty
|
|
Healthcare
Services |
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Balance at January 1, 2019
|
$
|
1,535
|
|
|
$
|
261
|
|
|
$
|
2,101
|
|
|
$
|
3,897
|
|
Acquisitions
|
—
|
|
|
—
|
|
|
25
|
|
|
25
|
|
||||
Balance at June 30, 2019
|
$
|
1,535
|
|
|
$
|
261
|
|
|
$
|
2,126
|
|
|
$
|
3,922
|
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Weighted
Average Life |
|
Cost
|
|
Accumulated
Amortization |
|
Net
|
|
Cost
|
|
Accumulated
Amortization |
|
Net
|
||||||||||||
|
|
|
($ in millions)
|
||||||||||||||||||||||
Other intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer contracts/
relationships |
8.7 years
|
|
$
|
647
|
|
|
$
|
465
|
|
|
$
|
182
|
|
|
$
|
646
|
|
|
$
|
434
|
|
|
$
|
212
|
|
Trade names and
technology |
6.4 years
|
|
84
|
|
|
84
|
|
|
—
|
|
|
84
|
|
|
83
|
|
|
1
|
|
||||||
Provider contracts
|
11.8 years
|
|
69
|
|
|
41
|
|
|
28
|
|
|
68
|
|
|
37
|
|
|
31
|
|
||||||
Noncompetes and
other |
7.3 years
|
|
29
|
|
|
28
|
|
|
1
|
|
|
29
|
|
|
28
|
|
|
1
|
|
||||||
Total other intangible
assets |
8.7 years
|
|
$
|
829
|
|
|
$
|
618
|
|
|
$
|
211
|
|
|
$
|
827
|
|
|
$
|
582
|
|
|
$
|
245
|
|
Maturity of Lease Liabilities
|
|
June 30, 2019
|
||
|
|
(in millions)
|
||
2019 (excluding the six months ended June 30, 2019)
|
|
$
|
72
|
|
2020
|
|
122
|
|
|
2021
|
|
103
|
|
|
2022
|
|
84
|
|
|
2023
|
|
39
|
|
|
After 2023
|
|
74
|
|
|
Total lease payments
|
|
494
|
|
|
Less: Interest
|
|
49
|
|
|
Present value of ROU lease liabilities
|
|
$
|
445
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions)
|
||||||||||
Rent expense
|
$
|
167
|
|
|
$
|
204
|
|
|
$
|
179
|
|
Sublease rental income
|
(32
|
)
|
|
(33
|
)
|
|
(26
|
)
|
|||
Net rent expense
|
$
|
135
|
|
|
$
|
171
|
|
|
$
|
153
|
|
|
Minimum
Lease Payments |
|
Sublease
Rental Receipts |
|
Net Lease
Commitments |
||||||
|
(in millions)
|
||||||||||
For the years ending December 31,:
|
|
|
|
|
|
||||||
2019
|
$
|
147
|
|
|
$
|
(13
|
)
|
|
$
|
134
|
|
2020
|
113
|
|
|
(12
|
)
|
|
101
|
|
|||
2021
|
96
|
|
|
(10
|
)
|
|
86
|
|
|||
2022
|
79
|
|
|
(9
|
)
|
|
70
|
|
|||
2023
|
34
|
|
|
(9
|
)
|
|
25
|
|
|||
Thereafter
|
50
|
|
|
(23
|
)
|
|
27
|
|
|||
Total
|
$
|
519
|
|
|
$
|
(76
|
)
|
|
$
|
443
|
|
|
|
For the six months ended June 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in millions)
|
||||||
Balances, beginning of period
|
|
$
|
4,862
|
|
|
$
|
4,668
|
|
Less: Reinsurance recoverables
|
|
(95
|
)
|
|
(70
|
)
|
||
Balances, beginning of period, net
|
|
4,767
|
|
|
4,598
|
|
||
Incurred related to:
|
|
|
|
|
||||
Current year
|
|
27,086
|
|
|
23,543
|
|
||
Prior years
|
|
(275
|
)
|
|
(338
|
)
|
||
Total incurred
|
|
26,811
|
|
|
23,205
|
|
||
Paid related to:
|
|
|
|
|
||||
Current year
|
|
(21,700
|
)
|
|
(18,914
|
)
|
||
Prior years
|
|
(4,108
|
)
|
|
(3,897
|
)
|
||
Total paid
|
|
(25,808
|
)
|
|
(22,811
|
)
|
||
Reinsurance recoverable
|
|
72
|
|
|
86
|
|
||
Less: Held-for-sale
|
|
—
|
|
|
(58
|
)
|
||
Balances, end of period
|
|
$
|
5,842
|
|
|
$
|
5,020
|
|
|
|
For the six months ended June 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in millions)
|
||||||
Future policy benefits:
|
|
|
|
|
||||
Individual Commercial
|
|
$
|
—
|
|
|
$
|
(14
|
)
|
Other Businesses
|
|
—
|
|
|
15
|
|
||
Total future policy benefits
|
|
$
|
—
|
|
|
$
|
1
|
|
|
|
For the six months ended June 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in millions)
|
||||||
Balances, beginning of period
|
|
$
|
4,338
|
|
|
$
|
3,963
|
|
Less: Reinsurance recoverables
|
|
(95
|
)
|
|
(70
|
)
|
||
Balances, beginning of period, net
|
|
4,243
|
|
|
3,893
|
|
||
Incurred related to:
|
|
|
|
|
||||
Current year
|
|
24,657
|
|
|
21,069
|
|
||
Prior years
|
|
(311
|
)
|
|
(247
|
)
|
||
Total incurred
|
|
24,346
|
|
|
20,822
|
|
||
Paid related to:
|
|
|
|
|
||||
Current year
|
|
(19,826
|
)
|
|
(17,061
|
)
|
||
Prior years
|
|
(3,592
|
)
|
|
(3,327
|
)
|
||
Total paid
|
|
(23,418
|
)
|
|
(20,388
|
)
|
||
Reinsurance recoverable
|
|
72
|
|
|
86
|
|
||
Balances, end of period
|
|
$
|
5,243
|
|
|
$
|
4,413
|
|
|
|
For the six months ended June 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in millions)
|
||||||
Balances, beginning of period
|
|
$
|
517
|
|
|
$
|
568
|
|
Incurred related to:
|
|
|
|
|
||||
Current year
|
|
2,693
|
|
|
2,665
|
|
||
Prior years
|
|
36
|
|
|
(34
|
)
|
||
Total incurred
|
|
2,729
|
|
|
2,631
|
|
||
Paid related to:
|
|
|
|
|
||||
Current year
|
|
(2,131
|
)
|
|
(2,094
|
)
|
||
Prior years
|
|
(516
|
)
|
|
(496
|
)
|
||
Total paid
|
|
(2,647
|
)
|
|
(2,590
|
)
|
||
Balances, end of period
|
|
$
|
599
|
|
|
$
|
609
|
|
Reconciliation of the Disclosure of Incurred and Paid Claims Development to Benefits Payable, net of reinsurance
|
||||
|
June 30,
|
|||
|
2019
|
|||
Net outstanding liabilities
|
(in millions)
|
|||
Retail
|
$
|
5,171
|
|
|
Group and Specialty
|
599
|
|
||
Benefits payable, net of reinsurance
|
5,770
|
|
||
|
|
|||
Reinsurance recoverable on unpaid claims
|
|
|||
Retail
|
72
|
|
||
Total benefits payable, gross
|
$
|
5,842
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(dollars in millions, except per common share results; number of shares in thousands)
|
||||||||||||||
Net income available for common stockholders
|
$
|
940
|
|
|
$
|
193
|
|
|
$
|
1,506
|
|
|
$
|
684
|
|
Weighted average outstanding shares of common stock
used to compute basic earnings per common share |
135,063
|
|
|
137,763
|
|
|
135,223
|
|
|
137,833
|
|
||||
Dilutive effect of:
|
|
|
|
|
|
|
|
||||||||
Employee stock options
|
67
|
|
|
197
|
|
|
98
|
|
|
205
|
|
||||
Restricted stock
|
449
|
|
|
616
|
|
|
449
|
|
|
665
|
|
||||
Shares used to compute diluted earnings per common share
|
135,579
|
|
|
138,576
|
|
|
135,770
|
|
|
138,703
|
|
||||
Basic earnings per common share
|
$
|
6.96
|
|
|
$
|
1.40
|
|
|
$
|
11.14
|
|
|
$
|
4.96
|
|
Diluted earnings per common share
|
$
|
6.94
|
|
|
$
|
1.39
|
|
|
$
|
11.10
|
|
|
$
|
4.93
|
|
Number of antidilutive stock options and restricted stock
excluded from computation |
761
|
|
|
171
|
|
|
732
|
|
|
408
|
|
Record
Date |
|
Payment
Date |
|
Amount
per Share |
|
Total
Amount |
||||
|
|
|
|
|
|
(in millions)
|
||||
2018 payments
|
|
|
|
|
|
|
||||
12/29/2017
|
|
1/26/2018
|
|
$
|
0.40
|
|
|
$
|
55
|
|
3/30/2018
|
|
4/27/2018
|
|
$
|
0.50
|
|
|
$
|
69
|
|
6/29/2018
|
|
7/27/2018
|
|
$
|
0.50
|
|
|
$
|
69
|
|
9/28/2018
|
|
10/26/2018
|
|
$
|
0.50
|
|
|
$
|
69
|
|
2019 payments
|
|
|
|
|
|
|
||||
12/31/2018
|
|
1/25/2019
|
|
$
|
0.50
|
|
|
$
|
68
|
|
3/29/2019
|
|
4/26/2019
|
|
$
|
0.55
|
|
|
$
|
74
|
|
6/28/2019
|
|
7/26/2019
|
|
$
|
0.55
|
|
|
$
|
74
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
(in millions)
|
||||||
Short-term debt:
|
|
|
|
||||
Commercial paper
|
$
|
300
|
|
|
$
|
645
|
|
Term note
|
650
|
|
|
650
|
|
||
Senior note:
|
|
|
|
||||
$400 million, 2.625% due October 1, 2019
|
399
|
|
|
399
|
|
||
Total short-term debt
|
$
|
1,349
|
|
|
$
|
1,694
|
|
|
|
|
|
||||
Long-term debt:
|
|
|
|
||||
Senior notes:
|
|
|
|
||||
$400 million, 2.50% due December 15, 2020
|
$
|
399
|
|
|
$
|
398
|
|
$400 million, 2.90% due December 15, 2022
|
397
|
|
|
396
|
|
||
$600 million, 3.15% due December 1, 2022
|
597
|
|
|
596
|
|
||
$600 million, 3.85% due October 1, 2024
|
597
|
|
|
597
|
|
||
$600 million, 3.95% due March 15, 2027
|
595
|
|
|
594
|
|
||
$250 million, 8.15% due June 15, 2038
|
262
|
|
|
263
|
|
||
$400 million, 4.625% due December 1, 2042
|
396
|
|
|
396
|
|
||
$750 million, 4.95% due October 1, 2044
|
739
|
|
|
739
|
|
||
$400 million, 4.80% due March 15, 2047
|
395
|
|
|
396
|
|
||
Total long-term debt
|
$
|
4,377
|
|
|
$
|
4,375
|
|
|
Retail
|
|
Group and Specialty
|
|
Healthcare
Services |
|
Eliminations/
Corporate |
|
Consolidated
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Three months ended June 30, 2019
|
|
|
|
|
|
|
|||||||||||||
External revenues
|
|
|
|
|
|
|
|
|
|||||||||||
Premiums:
|
|
|
|
|
|
|
|
|
|
||||||||||
Individual Medicare Advantage
|
$
|
10,793
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,793
|
|
Group Medicare Advantage
|
1,626
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,626
|
|
|||||
Medicare stand-alone PDP
|
818
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
818
|
|
|||||
Total Medicare
|
13,237
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,237
|
|
|||||
Fully-insured
|
144
|
|
|
1,284
|
|
|
—
|
|
|
—
|
|
|
1,428
|
|
|||||
Specialty
|
—
|
|
|
387
|
|
|
—
|
|
|
—
|
|
|
387
|
|
|||||
Medicaid and other
|
724
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
724
|
|
|||||
Total premiums
|
14,105
|
|
|
1,671
|
|
|
—
|
|
|
—
|
|
|
15,776
|
|
|||||
Services revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Provider
|
—
|
|
|
—
|
|
|
111
|
|
|
—
|
|
|
111
|
|
|||||
ASO and other
|
5
|
|
|
193
|
|
|
—
|
|
|
—
|
|
|
198
|
|
|||||
Pharmacy
|
—
|
|
|
—
|
|
|
46
|
|
|
—
|
|
|
46
|
|
|||||
Total services revenue
|
5
|
|
|
193
|
|
|
157
|
|
|
—
|
|
|
355
|
|
|||||
Total external revenues
|
14,110
|
|
|
1,864
|
|
|
157
|
|
|
—
|
|
|
16,131
|
|
|||||
Intersegment revenues
|
|
|
|
|
|
|
|
|
|
||||||||||
Services
|
—
|
|
|
5
|
|
|
4,496
|
|
|
(4,501
|
)
|
|
—
|
|
|||||
Products
|
—
|
|
|
—
|
|
|
1,733
|
|
|
(1,733
|
)
|
|
—
|
|
|||||
Total intersegment revenues
|
—
|
|
|
5
|
|
|
6,229
|
|
|
(6,234
|
)
|
|
—
|
|
|||||
Investment income
|
48
|
|
|
5
|
|
|
1
|
|
|
60
|
|
|
114
|
|
|||||
Total revenues
|
14,158
|
|
|
1,874
|
|
|
6,387
|
|
|
(6,174
|
)
|
|
16,245
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Benefits
|
12,019
|
|
|
1,442
|
|
|
—
|
|
|
(143
|
)
|
|
13,318
|
|
|||||
Operating costs
|
1,206
|
|
|
406
|
|
|
6,135
|
|
|
(6,044
|
)
|
|
1,703
|
|
|||||
Depreciation and amortization
|
77
|
|
|
21
|
|
|
40
|
|
|
(29
|
)
|
|
109
|
|
|||||
Total operating expenses
|
13,302
|
|
|
1,869
|
|
|
6,175
|
|
|
(6,216
|
)
|
|
15,130
|
|
|||||
Income from operations
|
856
|
|
|
5
|
|
|
212
|
|
|
42
|
|
|
1,115
|
|
|||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
60
|
|
|
60
|
|
|||||
Other income, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(174
|
)
|
|
(174
|
)
|
|||||
Income before income taxes and equity in net earnings
|
856
|
|
|
5
|
|
|
212
|
|
|
156
|
|
|
1,229
|
|
|||||
Equity in net earnings of Kindred at Home
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
|||||
Segment earnings
|
$
|
856
|
|
|
$
|
5
|
|
|
$
|
224
|
|
|
$
|
156
|
|
|
$
|
1,241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Retail
|
|
Group and Specialty
|
|
Healthcare
Services |
|
Individual Commercial
|
|
Other
Businesses |
|
Eliminations/
Corporate |
|
Consolidated
|
||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
Three months ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
External revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Premiums:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Individual Medicare Advantage
|
$
|
8,908
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,908
|
|
Group Medicare Advantage
|
1,509
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,509
|
|
|||||||
Medicare stand-alone PDP
|
914
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
914
|
|
|||||||
Total Medicare
|
11,331
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,331
|
|
|||||||
Fully-insured
|
125
|
|
|
1,346
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
1,481
|
|
|||||||
Specialty
|
—
|
|
|
342
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
342
|
|
|||||||
Medicaid and other
|
550
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
559
|
|
|||||||
Total premiums
|
12,006
|
|
|
1,688
|
|
|
—
|
|
|
10
|
|
|
9
|
|
|
—
|
|
|
13,713
|
|
|||||||
Services revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Provider
|
—
|
|
|
—
|
|
|
112
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
112
|
|
|||||||
ASO and other
|
3
|
|
|
208
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
213
|
|
|||||||
Pharmacy
|
—
|
|
|
—
|
|
|
57
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57
|
|
|||||||
Total services revenue
|
3
|
|
|
208
|
|
|
169
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
382
|
|
|||||||
Total external revenues
|
12,009
|
|
|
1,896
|
|
|
169
|
|
|
10
|
|
|
11
|
|
|
—
|
|
|
14,095
|
|
|||||||
Intersegment revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Services
|
—
|
|
|
4
|
|
|
4,194
|
|
|
—
|
|
|
—
|
|
|
(4,198
|
)
|
|
—
|
|
|||||||
Products
|
—
|
|
|
—
|
|
|
1,611
|
|
|
—
|
|
|
—
|
|
|
(1,611
|
)
|
|
—
|
|
|||||||
Total intersegment revenues
|
—
|
|
|
4
|
|
|
5,805
|
|
|
—
|
|
|
—
|
|
|
(5,809
|
)
|
|
—
|
|
|||||||
Investment income
|
30
|
|
|
6
|
|
|
17
|
|
|
—
|
|
|
65
|
|
|
46
|
|
|
164
|
|
|||||||
Total revenues
|
12,039
|
|
|
1,906
|
|
|
5,991
|
|
|
10
|
|
|
76
|
|
|
(5,763
|
)
|
|
14,259
|
|
|||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Benefits
|
10,270
|
|
|
1,357
|
|
|
—
|
|
|
(9
|
)
|
|
39
|
|
|
(121
|
)
|
|
11,536
|
|
|||||||
Operating costs
|
1,210
|
|
|
447
|
|
|
5,749
|
|
|
1
|
|
|
2
|
|
|
(5,648
|
)
|
|
1,761
|
|
|||||||
Depreciation and amortization
|
66
|
|
|
22
|
|
|
36
|
|
|
—
|
|
|
—
|
|
|
(24
|
)
|
|
100
|
|
|||||||
Total operating expenses
|
11,546
|
|
|
1,826
|
|
|
5,785
|
|
|
(8
|
)
|
|
41
|
|
|
(5,793
|
)
|
|
13,397
|
|
|||||||
Income from operations
|
493
|
|
|
80
|
|
|
206
|
|
|
18
|
|
|
35
|
|
|
30
|
|
|
862
|
|
|||||||
Loss on sale of business
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
790
|
|
|
790
|
|
|||||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
53
|
|
|
53
|
|
|||||||
Income (loss) before income taxes and equity in net earnings
|
493
|
|
|
80
|
|
|
206
|
|
|
18
|
|
|
35
|
|
|
(813
|
)
|
|
19
|
|
|||||||
Equity in net earnings of Kindred at Home
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Segment earnings (loss)
|
$
|
493
|
|
|
$
|
80
|
|
|
$
|
206
|
|
|
$
|
18
|
|
|
$
|
35
|
|
|
$
|
(813
|
)
|
|
$
|
19
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Retail
|
|
Group and Specialty
|
|
Healthcare
Services |
|
Eliminations/
Corporate |
|
Consolidated
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Six months ended June 30, 2019
|
|
|
|
|
|
|
|
|
|||||||||||
External revenues
|
|
|
|
|
|
|
|
|
|||||||||||
Premiums:
|
|
|
|
|
|
|
|
|
|
||||||||||
Individual Medicare Advantage
|
$
|
21,502
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21,502
|
|
Group Medicare Advantage
|
3,258
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,258
|
|
|||||
Medicare stand-alone PDP
|
1,627
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,627
|
|
|||||
Total Medicare
|
26,387
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26,387
|
|
|||||
Fully-insured
|
284
|
|
|
2,595
|
|
|
—
|
|
|
—
|
|
|
2,879
|
|
|||||
Specialty
|
—
|
|
|
760
|
|
|
—
|
|
|
—
|
|
|
760
|
|
|||||
Medicaid and other
|
1,401
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,401
|
|
|||||
Total premiums
|
28,072
|
|
|
3,355
|
|
|
—
|
|
|
—
|
|
|
31,427
|
|
|||||
Services revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Provider
|
—
|
|
|
—
|
|
|
231
|
|
|
—
|
|
|
231
|
|
|||||
ASO and other
|
10
|
|
|
387
|
|
|
—
|
|
|
—
|
|
|
397
|
|
|||||
Pharmacy
|
—
|
|
|
—
|
|
|
82
|
|
|
—
|
|
|
82
|
|
|||||
Total services revenue
|
10
|
|
|
387
|
|
|
313
|
|
|
—
|
|
|
710
|
|
|||||
Total external revenues
|
28,082
|
|
|
3,742
|
|
|
313
|
|
|
—
|
|
|
32,137
|
|
|||||
Intersegment revenues
|
|
|
|
|
|
|
|
|
|
||||||||||
Services
|
—
|
|
|
9
|
|
|
8,802
|
|
|
(8,811
|
)
|
|
—
|
|
|||||
Products
|
—
|
|
|
—
|
|
|
3,369
|
|
|
(3,369
|
)
|
|
—
|
|
|||||
Total intersegment revenues
|
—
|
|
|
9
|
|
|
12,171
|
|
|
(12,180
|
)
|
|
—
|
|
|||||
Investment income
|
89
|
|
|
10
|
|
|
1
|
|
|
115
|
|
|
215
|
|
|||||
Total revenues
|
28,171
|
|
|
3,761
|
|
|
12,485
|
|
|
(12,065
|
)
|
|
32,352
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Benefits
|
24,346
|
|
|
2,729
|
|
|
—
|
|
|
(264
|
)
|
|
26,811
|
|
|||||
Operating costs
|
2,354
|
|
|
819
|
|
|
12,023
|
|
|
(11,833
|
)
|
|
3,363
|
|
|||||
Depreciation and amortization
|
150
|
|
|
43
|
|
|
78
|
|
|
(55
|
)
|
|
216
|
|
|||||
Total operating expenses
|
26,850
|
|
|
3,591
|
|
|
12,101
|
|
|
(12,152
|
)
|
|
30,390
|
|
|||||
Income from operations
|
1,321
|
|
|
170
|
|
|
384
|
|
|
87
|
|
|
1,962
|
|
|||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
122
|
|
|
122
|
|
|||||
Other income, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(135
|
)
|
|
(135
|
)
|
|||||
Income before income taxes and equity in net earnings
|
1,321
|
|
|
170
|
|
|
384
|
|
|
100
|
|
|
1,975
|
|
|||||
Equity in net earnings of Kindred at Home
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
|||||
Segment earnings
|
$
|
1,321
|
|
|
$
|
170
|
|
|
$
|
399
|
|
|
$
|
100
|
|
|
$
|
1,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Retail
|
|
Group and Specialty
|
|
Healthcare
Services |
|
Individual Commercial
|
|
Other
Businesses |
|
Eliminations/
Corporate |
|
Consolidated
|
||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
Six months ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
External Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Premiums:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Individual Medicare Advantage
|
$
|
17,878
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17,878
|
|
Group Medicare Advantage
|
3,033
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,033
|
|
|||||||
Medicare stand-alone PDP
|
1,810
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,810
|
|
|||||||
Total Medicare
|
22,721
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,721
|
|
|||||||
Fully-insured
|
250
|
|
|
2,738
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
2,993
|
|
|||||||
Specialty
|
—
|
|
|
689
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
689
|
|
|||||||
Medicaid and other
|
1,103
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
1,121
|
|
|||||||
Total premiums
|
24,074
|
|
|
3,427
|
|
|
—
|
|
|
5
|
|
|
18
|
|
|
—
|
|
|
27,524
|
|
|||||||
Services revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Provider
|
—
|
|
|
—
|
|
|
177
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
177
|
|
|||||||
ASO and other
|
5
|
|
|
427
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
436
|
|
|||||||
Pharmacy
|
—
|
|
|
—
|
|
|
96
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
96
|
|
|||||||
Total services revenue
|
5
|
|
|
427
|
|
|
273
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
709
|
|
|||||||
Total external revenues
|
24,079
|
|
|
3,854
|
|
|
273
|
|
|
5
|
|
|
22
|
|
|
—
|
|
|
28,233
|
|
|||||||
Intersegment revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Services
|
—
|
|
|
9
|
|
|
8,212
|
|
|
—
|
|
|
—
|
|
|
(8,221
|
)
|
|
—
|
|
|||||||
Products
|
—
|
|
|
—
|
|
|
3,146
|
|
|
—
|
|
|
—
|
|
|
(3,146
|
)
|
|
—
|
|
|||||||
Total intersegment revenues
|
—
|
|
|
9
|
|
|
11,358
|
|
|
—
|
|
|
—
|
|
|
(11,367
|
)
|
|
—
|
|
|||||||
Investment income
|
67
|
|
|
13
|
|
|
23
|
|
|
—
|
|
|
100
|
|
|
102
|
|
|
305
|
|
|||||||
Total revenues
|
24,146
|
|
|
3,876
|
|
|
11,654
|
|
|
5
|
|
|
122
|
|
|
(11,265
|
)
|
|
28,538
|
|
|||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Benefits
|
20,822
|
|
|
2,630
|
|
|
—
|
|
|
(69
|
)
|
|
65
|
|
|
(242
|
)
|
|
23,206
|
|
|||||||
Operating costs
|
2,432
|
|
|
910
|
|
|
11,190
|
|
|
3
|
|
|
4
|
|
|
(11,029
|
)
|
|
3,510
|
|
|||||||
Depreciation and amortization
|
132
|
|
|
45
|
|
|
85
|
|
|
—
|
|
|
—
|
|
|
(62
|
)
|
|
200
|
|
|||||||
Total operating expenses
|
23,386
|
|
|
3,585
|
|
|
11,275
|
|
|
(66
|
)
|
|
69
|
|
|
(11,333
|
)
|
|
26,916
|
|
|||||||
Income from operations
|
760
|
|
|
291
|
|
|
379
|
|
|
71
|
|
|
53
|
|
|
68
|
|
|
1,622
|
|
|||||||
Loss on sale of business
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
790
|
|
|
790
|
|
|||||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
106
|
|
|
106
|
|
|||||||
Income (loss) before income taxes and equity in net earnings
|
760
|
|
|
291
|
|
|
379
|
|
|
71
|
|
|
53
|
|
|
(828
|
)
|
|
726
|
|
|||||||
Equity in net earnings of Kindred at Home
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Segment earnings (loss)
|
$
|
760
|
|
|
$
|
291
|
|
|
$
|
379
|
|
|
$
|
71
|
|
|
$
|
53
|
|
|
$
|
(828
|
)
|
|
$
|
726
|
|
•
|
Our strategy offers 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 June 30, 2019, approximately 2,272,300 members, or 65%, of our individual Medicare Advantage members were in value-based relationships under our integrated care delivery model, as compared to 1,978,200 members, or 65%, at June 30, 2018. Medicare Advantage and dual demonstration program membership enrolled in a Humana chronic care management program was 853,600 at June 30, 2019, an increase of 13.4% from 752,700 at June 30, 2018. These members may not be unique to each program since members have the ability to enroll in multiple programs. The increase is driven by our improved process for identifying and enrolling members in the appropriate program at the right time, coupled with growth in Special Needs Plans, or SNP, membership and the insuring of certain SNP membership to Humana At Home's care management program.
|
•
|
Net income increased $747 million from $193 million in 2018 to $940 million in 2019 and earnings per diluted common share increased $5.55 from $1.39 earnings per diluted common share in 2018 to $6.94 earnings per diluted common share in 2019. This comparison was primarily impacted by the loss on the sale of KMG recognized during the three months ended June 30, 2018 as well as the beneficial impact of the suspension of the health industry insurance fee in 2019. The year-over-year comparisons were further impacted by the improvement in our Retail and Healthcare Services segment results, partially offset by the lower Group and Specialty segment results as detailed in the discussion that follows, as well as the impact of previously implemented productivity initiatives which have led to significant operating cost efficiencies in our segments. In addition, year-over-year comparisons are favorably impacted by a lower number of shares used to compute dilutive earnings per share, primarily reflecting share repurchases.
|
•
|
Contributing to our Retail segment revenue growth was our individual Medicare Advantage membership, which increased 457,300 members, or 15.1%, from June 30, 2018 to June 30, 2019.
|
•
|
Our operating cash flow of $2.3 billion for 2019 improved primarily from the timing of the mid-year Medicare risk adjustment premium revenue collections which were received during the second quarter of 2019 as compared to the third quarter of 2018, higher earnings, the impact of approximately $230 million payment related to reinsuring certain voluntary benefit and financial protection products to a third party in connection with the sale of KMG in 2018, as well as the timing of other working capital changes.
|
•
|
On July 31, 2019, we announced that we intend to enter into an agreement with a third party financial institution to effect a $1 billion accelerated stock repurchase program. We will repurchase shares through the program as part of the $3 billion authorized on July 30, 2019. The actual number of shares repurchased under the
|
|
For the three months ended June 30,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
Dollars
|
|
Percentage
|
|||||||
|
(dollars in millions, except per common share results)
|
|||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|||||||
Premiums:
|
|
|
|
|
|
|
|
|||||||
Retail
|
$
|
14,105
|
|
|
$
|
12,006
|
|
|
$
|
2,099
|
|
|
17.5
|
%
|
Group and Specialty
|
1,671
|
|
|
1,688
|
|
|
(17
|
)
|
|
(1.0
|
)%
|
|||
Individual Commercial
|
—
|
|
|
10
|
|
|
(10
|
)
|
|
(100.0
|
)%
|
|||
Other Businesses
|
—
|
|
|
9
|
|
|
(9
|
)
|
|
(100.0
|
)%
|
|||
Total premiums
|
15,776
|
|
|
13,713
|
|
|
2,063
|
|
|
15.0
|
%
|
|||
Services:
|
|
|
|
|
|
|
|
|||||||
Retail
|
5
|
|
|
3
|
|
|
2
|
|
|
66.7
|
%
|
|||
Group and Specialty
|
193
|
|
|
208
|
|
|
(15
|
)
|
|
(7.2
|
)%
|
|||
Healthcare Services
|
157
|
|
|
169
|
|
|
(12
|
)
|
|
(7.1
|
)%
|
|||
Other Businesses
|
—
|
|
|
2
|
|
|
(2
|
)
|
|
(100.0
|
)%
|
|||
Total services
|
355
|
|
|
382
|
|
|
(27
|
)
|
|
(7.1
|
)%
|
|||
Investment income
|
114
|
|
|
164
|
|
|
(50
|
)
|
|
(30.5
|
)%
|
|||
Total revenues
|
16,245
|
|
|
14,259
|
|
|
1,986
|
|
|
13.9
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Benefits
|
13,318
|
|
|
11,536
|
|
|
1,782
|
|
|
15.4
|
%
|
|||
Operating costs
|
1,703
|
|
|
1,761
|
|
|
(58
|
)
|
|
(3.3
|
)%
|
|||
Depreciation and amortization
|
109
|
|
|
100
|
|
|
9
|
|
|
9.0
|
%
|
|||
Total operating expenses
|
15,130
|
|
|
13,397
|
|
|
1,733
|
|
|
12.9
|
%
|
|||
Income from operations
|
1,115
|
|
|
862
|
|
|
253
|
|
|
29.4
|
%
|
|||
Loss on sale of business
|
—
|
|
|
790
|
|
|
(790
|
)
|
|
(100.0
|
)%
|
|||
Interest expense
|
60
|
|
|
53
|
|
|
7
|
|
|
13.2
|
%
|
|||
Other income, net
|
(174
|
)
|
|
—
|
|
|
(174
|
)
|
|
100.0
|
%
|
|||
Income before income taxes and equity in net earnings
|
1,229
|
|
|
19
|
|
|
1,210
|
|
|
6,368.4
|
%
|
|||
Provision for income taxes
|
301
|
|
|
(174
|
)
|
|
475
|
|
|
(273.0
|
)%
|
|||
Equity in net earnings of Kindred at Home
|
12
|
|
|
—
|
|
|
12
|
|
|
100.0
|
%
|
|||
Net income
|
$
|
940
|
|
|
$
|
193
|
|
|
$
|
747
|
|
|
387.0
|
%
|
Diluted earnings per common share
|
$
|
6.94
|
|
|
$
|
1.39
|
|
|
$
|
5.55
|
|
|
399.3
|
%
|
Benefit ratio (a)
|
84.4
|
%
|
|
84.1
|
%
|
|
|
|
0.3
|
%
|
||||
Operating cost ratio (b)
|
10.6
|
%
|
|
12.5
|
%
|
|
|
|
(1.9
|
)%
|
||||
Effective tax rate
|
24.2
|
%
|
|
n/m
|
|
|
|
|
n/m
|
|
(a)
|
Represents benefits expense as a percentage of premiums revenue.
|
(b)
|
Represents operating costs as a percentage of total revenues less investment income.
|
|
|
|
|
|
|
|
|
|||||||
|
For the six months ended
June 30, |
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
Dollars
|
|
Percentage
|
|||||||
|
(dollars in millions, except per common share results)
|
|||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|||||||
Premiums:
|
|
|
|
|
|
|
|
|||||||
Retail
|
$
|
28,072
|
|
|
$
|
24,074
|
|
|
$
|
3,998
|
|
|
16.6
|
%
|
Group and Specialty
|
3,355
|
|
|
3,427
|
|
|
(72
|
)
|
|
(2.1
|
)%
|
|||
Individual Commercial
|
—
|
|
|
5
|
|
|
(5
|
)
|
|
(100.0
|
)%
|
|||
Other Businesses
|
—
|
|
|
18
|
|
|
(18
|
)
|
|
(100.0
|
)%
|
|||
Total premiums
|
31,427
|
|
|
27,524
|
|
|
3,903
|
|
|
14.2
|
%
|
|||
Services:
|
|
|
|
|
|
|
|
|||||||
Retail
|
10
|
|
|
5
|
|
|
5
|
|
|
100.0
|
%
|
|||
Group and Specialty
|
387
|
|
|
427
|
|
|
(40
|
)
|
|
(9.4
|
)%
|
|||
Healthcare Services
|
313
|
|
|
273
|
|
|
40
|
|
|
14.7
|
%
|
|||
Other Businesses
|
—
|
|
|
4
|
|
|
(4
|
)
|
|
(100.0
|
)%
|
|||
Total services
|
710
|
|
|
709
|
|
|
1
|
|
|
0.1
|
%
|
|||
Investment income
|
215
|
|
|
305
|
|
|
(90
|
)
|
|
(29.5
|
)%
|
|||
Total revenues
|
32,352
|
|
|
28,538
|
|
|
3,814
|
|
|
13.4
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Benefits
|
26,811
|
|
|
23,206
|
|
|
3,605
|
|
|
15.5
|
%
|
|||
Operating costs
|
3,363
|
|
|
3,510
|
|
|
(147
|
)
|
|
(4.2
|
)%
|
|||
Depreciation and amortization
|
216
|
|
|
200
|
|
|
16
|
|
|
8.0
|
%
|
|||
Total operating expenses
|
30,390
|
|
|
26,916
|
|
|
3,474
|
|
|
12.9
|
%
|
|||
Income from operations
|
1,962
|
|
|
1,622
|
|
|
340
|
|
|
21.0
|
%
|
|||
Loss on sale of business
|
—
|
|
|
790
|
|
|
(790
|
)
|
|
(100.0
|
)%
|
|||
Interest expense
|
122
|
|
|
106
|
|
|
16
|
|
|
15.1
|
%
|
|||
Other income, net
|
(135
|
)
|
|
—
|
|
|
(135
|
)
|
|
100.0
|
%
|
|||
Income before income taxes and equity in net earnings
|
1,975
|
|
|
726
|
|
|
1,249
|
|
|
172.0
|
%
|
|||
Provision for income taxes
|
484
|
|
|
42
|
|
|
442
|
|
|
1,052.4
|
%
|
|||
Equity in net earnings of Kindred at Home
|
15
|
|
|
—
|
|
|
15
|
|
|
100.0
|
%
|
|||
Net income
|
$
|
1,506
|
|
|
$
|
684
|
|
|
$
|
822
|
|
|
120.2
|
%
|
Diluted earnings per common share
|
$
|
11.10
|
|
|
$
|
4.93
|
|
|
$
|
6.17
|
|
|
125.2
|
%
|
Benefit ratio (a)
|
85.3
|
%
|
|
84.3
|
%
|
|
|
|
1.0
|
%
|
||||
Operating cost ratio (b)
|
10.5
|
%
|
|
12.4
|
%
|
|
|
|
(1.9
|
)%
|
||||
Effective tax rate
|
24.3
|
%
|
|
5.8
|
%
|
|
|
|
18.5
|
%
|
(a)
|
Represents benefits expense as a percentage of premiums revenue.
|
(b)
|
Represents operating costs as a percentage of total revenues less investment income.
|
|
June 30,
|
|
Change
|
||||||||
|
2019
|
|
2018
|
|
Members
|
|
Percentage
|
||||
Membership:
|
|
|
|
|
|
|
|
||||
Medical membership:
|
|
|
|
|
|
|
|
||||
Individual Medicare Advantage
|
3,484,500
|
|
|
3,027,200
|
|
|
457,300
|
|
|
15.1
|
%
|
Group Medicare Advantage
|
519,100
|
|
|
493,100
|
|
|
26,000
|
|
|
5.3
|
%
|
Medicare stand-alone PDP
|
4,400,500
|
|
|
5,008,200
|
|
|
(607,700
|
)
|
|
(12.1
|
)%
|
Total Retail Medicare
|
8,404,100
|
|
|
8,528,500
|
|
|
(124,400
|
)
|
|
(1.5
|
)%
|
State-based Medicaid
|
465,200
|
|
|
325,200
|
|
|
140,000
|
|
|
43.1
|
%
|
Medicare Supplement
|
276,000
|
|
|
241,500
|
|
|
34,500
|
|
|
14.3
|
%
|
Total Retail medical members
|
9,145,300
|
|
|
9,095,200
|
|
|
50,100
|
|
|
0.6
|
%
|
|
|
|
|
|
|
|
|
|||||||
|
For the three months ended June 30,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
Dollars
|
|
Percentage
|
|||||||
|
(in millions)
|
|
|
|||||||||||
Premiums and Services Revenue:
|
|
|
|
|
|
|
|
|||||||
Premiums:
|
|
|
|
|
|
|
|
|||||||
Individual Medicare Advantage
|
$
|
10,793
|
|
|
$
|
8,908
|
|
|
$
|
1,885
|
|
|
21.2
|
%
|
Group Medicare Advantage
|
1,626
|
|
|
1,509
|
|
|
117
|
|
|
7.8
|
%
|
|||
Medicare stand-alone PDP
|
818
|
|
|
914
|
|
|
(96
|
)
|
|
(10.5
|
)%
|
|||
Total Retail Medicare
|
13,237
|
|
|
11,331
|
|
|
1,906
|
|
|
16.8
|
%
|
|||
State-based Medicaid
|
724
|
|
|
550
|
|
|
174
|
|
|
31.6
|
%
|
|||
Medicare Supplement
|
144
|
|
|
125
|
|
|
19
|
|
|
15.2
|
%
|
|||
Total premiums
|
14,105
|
|
|
12,006
|
|
|
2,099
|
|
|
17.5
|
%
|
|||
Services
|
5
|
|
|
3
|
|
|
2
|
|
|
66.7
|
%
|
|||
Total premiums and services revenue
|
$
|
14,110
|
|
|
$
|
12,009
|
|
|
$
|
2,101
|
|
|
17.5
|
%
|
Segment earnings
|
$
|
856
|
|
|
$
|
493
|
|
|
$
|
363
|
|
|
73.6
|
%
|
Benefit ratio
|
85.2
|
%
|
|
85.5
|
%
|
|
|
|
(0.3
|
)%
|
||||
Operating cost ratio
|
8.5
|
%
|
|
10.1
|
%
|
|
|
|
(1.6
|
)%
|
|
|
|
|
|
|
|
|
|||||||
|
For the six months ended
June 30, |
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
Dollars
|
|
Percentage
|
|||||||
|
(in millions)
|
|
|
|||||||||||
Premiums and Services Revenue:
|
|
|
|
|
|
|
|
|||||||
Premiums:
|
|
|
|
|
|
|
|
|||||||
Individual Medicare Advantage
|
$
|
21,502
|
|
|
$
|
17,878
|
|
|
$
|
3,624
|
|
|
20.3
|
%
|
Group Medicare Advantage
|
3,258
|
|
|
3,033
|
|
|
225
|
|
|
7.4
|
%
|
|||
Medicare stand-alone PDP
|
1,627
|
|
|
1,810
|
|
|
(183
|
)
|
|
(10.1
|
)%
|
|||
Total Retail Medicare
|
26,387
|
|
|
22,721
|
|
|
3,666
|
|
|
16.1
|
%
|
|||
State-based Medicaid
|
1,401
|
|
|
1,103
|
|
|
298
|
|
|
27.0
|
%
|
|||
Medicare Supplement
|
284
|
|
|
250
|
|
|
34
|
|
|
13.6
|
%
|
|||
Total premiums
|
28,072
|
|
|
24,074
|
|
|
3,998
|
|
|
16.6
|
%
|
|||
Services
|
10
|
|
|
5
|
|
|
5
|
|
|
100.0
|
%
|
|||
Total premiums and services revenue
|
$
|
28,082
|
|
|
$
|
24,079
|
|
|
$
|
4,003
|
|
|
16.6
|
%
|
Segment earnings
|
$
|
1,321
|
|
|
$
|
760
|
|
|
$
|
561
|
|
|
73.8
|
%
|
Benefit ratio
|
86.7
|
%
|
|
86.5
|
%
|
|
|
|
0.2
|
%
|
||||
Operating cost ratio
|
8.4
|
%
|
|
10.1
|
%
|
|
|
|
(1.7
|
)%
|
•
|
Retail segment earnings increased $363 million, or 73.6%, from $493 million in the 2018 quarter to $856 million in the 2019 quarter primarily due the segment's lower benefit and operating cost ratios, as well as increased premiums, primarily associated with significant growth in our individual Medicare Advantage membership as more fully described below. Retail segment earnings increased $561 million, or 73.8%, from $760 million in the 2018 period to $1.3 billion in the 2019 period primarily reflecting the lower operating cost ratio along with increased premiums associated with the significant growth in our individual Medicare Advantage membership, partially offset by the segment's higher benefit ratio as more fully described below.
|
•
|
Individual Medicare Advantage membership increased 457,300 members, or 15.1%, from June 30, 2018 to June 30, 2019, primarily due to membership additions associated with the most recent Annual Election Period, or AEP, and Open Election Period (OEP) for Medicare beneficiaries. The OEP sales period, which ran from January 1 to March 31, added approximately 43,700 members . The increase in Individual Medicare Advantage membership includes the addition of approximately 55,200 Dual Eligible Special Need Plan (D-SNP) members from June 30, 2018 to June 30, 2019.
|
•
|
Group Medicare Advantage membership increased 26,000, or 5.3%, from June 30, 2018 to June 30, 2019, primarily due to net membership additions associated with the most recent AEP for Medicare beneficiaries.
|
•
|
Medicare stand-alone PDP membership decreased 607,700 members, or 12.1%, from June 30, 2018 to June 30, 2019 reflecting net declines during the most recent AEP for Medicare beneficiaries. These anticipated declines were primarily due to the competitive nature of the industry and the pricing discipline we have employed, which has resulted in us no longer being the low cost plan in any market for 2019.
|
•
|
State-based Medicaid membership increased 140,000 members, or 43.1%, from June 30, 2018 to June 30, 2019, primarily driven by the statewide award of a comprehensive contract under the Managed Medical Assistance (MMA) program in Florida.
|
•
|
Retail segment premiums increased $2.1 billion, or 17.5%, from the 2018 quarter to the 2019 quarter and increased $4.0 billion, or 16.6%, from the 2018 period to the 2019 period primarily due to individual and group Medicare Advantage membership growth and higher per member premiums, as well as increased state-based contracts membership. These favorable items were partially offset by the decline in membership in our stand-alone PDP offerings.
|
•
|
The Retail segment benefit ratio decreased 30 basis points from 85.5% in the 2018 quarter to 85.2% in the 2019 quarter primarily as a result of engaging our Medicare Advantage members in clinical programs, as well as ensuring that they are appropriately documented under the CMS risk-adjustment model. In addition the decreases were impacted by the lower than expected medical costs as compared to the pricing assumptions used in our individual Medicare Advantage business for 2019. This improvement was partially offset by the suspension of the health insurance industry fee in 2019 which was contemplated in the pricing and benefit design of our products, and lower favorable prior-period medical reserve development in the 2019 quarter. The Retail segment benefit ratio increased 20 basis points from 86.5% in the 2018 period to 86.7% in the 2019 period, primarily reflecting the net-negative impact of the same factors that affected the 2019 quarter described above. These increases were partially offset by higher favorable prior-period reserve development and the impact of a less severe flu season in the 2019 period.
|
•
|
The Retail segment's benefits expense for the 2019 quarter included $28 million in favorable prior-period medical claims reserve development versus $60 million in the 2018 quarter. For the 2019 period, the Retail segment’s benefit expense includes the beneficial effect of $311 million in favorable prior-period reserve development versus $247 million in the 2018 period. Prior-period medical claims reserve development decreased the Retail segment benefit ratio by approximately 20 basis points in the 2019 quarter versus approximately 50 basis points in the 2018 quarter. Favorable prior-period reserve development decreased the Retail segment benefit ratio by approximately 110 basis points in the 2019 period versus approximately 100 basis points in the 2018 period.
|
•
|
The Retail segment operating cost ratio of 8.5% for the 2019 quarter decreased 160 basis points from 10.1% for the 2018 quarter. The Retail segment operating cost ratio of 8.4% for the 2019 period decreased 170 basis points from 10.1% for the 2018 period. The year-over-year comparison was primarily due to the suspension of the health insurance industry fee in 2019, as well as operating costs efficiencies from previously implemented productivity initiatives. These decreases were partially offset by the strategic investments in our integrated care delivery model and the impact of higher compensation expense accruals in 2019 for the AIP as a result of our continued strong performance. The non-deductible health insurance industry fee impacted the operating cost ratio by 190 basis points in the 2018 quarter and period.
|
|
June 30,
|
|
Change
|
||||||||
|
2019
|
|
2018
|
|
Members
|
|
Percentage
|
||||
Membership:
|
|
|
|
|
|
|
|
||||
Medical membership:
|
|
|
|
|
|
|
|
||||
Fully-insured commercial group
|
942,500
|
|
|
1,050,900
|
|
|
(108,400
|
)
|
|
(10.3
|
)%
|
ASO
|
496,000
|
|
|
458,800
|
|
|
37,200
|
|
|
8.1
|
%
|
Military services
|
5,971,400
|
|
|
5,931,500
|
|
|
39,900
|
|
|
0.7
|
%
|
Total group and specialty medical members
|
7,409,900
|
|
|
7,441,200
|
|
|
(31,300
|
)
|
|
(0.4
|
)%
|
Specialty membership (a)
|
5,860,000
|
|
|
6,227,700
|
|
|
(367,700
|
)
|
|
(5.9
|
)%
|
(a)
|
Specialty products include dental, vision, voluntary benefit products and other supplemental health. Members included in these products may not be unique to each product since members have the ability to enroll in multiple products.
|
|
|
|
|
|
|
|
|
|||||||
|
For the three months ended June 30,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
Dollars
|
|
Percentage
|
|||||||
|
(in millions)
|
|
|
|||||||||||
Premiums and Services Revenue:
|
|
|
|
|
|
|
|
|||||||
Premiums:
|
|
|
|
|
|
|
|
|||||||
Fully-insured commercial group
|
$
|
1,284
|
|
|
$
|
1,346
|
|
|
$
|
(62
|
)
|
|
(4.6
|
)%
|
Group specialty
|
387
|
|
|
342
|
|
|
45
|
|
|
13.2
|
%
|
|||
Total premiums
|
1,671
|
|
|
1,688
|
|
|
(17
|
)
|
|
(1.0
|
)%
|
|||
Services
|
193
|
|
|
208
|
|
|
(15
|
)
|
|
(7.2
|
)%
|
|||
Total premiums and services revenue
|
$
|
1,864
|
|
|
$
|
1,896
|
|
|
$
|
(32
|
)
|
|
(1.7
|
)%
|
Segment earnings
|
$
|
5
|
|
|
$
|
80
|
|
|
$
|
(75
|
)
|
|
(93.8
|
)%
|
Benefit ratio
|
86.3
|
%
|
|
80.4
|
%
|
|
|
|
5.9
|
%
|
||||
Operating cost ratio
|
21.7
|
%
|
|
23.5
|
%
|
|
|
|
(1.8
|
)%
|
|
|
|
|
|
|
|
|
|||||||
|
For the six months ended
June 30, |
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
Dollars
|
|
Percentage
|
|||||||
|
(in millions)
|
|
|
|||||||||||
Premiums and Services Revenue:
|
|
|
|
|
|
|
|
|||||||
Premiums:
|
|
|
|
|
|
|
|
|||||||
Fully-insured commercial group
|
$
|
2,595
|
|
|
$
|
2,738
|
|
|
$
|
(143
|
)
|
|
(5.2
|
)%
|
Group specialty
|
760
|
|
|
689
|
|
|
71
|
|
|
10.3
|
%
|
|||
Total premiums
|
3,355
|
|
|
3,427
|
|
|
(72
|
)
|
|
(2.1
|
)%
|
|||
Services
|
387
|
|
|
427
|
|
|
(40
|
)
|
|
(9.4
|
)%
|
|||
Total premiums and services revenue
|
$
|
3,742
|
|
|
$
|
3,854
|
|
|
$
|
(112
|
)
|
|
(2.9
|
)%
|
Segment earnings
|
$
|
170
|
|
|
$
|
291
|
|
|
$
|
(121
|
)
|
|
(41.6
|
)%
|
Benefit ratio
|
81.3
|
%
|
|
76.7
|
%
|
|
|
|
4.6
|
%
|
||||
Operating cost ratio
|
21.8
|
%
|
|
23.6
|
%
|
|
|
|
(1.8
|
)%
|
•
|
Group and Specialty segment earnings decreased $75 million, or 93.8%, from $80 million in the 2018 quarter to $5 million in the 2019 quarter. Group and Specialty segment earnings decreased $121 million, or 41.6%, from $291 million in the 2018 period to $170 million in the 2019 period. These decreases were primarily due to a higher benefit ratio, along with lower military services business earnings. Earnings comparisons related to the military services business were unfavorably impacted by the receipt of certain contractual incentives and adjustments in 2018 related to the previous TRICARE contract which did not recur in 2019. These decreases were partially offset by improvement in the operating cost ratio as more fully described below.
|
•
|
Fully-insured commercial group medical membership decreased 108,400 members, or 10.3%, from June 30, 2018 to June 30, 2019 primarily reflecting lower membership in small group accounts due in part to more small group accounts selecting level-funded ASO products in 2019, as well as the loss of certain large group accounts due to the competitive pricing environment. The portion of group fully-insured commercial medical membership in small group accounts was approximately 61% at June 30, 2019 and 62% at June 30, 2018.
|
•
|
Group ASO commercial medical membership increased 37,200 members, or 8.1%, from June 30, 2018 to June 30, 2019 reflecting more small group accounts selecting level-funded ASO products in 2019, partially offset by the loss of certain large group accounts as a result of continued discipline in pricing of services for self-funded accounts amid a highly competitive environment.
|
•
|
Military services membership increased 39,900 members, or 0.7%, from June 30, 2018 to June 30, 2019. Membership includes military service members, retirees, and their families to whom the company provides healthcare services under the current T2017 TRICARE East Region contract. The current contract, which covers 32 states, became effective on January 1, 2018.
|
•
|
Specialty membership decreased 367,700 members, or 5.9%, from June 30, 2018 to June 30, 2019 primarily due to the exit of our voluntary benefits and financial protection products in connection with the sale of KMG in 2018, as well as the loss of some group accounts offering stand-alone dental and vision products.
|
•
|
Group and Specialty segment premiums decreased $17 million, or 1.0%, from the 2018 quarter to $1.67 billion for the 2019 quarter and decreased $72 million, or 2.1%, from the 2018 period to $3.36 billion for the 2019 period. These decreases were primarily due to a decline in our fully-insured group commercial and specialty membership and the exit of our voluntary benefit and financial protection products in connection with the sale of KMG in 2018. These decreases were partially offset by higher stop-loss revenues related to our level-funded ASO accounts resulting from membership growth in this product. Additionally, the impact of the lower unfavorable commercial risk adjustment, or CRA, payable estimates in 2019 as compared to 2018 resulted in higher small group fully-insured commercial revenues.
|
•
|
Group and Specialty segment services revenue decreased $15 million, or 7.2%, from the 2018 quarter to $193 million for the 2019 quarter and decreased $40 million, or 9.4%, from the 2018 period to $387 million for the 2019 period primarily due to the impact of certain contractual incentives and adjustments related to the previous TRICARE contract received in 2018, which did not recur in 2019.
|
•
|
The Group and Specialty segment benefit ratio increased 590 basis points from 80.4% in the 2018 quarter to 86.3% in the 2019 quarter. The Group and Specialty segment benefit ratio increased 460 basis points from 76.7% in the 2018 period to 81.3% in the 2019 period. These increases were primarily due to the impact of unfavorable prior-period reserve development in 2019, the suspension of the health insurance industry fee in 2019 which was contemplated in the pricing of our products, as well as membership mix, including the continued migration of groups to level-funded ASO products in 2019. These items were partially offset by the smaller unfavorable premium adjustment in 2019 as compared to 2018 related to our CRA accrual associated with the ACA-compliant business as a result of the release of CMS's final 2018 CRA data.
|
•
|
The Group and Specialty segment's benefits expense included $20 million in unfavorable prior-period medical claims reserve development in the 2019 quarter versus none in the 2018 quarter. This unfavorable prior-period medical claims reserve development increased the Group and Specialty segment benefit ratio by approximately 120 basis points in the 2019 quarter and had no impact in the 2018 quarter. The Group and Specialty segment's benefits expense included the effect of an unfavorable prior-period medical claims reserve development of $36 million in the 2019 period versus favorable prior-period medical claims reserve development of $34 million in the 2018 period. The unfavorable prior-period medical claims reserve development for the 2019 period increased the Group and Specialty segment benefit ratio by approximately 110 basis points and the favorable development for the 2018 period decreased the Group and Specialty segment benefit ratio 100 basis points.
|
•
|
The Group and Specialty segment operating cost ratio of 21.7% for the 2019 quarter decreased 180 basis points from 23.5% for the 2018 quarter. For the 2019 period, the Group and Specialty segment operating cost ratio of 21.8% decreased 180 basis points from 23.6% for the 2018 period. These improvements primarily were due to the suspension of the health insurance industry fee in 2019, as well as operating cost efficiencies in the 2019 quarter driven by previously implemented productivity initiatives. The improvement was further impacted by the exit of the voluntary benefits and financial protection products in connection with the previously disclosed sale of KMG recognized during the second quarter of 2018, which carried a higher operating cost ratio. These improvements were offset by the higher compensation expense accruals in 2019 for the AIP as a result of our continued strong performance. The non-deductible health insurance industry fee impacted the operating cost ratio by 160 basis points in the 2018 quarter and period.
|
|
|
|
|
|
|
|
|
|||||||
|
For the three months ended June 30,
|
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
Dollars
|
|
Percentage
|
|||||||
|
(in millions)
|
|
|
|||||||||||
Revenues:
|
|
|
|
|
|
|
|
|||||||
Services:
|
|
|
|
|
|
|
|
|||||||
Provider services
|
$
|
82
|
|
|
$
|
67
|
|
|
$
|
15
|
|
|
22.4
|
%
|
Pharmacy solutions
|
45
|
|
|
57
|
|
|
(12
|
)
|
|
(21.1
|
)%
|
|||
Clinical care services
|
30
|
|
|
45
|
|
|
(15
|
)
|
|
(33.3
|
)%
|
|||
Total services revenues
|
157
|
|
|
169
|
|
|
(12
|
)
|
|
(7.1
|
)%
|
|||
Intersegment revenues:
|
|
|
|
|
|
|
|
|||||||
Pharmacy solutions
|
5,465
|
|
|
5,094
|
|
|
371
|
|
|
7.3
|
%
|
|||
Provider services
|
602
|
|
|
541
|
|
|
61
|
|
|
11.3
|
%
|
|||
Clinical care services
|
162
|
|
|
170
|
|
|
(8
|
)
|
|
(4.7
|
)%
|
|||
Total intersegment revenues
|
6,229
|
|
|
5,805
|
|
|
424
|
|
|
7.3
|
%
|
|||
Total services and intersegment revenues
|
$
|
6,386
|
|
|
$
|
5,974
|
|
|
$
|
412
|
|
|
6.9
|
%
|
Segment earnings
|
$
|
224
|
|
|
$
|
206
|
|
|
$
|
18
|
|
|
8.7
|
%
|
Operating cost ratio
|
96.1
|
%
|
|
96.2
|
%
|
|
|
|
(0.1
|
)%
|
|
|
|
|
|
|
|
|
|||||||
|
For the six months ended
June 30, |
|
Change
|
|||||||||||
|
2019
|
|
2018
|
|
Dollars
|
|
Percentage
|
|||||||
|
(in millions)
|
|
|
|||||||||||
Revenues:
|
|
|
|
|
|
|
|
|||||||
Services:
|
|
|
|
|
|
|
|
|||||||
Provider services
|
$
|
161
|
|
|
$
|
88
|
|
|
$
|
73
|
|
|
83.0
|
%
|
Pharmacy solutions
|
81
|
|
|
96
|
|
|
(15
|
)
|
|
(15.6
|
)%
|
|||
Clinical care services
|
71
|
|
|
89
|
|
|
(18
|
)
|
|
(20.2
|
)%
|
|||
Total services revenues
|
313
|
|
|
273
|
|
|
40
|
|
|
14.7
|
%
|
|||
Intersegment revenues:
|
|
|
|
|
|
|
|
|
||||||
Pharmacy solutions
|
10,662
|
|
|
10,089
|
|
|
573
|
|
|
5.7
|
%
|
|||
Provider services
|
1,201
|
|
|
919
|
|
|
282
|
|
|
30.7
|
%
|
|||
Clinical care services
|
308
|
|
|
350
|
|
|
(42
|
)
|
|
(12.0
|
)%
|
|||
Total intersegment revenues
|
12,171
|
|
|
11,358
|
|
|
813
|
|
|
7.2
|
%
|
|||
Total services and intersegment revenues
|
$
|
12,484
|
|
|
$
|
11,631
|
|
|
$
|
853
|
|
|
7.3
|
%
|
Segment earnings
|
$
|
399
|
|
|
$
|
379
|
|
|
$
|
20
|
|
|
5.3
|
%
|
Operating cost ratio
|
96.3
|
%
|
|
96.2
|
%
|
|
|
|
0.1
|
%
|
•
|
Healthcare Services segment earnings of $224 million for the 2019 quarter increased $18 million, or 8.7%, from $206 million in the 2018 quarter. For the 2019 period, the Healthcare Services segment earnings of $399 million increased $20 million, or 5.3%, from $379 million in the 2018 period. These increases were primarily due to the impact of Kindred at Home operations, higher earnings from our pharmacy operations, and the
|
•
|
Humana Pharmacy Solutions script volumes on an adjusted 30-day equivalent basis increased to approximately 113 million in the 2019 quarter, up 2.6%, versus scripts of approximately 110 million in the 2018 quarter. For the 2019 period, script volumes increased to approximately 223 million, up 2.2%, versus scripts of approximately 218 million in the 2018 period. These increases primarily reflect growth associated with higher individual Medicare Advantage membership, partially offset by the decline in stand-alone PDP membership.
|
•
|
Services revenues was relatively unchanged for the 2019 quarter at $157 million, a decrease of $12 million, or 7.1%, from the 2018 quarter. Services revenues increased $40 million, or 14.7%, from the 2018 period to $313 million for the 2019 period primarily due to revenue growth from our provider services.
|
•
|
Intersegment revenues increased $424 million, or 7.3%, from the 2018 quarter to $6.2 billion for the 2019 quarter and increased $813 million, or 7.2%, from the 2018 period to $12.2 billion for the 2019 period primarily due to strong Medicare Advantage membership growth and higher revenues associated with our provider services business reflecting the acquisition of MCCI and FPG. These increases were partially offset by the loss of intersegment revenues associated with the reduction of stand-alone PDP membership.
|
•
|
The Healthcare Services segment operating cost ratio of 96.1% and 96.3% for the 2019 quarter and period, respectively, were relatively unchanged from 96.2% in both the 2018 quarter and period.
|
|
Six Months Ended
|
||||||
|
2019
|
|
2018
|
||||
|
(in millions)
|
||||||
Net cash provided by operating activities
|
$
|
2,330
|
|
|
$
|
3,561
|
|
Net cash provided by (used in) investing activities
|
89
|
|
|
(287
|
)
|
||
Net cash provided by financing activities
|
16
|
|
|
1,515
|
|
||
Increase in cash and cash equivalents
|
$
|
2,435
|
|
|
$
|
4,789
|
|
|
June 30, 2019
|
|
December 31, 2018
|
|
2019
Period Change |
|
2018
Period Change |
||||||||
|
(in millions)
|
||||||||||||||
IBNR (1)
|
$
|
3,688
|
|
|
$
|
3,361
|
|
|
$
|
327
|
|
|
$
|
276
|
|
Reported claims in process (2)
|
924
|
|
|
617
|
|
|
307
|
|
|
118
|
|
||||
Other benefits payable (3)
|
1,230
|
|
|
884
|
|
|
346
|
|
|
16
|
|
||||
Total benefits payable
|
$
|
5,842
|
|
|
$
|
4,862
|
|
|
$
|
980
|
|
|
$
|
410
|
|
(1)
|
IBNR represents an estimate of benefits payable for claims incurred but not reported (IBNR) at the balance sheet date and includes unprocessed claim inventories. The level of IBNR is primarily impacted by membership levels, medical claim trends and the receipt cycle time, which represents the length of time between when a claim is initially incurred and when the claim form is received and processed (i.e. a shorter time span results in a lower IBNR). IBNR includes unprocessed claims inventories.
|
(2)
|
Reported claims in process represents the estimated valuation of processed claims that are in the post claim adjudication process, which consists of administrative functions such as audit and check batching and handling, as well as amounts owed to our pharmacy benefit administrator which fluctuate due to bi-weekly payments and the month-end cutoff.
|
(3)
|
Other benefits payable primarily include amounts owed to providers under capitated and risk sharing arrangements.
|
|
June 30, 2019
|
|
December 31, 2018
|
|
2019
Period Change |
|
2018
Period Change |
||||||||
|
(in millions)
|
||||||||||||||
Medicare
|
$
|
697
|
|
|
$
|
836
|
|
|
$
|
(139
|
)
|
|
$
|
670
|
|
Commercial and other
|
154
|
|
|
135
|
|
|
19
|
|
|
(35
|
)
|
||||
Military services
|
126
|
|
|
123
|
|
|
3
|
|
|
(34
|
)
|
||||
Allowance for doubtful accounts
|
(73
|
)
|
|
(79
|
)
|
|
6
|
|
|
16
|
|
||||
Total net receivables
|
$
|
904
|
|
|
$
|
1,015
|
|
|
$
|
(111
|
)
|
|
$
|
617
|
|
Reconciliation to cash flow statement:
|
|
|
|
|
|
|
|
||||||||
Receivables from acquisition of business
|
|
|
|
|
(12
|
)
|
|
2
|
|
||||||
Change in receivables per cash flow
statement resulting in cash from operations |
|
|
|
|
$
|
(123
|
)
|
|
$
|
619
|
|
Item 2:
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
(a)
|
None.
|
(b)
|
N/A
|
(c)
|
The following table provides information about our purchases of equity securities that are registered by us pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, during the three months ended June 30, 2019:
|
Period
|
Total Number
of Shares Purchased (1)(2) |
|
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) |
||||||
April 2019
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
1,026,354,011
|
|
May 2019
|
—
|
|
|
—
|
|
|
—
|
|
|
1,026,354,011
|
|
||
June 2019
|
—
|
|
|
—
|
|
|
—
|
|
|
1,026,354,011
|
|
||
Total
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
|
(1)
|
On July 30, 2019, the Board of Directors replaced a previous share repurchase authorization of up to $3 billion (of which approximately $1.03 billion remained unused) with a new authorization for repurchases of up to $3 billion of our common shares exclusive of shares repurchased in connection with employee stock plans, expiring on June 30, 2022.
|
(2)
|
Excludes 34 thousand shares repurchased in connection with employee stock plans.
|
Item 3:
|
Defaults Upon Senior Securities
|
Item 4:
|
Mine Safety Disclosures
|
Item 5:
|
Other Information
|
3(i)
|
Restated Certificate of Incorporation of Humana Inc. filed with the Secretary of State of Delaware on November 9, 1989, as restated to incorporate the amendment of January 9, 1992, and the correction of March 23, 1992 (incorporated herein by reference to Exhibit 4(i) to Humana Inc.’s Post-Effective Amendment No. 1 to the Registration Statement on Form S-8 (Reg. No. 33-49305) filed February 2, 1994).
|
By-Laws of Humana Inc., as amended on December 14, 2017 (incorporated herein by reference to Exhibit 3(b) to Humana Inc.’s Current Report on Form 8-K, filed December 14, 2017).
|
|
Principal Executive Officer certification pursuant to Section 302 of Sarbanes–Oxley Act of 2002.
|
|
Principal Financial Officer certification pursuant to Section 302 of Sarbanes–Oxley Act of 2002.
|
|
Principal Executive Officer and Principal Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101
|
The following materials from Humana Inc.'s Quarterly Report on Form 10-Q formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets at June 30, 2019 and December 31, 2018; (ii) the Condensed Consolidated Statements of Income for the three and six months ended June 30, 2019 and 2018; (iii) the Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2019 and 2018; (iv) the Consolidated Statements of Equity for the three and six months ended June 30, 2019 and 2019; (v) the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018; and (vi) Notes to Condensed Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
HUMANA INC.
|
|
|
|
(Registrant)
|
|
|
|
|
|
Date:
|
July 31, 2019
|
By:
|
/s/ CYNTHIA H. ZIPPERLE
|
|
|
|
Cynthia H. Zipperle
|
|
|
|
Senior Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)
|
|
|
|
|
Date:
|
July 31, 2019
|
|
|
Signature:
|
/s/ Bruce D. Broussard
|
|
Bruce D. Broussard
Principal Executive Officer
|
|
|
|
Date:
|
|
July 31, 2019
|
|
|
|
Signature:
|
|
/s/ Brian A. Kane
|
|
|
Brian A. Kane
Principal Financial Officer
|
/s/ Bruce D. Broussard
|
Bruce D. Broussard
Principal Executive Officer
|
|
July 31, 2019
|
|
/s/ Brian A. Kane
|
Brian A. Kane
Principal Financial Officer
|
|
July 31, 2019
|