Humana Prices $2.25 Billion Debt Offering
12 March 2024 - 11:21AM
Business Wire
Humana Inc. (the “company”) (NYSE: HUM) announced today that it
has priced a public offering of $2.25 billion in aggregate
principal amount of senior notes. These senior notes are comprised
of $1.25 billion of the company’s 5.375 percent senior notes, due
2031, at 99.940 percent of the principal amount and $1.00 billion
of the company’s 5.750 percent senior notes, due 2054, at 99.949
percent of the principal amount (collectively, the “Senior Notes
Offerings”). The Senior Notes Offerings are expected to close on
March 13, 2024, subject to the satisfaction of customary closing
conditions.
The company expects net proceeds from the Senior Notes Offerings
will be approximately $2.226 billion after deducting underwriters’
discounts and estimated offering expenses. The company intends to
use the net proceeds from the Senior Notes Offerings for general
corporate purposes, which may include the repayment of existing
indebtedness, including borrowings under its commercial paper
program.
Citigroup Global Markets Inc., Goldman Sachs & Co. LLC,
Morgan Stanley & Co. LLC, PNC Capital Markets LLC and Wells
Fargo Securities, LLC are acting as active joint book-running
managers for the Senior Notes Offerings.
The Senior Notes Offerings are being made pursuant to an
effective shelf registration statement (including a base
prospectus) filed with the Securities and Exchange Commission (the
“SEC”). The Senior Notes Offerings may be made only by means of a
prospectus and related prospectus supplement, copies of which may
be obtained by calling Citigroup Global Markets Inc. toll-free at
(800) 831-9146, Goldman Sachs & Co. LLC toll-free at (866)
471-2526, Morgan Stanley & Co. LLC toll-free at (866) 718-1649,
PNC Capital Markets LLC toll-free at (855) 881-0697 or Wells Fargo
Securities, LLC toll-free at (800) 645-3751. An electronic copy of
the registration statement and prospectus supplement, together with
the base prospectus, is available on the SEC’s website at
www.sec.gov.
This news release does not constitute an offer to sell or a
solicitation of an offer to buy the securities described herein,
nor shall there be any sale of these securities in any state or
jurisdiction in which such an offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.
Cautionary Statement
This news release includes forward-looking statements regarding
Humana within the meaning of the Private Securities Litigation
Reform Act of 1995. When used in investor presentations, press
releases, SEC filings, and in oral statements made by or with the
approval of one of Humana’s executive officers, the words or
phrases like “expects,” “believes,” “anticipates,” “intends,”
“likely will result,” “estimates,” “projects” or variations of such
words and similar expressions are intended to identify such
forward-looking statements.
These forward-looking statements are not guarantees of future
performance and are subject to risks, uncertainties, and
assumptions, including, among other things, information set forth
in the “Risk Factors” section of the company’s SEC filings, a
summary of which includes but is not limited to the following:
- If Humana does not design and price its products properly and
competitively, if the premiums Humana receives are insufficient to
cover the cost of healthcare services delivered to its members, if
the company is unable to implement clinical initiatives to provide
a better healthcare experience for its members, lower costs and
appropriately document the risk profile of its members, or if its
estimates of benefits expense are inadequate, Humana’s
profitability could be materially adversely affected. Humana
estimates the costs of its benefit expense payments, and designs
and prices its products accordingly, using actuarial methods and
assumptions based upon, among other relevant factors, claim payment
patterns, medical cost inflation, and historical developments such
as claim inventory levels and claim receipt patterns. The company
continually reviews estimates of future payments relating to
benefit expenses for services incurred in the current and prior
periods and makes necessary adjustments to its reserves, including
premium deficiency reserves, where appropriate. These estimates
involve extensive judgment, and have considerable inherent
variability because they are extremely sensitive to changes in
claim payment patterns and medical cost trends. Accordingly,
Humana’s reserves may be insufficient.
- If Humana fails to effectively implement its operational and
strategic initiatives, including its Medicare initiatives, which
are of particular importance given the concentration of the
company's revenues in these products, state-based contract
strategy, the growth of its CenterWell business, and its integrated
care delivery model, the company’s business may be materially
adversely affected. In addition, there can be no assurances that
the company will be successful in maintaining or improving its Star
ratings in future years.
- If Humana, or the third-party service providers on which it
relies, fails to properly maintain the integrity of its data, to
strategically maintain existing or implement new information
systems, to protect Humana’s proprietary rights to its systems, or
to defend against cybersecurity attacks, contain such attacks when
they occur, or prevent other privacy or data security incidents
that result in security breaches that disrupt the company’s
operations or in the unintentional dissemination of sensitive
personal information or proprietary or confidential information,
the company’s business may be materially adversely affected.
- Humana is involved in various legal actions, or disputes that
could lead to legal actions (such as, among other things, provider
contract disputes and qui tam litigation brought by individuals on
behalf of the government), governmental and internal
investigations, and routine internal review of business processes
any of which, if resolved unfavorably to the company, could result
in substantial monetary damages or changes in its business
practices. Increased litigation and negative publicity could also
increase the company’s cost of doing business.
- As a government contractor, Humana is exposed to risks that may
materially adversely affect its business or its willingness or
ability to participate in government healthcare programs including,
among other things, loss of material government contracts;
governmental audits and investigations; potential inadequacy of
government determined payment rates; potential restrictions on
profitability, including by comparison of profitability of the
company’s Medicare Advantage business to non-Medicare Advantage
business; or other changes in the governmental programs in which
Humana participates. Changes to the risk adjustment model utilized
by the Centers for Medicare and Medicaid Services (“CMS”) to adjust
premiums paid to Medicare Advantage plans or retrospective recovery
by CMS of previously paid premiums as a result of the final rule
related to the risk adjustment data validation audit methodology
published by CMS on January 30, 2023 (Final RADV Rule), which
Humana believes fails to address adequately the statutory
requirement of actuarial equivalence and violates the
Administrative Procedure Act due to its failure to include a “Fee
for Service Adjuster”, could have a material adverse effect on the
company’s operating results, financial position and cash
flows.
- Humana’s business activities are subject to substantial
government regulation. New laws or regulations, or legislative,
judicial, or regulatory changes in existing laws or regulations or
their manner of application could increase the company's cost of
doing business and have a material adverse effect on Humana’s
results of operations (including restricting revenue, enrollment
and premium growth in certain products and market segments,
restricting the company’s ability to expand into new markets,
increasing the company’s medical and operating costs by, among
other things, requiring a minimum benefit ratio on insured
products, lowering the company’s Medicare payment rates and
increasing the company’s expenses associated with a non-deductible
health insurance industry fee and other assessments); the company’s
financial position (including the company’s ability to maintain the
value of its goodwill); and the company’s cash flows.
- Humana’s failure to manage acquisitions, divestitures and other
significant transactions successfully may have a material adverse
effect on the company’s results of operations, financial position,
and cash flows.
- If Humana fails to develop and maintain satisfactory
relationships with the providers of care to its members, the
company’s business may be adversely affected.
- Humana faces significant competition in attracting and
retaining talented employees. Further, managing succession for, and
retention of, key executives is critical to the company’s success,
and its failure to do so could adversely affect the company’s
businesses, operating results and/or future performance.
- Humana’s pharmacy business is highly competitive and subjects
it to regulations and supply chain risks in addition to those the
company faces with its core health benefits businesses.
- Changes in the prescription drug industry pricing benchmarks
may adversely affect Humana’s financial performance.
- Humana’s ability to obtain funds from certain of its licensed
subsidiaries is restricted by state insurance regulations.
- Downgrades in Humana’s debt ratings, should they occur, may
adversely affect its business, results of operations, and financial
condition.
- Volatility in the securities and credit markets, including
changes in interest rates, may significantly and adversely affect
the value of Humana’s investment portfolio and the investment
income that Humana derives from this portfolio.
In making forward-looking statements, Humana is not undertaking
to address or update them in future filings or communications
regarding its business or results. In light of these risks,
uncertainties, and assumptions, the forward-looking events
discussed herein may or may not occur. There also may be other
risks that the company is unable to predict at this time. Any of
these risks and uncertainties may cause actual results to differ
materially from the results discussed in the forward-looking
statements.
Humana advises investors to read the Form 10-K for the year
ended December 31, 2023 as filed by the company with the SEC for
further discussion both of the risks it faces and its historical
performance.
About Humana
Humana Inc. (NYSE: HUM) is committed to putting health first -
for our teammates, our customers, and our company. Through our
Humana insurance services, and our CenterWell health care services,
we make it easier for the millions of people we serve to achieve
their best health - delivering the care and service they need, when
they need it. These efforts are leading to a better quality of life
for people with Medicare, Medicaid, families, individuals, military
service personnel, and communities at large.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240311582522/en/
Lisa Stoner Investor Relations Humana Inc. 502-580-2652 e-mail:
lstamper@humana.com Mark Taylor
Corporate Communications Humana Inc. 317-753-0345 e-mail:
mtaylor108@humana.com
Humana (NYSE:HUM)
Historical Stock Chart
From Apr 2024 to May 2024
Humana (NYSE:HUM)
Historical Stock Chart
From May 2023 to May 2024