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Date of report (Date of earliest event reported):
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February 18, 2011
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1-5975
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61-0647538
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(Commission File Number)
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(IRS Employer Identification No.)
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500 West Main Street, Louisville, KY
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40202
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(Address of Principal Executive Offices)
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(Zip Code)
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If Humana does not design and price its products properly and competitively, if the premiums it charges are insufficient to cover the cost of health care services delivered to its members, or if its estimates of benefit expenses are inadequate, its profitability may 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. These estimates, however involve extensive judgment, and have considerable inherent variability because they are extremely sensitive to changes in payment patterns and medical cost trends.
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If Humana fails to effectively implement its operational and strategic initiatives, including its Medicare initiatives, its business may be materially adversely affected, which is of particular importance given the concentration of its revenues in the Medicare business.
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If Humana fails to properly maintain the integrity of its data, to strategically implement new information systems, or to protect its proprietary rights to its systems, its business may be materially adversely affected.
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Humana’s business may be materially adversely impacted by CMS’s adoption of the new coding set for diagnoses.
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Humana is involved in various legal actions, which, if resolved unfavorably to Humana, could result in substantial monetary damages. Increased litigation and negative publicity could increase Humana’s cost of doing business.
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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 health care programs.
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Recently enacted health insurance reform, including The Patient Protection and Affordable Care Act and The Health Care and Education Reconciliation Act of 2010, could 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 its ability to expand into new markets, increasing its medical and administrative costs by, among other things, requiring a minimum benefit ratio, lowering its Medicare payment rates and increasing its expenses associated with a non-deductible federal premium tax and other assessments; financial position, including its ability to maintain the value of its goodwill; and cash flows. In addition, if the new non-deductible federal premium tax is imposed as enacted, and if Humana is unable to adjust its business model to address this new tax, there can be no assurance that the non-deductible federal premium tax would not have a material adverse effect on its results of operations, financial position, and cash flows.
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Humana’s business activities are subject to substantial government regulation. New laws or regulations, or changes in existing laws or regulations or their manner of application, could increase its cost of doing business and may adversely affect its business, profitability, financial condition, and cash flows.
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Any failure to manage administrative costs could hamper profitability.
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Any failure by Humana to manage acquisitions and other significant transactions successfully may have a material adverse effect on its results of operations, financial position, and cash flows.
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If Humana fails to develop and maintain satisfactory relationships with the providers of care to its members, its business may be adversely affected.
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Humana’s pharmacy business is highly competitive and subjects the Company to regulations in addition to those the Company faces with its core health benefits businesses.
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Changes in the prescription drug industry pricing benchmarks may adversely affect Humana’s financial performance.
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If Humana does not continue to earn and retain purchase discounts and volume rebates from pharmaceutical manufacturers at current levels, its gross margins may decline.
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Humana’s ability to obtain funds from its subsidiaries is restricted.
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Downgrades in Humana’s debt ratings, should they occur, may adversely affect its business, results of operations, and financial condition.
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Changes in economic conditions may adversely affect Humana’s results of operations, financial position, and cash flows.
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The securities and credit markets may experience volatility and disruption, which may adversely affect Humana’s business.
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Given the current economic climate, Humana’s stock and the stocks of other companies in the insurance industry may be increasingly subject to stock price and trading volume volatility.
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Form 10-K for the year ended December 31, 2010; and
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Form 8-Ks filed during 2011.
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HUMANA INC.
BY: /s/ Steven E. McCulley
Steven E. McCulley
Vice President and Controller
(Principal Accounting Officer)
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