Humana 2Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“we anticipate only modest plan withdrawals in 2014. Approximately 78,000 or 4% of our individual Medicare Advantage members will not be offered their current Humana plan in 2014.”

“we continue to anticipate growth in individual Medicare Advantage membership in 2014. That said, the funding pressures from CMS are still quite onerous, Facing these ongoing challenges makes continued investment and execution discipline, particularly for our integrated delivery model, all the more critical moving forward.”

“Revenues for dual-eligible and Medicaid awards, thus far, could potentially add revenues in the mid-single digit billion dollar range over the next few years. Though the mix of lower-margin dual-eligible business with the higher-margin Medicare business will result in a decline for the retail segment margins over time, we anticipate the segment pretax results to expand nicely.”

“Turning now to health care exchanges. Our focus for the coming year includes 14 states with our existing HumanaOne footprint. We expect the exchange products to include primarily HMO offerings, with select market presence with each of the 14 states, ensuring we are offering a competitive and cost-effective value. The preparation process is tremendous, with short timelines for implementation. Nevertheless, our operational teams have risen to the challenge. Tactical plans for sales, enrollment and retention are well into the implementation phase.”

“our desire over the long haul is to get as many members and providers participating with us in HMO plans because they offer the best opportunity for us to provide economic value to the people that we serve.”

“around the dual-eligible population. And the margins are less, but the actual dollar per case is much greater as a result of the conditions that, that population brings to needing services. And so, the way we look at it, the absolute dollars that comes to the bottom line are much greater. And so, we look at that as a good returning business. The exchanges are a little different. They’re smaller dollars, but there’s less capital that you put out as a result of the less premium there. So the — so we — but those are great examples where the margin is impacted. But both for strategic reasons and for long-term returns, it’s a good business to enter into.”

Humana 1Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“we remain uncertain if 2014 will be a year of earnings growth.”

“we are pleased to report earnings per share of $2.95, which exceeded the midpoint of our previous guidance by $1.15.”

“operating improvement of $205 million or $0.81 per share versus our prior first quarter guidance, primarily resulted from the following 4 items…First, favorable prior period development…Second, we also experienced favorable medical expense trends in most lines of business. This was primarily driven by lower levels of hospital utilization after the flu season, rapidly abated in the third week of January…Third, our PDP business exceeded plan during the quarter…Fourth, we also benefited from a lower operating cost ratio versus plan. ”

“most of the operating over-performance for the first quarter does not trend forward, primarily for 2 reasons. First, we do not and have not included any additional prior period development in our forecast. And second, while we’re pleased with our first quarter utilization trends, we remain cautious in our full year trend outlook since we’re only 1/4 of the way through the year.”

“And I’m not certain that you’ll hear us say, “Gosh, we want to have a 5% margin,” but we want to grow our earnings meaningfully in the future. And I think we’re going to try to change the dialogue around that going forward. And so don’t look for a margin target, look for earnings growth targets going forward.”

“Because of all of those things and I think our brand as a company that focuses on the senior population, I feel very comfortable in our ability to grow our membership year-over-year, regardless of what our competition does.”

“I think the stronger will get stronger and the weaker will get weaker and the barriers to entry in the business are increasing as a result of these pressures. And I think companies like Humana are positioned well to take advantage of the demographic growth that is happening. And I truly believe, and I think what this quarter demonstrates, that our ability to add value clinically when compared to the Medicare fee-for-service program is a great, great example and I think has long-term fundamental growth for the organization and the ability to add value back to the industry.”