Humana Completes Aggregate $750 Million Debt Offering
24 March 2022 - 7:30AM
Business Wire
Humana Inc. (the “company”) (NYSE: HUM) announced today the
completion of its public offering of $750 million aggregate
principal amount of the company’s 3.700 percent senior notes, due
2029 (the “Senior Notes Offering”).
The company expects net proceeds from the Senior Notes Offering
will be approximately $741.1 million, after deducting underwriters’
discounts and estimated offering expenses. The company intends to
use the net proceeds from the Senior Notes Offering for general
corporate purposes, which may include the repayment of existing
indebtedness, including borrowings under the company’s commercial
paper program.
Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC
acted as active joint book-running managers for the Senior Notes
Offering.
The Senior Notes Offering was made pursuant to an effective
shelf registration statement (including a base prospectus) filed
with the Securities and Exchange Commission (the “SEC”). The Senior
Notes Offering was made by means of a prospectus and related
prospectus supplement, copies of which may be obtained by calling
Citigroup Global Markets Inc. toll-free at 1-800-831-9146 or by
calling Morgan Stanley & Co. LLC toll-free at 1-866-718-1649.
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, Securities and Exchange Commission (“SEC”) filings, and
in oral statements made by or with the approval of one of Humana’s
executive officers, the words or phrases like “expects,”
“believes,” “anticipates,” “intends,” “likely will result,”
“estimates,” “projects” or variations of such words and similar
expressions are intended to identify such forward-looking
statements.
These forward-looking statements are not guarantees of future
performance and are subject to risks, uncertainties, and
assumptions, including, among other things, information set forth
in the “Risk Factors” section of the company’s SEC filings, a
summary of which includes but is not limited to the following:
- If Humana does not design and price its products properly and
competitively, if the premiums Humana receives are insufficient to
cover the cost of 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, particularly its Medicare initiatives and
state-based contract strategy, the company’s business may be
materially adversely affected, which is of particular importance
given the concentration of the company’s revenues in these
products. 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 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 cyber-security attacks or prevent other privacy
or data security incidents that result in security breaches that
disrupt our 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 CMS to adjust premiums paid to Medicare Advantage, or MA, plans
according to the health status of covered members, including
proposed changes to the methodology used by CMS for risk adjustment
data validation audits that fail to address adequately the
statutory requirement of actuarial equivalence, if implemented,
could have a material adverse effect on our 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.
- The securities and credit markets may experience volatility and
disruption, which may adversely affect Humana’s business.
- The spread of, and response to, the novel coronavirus, or
COVID-19, underscores certain risks Humana faces, including those
discussed above, and the ongoing, heightened uncertainty created by
the pandemic precludes any prediction as to the ultimate adverse
impact to Humana of COVID-19. As the COVID-19 pandemic continues,
the premiums the company charges may prove to be insufficient to
cover the cost of health care services delivered to its members,
each of which could be impacted by many factors, including the
impacts that Humana has experienced, and may continue to
experience, to its revenues due to limitations on its ability to
implement clinical initiatives to manage health care costs and
chronic conditions of its members, and appropriately document their
risk profiles, as a result of the company’s members being unable or
unwilling to see their providers due to actions taken to mitigate
the spread of COVID-19; increased costs that may result from higher
utilization rates of medical facilities and services and other
increases in associated hospital and pharmaceutical costs; and
shifts in the company’s premium and medical claims cost trends to
reflect the demographic impact of higher mortality during the
COVID-19 pandemic. In addition, Humana is offering, and has been
mandated by legislative and regulatory action (including the
Families First Act and CARES Act) to provide, certain expanded
benefit coverage to its members, such as waiving, or reimbursing,
certain costs for COVID-19 testing, vaccinations and treatment.
These measures taken by Humana, or governmental action, to respond
to the ongoing impact of COVID-19 (including further expansion or
modification of the services delivered to its members, the adoption
or modification of regulatory requirements associated with those
services and the costs and challenges associated with ensuring
timely compliance with such requirements), and the potential for
widespread testing, treatments and the distribution and
administration of COVID-19 vaccines, could adversely impact the
company’s profitability. The spread and impact of COVID-19 and
additional variants, or actions taken to mitigate this spread,
could have material and adverse effects on Humana’s ability to
operate effectively, including as a result of the complete or
partial closure of facilities or labor shortages. Disruptions in
public and private infrastructure, including communications,
availability of in-person sales and marketing channels, financial
services and supply chains, could materially and adversely disrupt
the company’s normal business operations. A significant subset of
the company’s and the company’s third party providers’ employee
population are in a remote work environment in an effort to
mitigate the spread of COVID-19, which may exacerbate certain risks
to Humana’s business, including an increased demand for information
technology resources, increased risk of phishing and other
cybersecurity attacks, and increased risk of unauthorized
dissemination of sensitive personal, proprietary, or confidential
information. The continued COVID-19 pandemic has severely impacted
global economic activity, including the businesses of some of
Humana’s commercial customers, and caused significant volatility
and negative pressure in the financial markets. In addition to
disrupting Humana’s operations, these developments may adversely
affect the timing of commercial customer premium collections and
corresponding claim payments, the value of the company’s investment
portfolio, or future liquidity needs. The ongoing, heightened
uncertainty created by the pandemic precludes any prediction as to
the ultimate adverse impact to Humana of COVID-19. Humana is
continuing to monitor the spread of COVID-19, changes to the
company’s benefit coverages, and the ongoing costs and business
impacts of dealing with COVID-19, including the potential costs and
impacts associated with lifting or reimposing restrictions on
movement and economic activity, the timing and degree in resumption
of demand for deferred healthcare services, the pace of
administration of COVID-19 vaccines and the effectiveness of those
vaccines, and related risks. The magnitude and duration of the
pandemic remain uncertain, and its impact on Humana’s business,
results of operations, financial position, and cash flows could be
material.
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 following documents as
filed by the company with the SEC for further discussion both of
the risks it faces and its historical performance:
- Form 10-K for the year ended December 31, 2021; and
- Form 8-Ks filed during 2022.
About Humana
Humana Inc. (NYSE: HUM) is committed to helping our millions of
medical and specialty members achieve their best health. Our
successful history in care delivery and health plan administration
is helping us create a new kind of integrated care with the power
to improve health and well-being and lower costs. Our efforts are
leading to a better quality of life for people with Medicare,
families, individuals, military service personnel, and communities
at large.
To accomplish that, we support physicians and other health care
professionals as they work to deliver the right care in the right
place for their patients, our members. Our range of clinical
capabilities, resources and tools - such as in-home care,
behavioral health, pharmacy services, data analytics and wellness
solutions - combine to produce a simplified experience that makes
health care easier to navigate and more effective.
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version on businesswire.com: https://www.businesswire.com/news/home/20220323005856/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
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