Humana Prices $800 Million Debt Offering
December 14 2017 - 7:00PM
Business Wire
Humana Inc. (NYSE: HUM) announced today that it has priced a
public offering of $800 million in senior notes. These senior notes
are comprised of $400 million of the company’s 2.500 percent senior
notes, due 2020, at 99.946 percent of the principal amount and $400
million of the company’s 2.900 percent senior notes, due 2022, at
99.830 percent of the principal amount (collectively, “Senior Notes
Offerings”). The Senior Notes Offerings are expected to close on
December 21, 2017, subject to customary closing conditions.
The company expects net proceeds from the Senior Notes Offerings
will be approximately $793 million, after deducting underwriters’
discounts and estimated offering expenses. The company intends to
use the net proceeds from this offering, together with available
cash, to fund the redemption of its $300 million aggregate
principal amount of 6.30 percent senior notes maturing in August
2018 and its $500 million aggregate principal amount of 7.20
percent senior notes maturing in June 2018.
Citigroup Global Markets Inc., J.P. Morgan Securities LLC and
Merrill Lynch, Pierce, Fenner & Smith Incorporated 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
1-800-831-9146, or by calling J.P. Morgan Securities LLC collect at
1-212-834-4533 or by calling Merrill Lynch, Pierce, Fenner &
Smith Incorporated toll-free at 1-800-294-1322. 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 press 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 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, however, involve extensive judgment,
and have considerable inherent variability because they are
extremely sensitive to changes in claim payment patterns and
medical cost trends, so any reserves the company may establish,
including premium deficiency reserves, may be insufficient.
- If Humana fails to effectively
implement its operational and strategic initiatives, particularly
its Medicare initiatives, state-based contract strategy, and its
participation in the new health insurance exchanges, 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 quality ratings in future.
- The divestiture of Humana’s subsidiary,
KMG America Corporation, is subject to various closing conditions,
including various regulatory approvals and customary closing
conditions, as well as other uncertainties, and there can be no
assurances as to whether and when it may be completed.
- If Humana fails to properly maintain
the integrity of its data, to strategically implement new
information systems, to protect Humana’s proprietary rights to its
systems, or to defend against cyber-security attacks, 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 relating to rate
adjustments resulting from the Balanced Budget and Emergency
Deficit Control Act of 1985, as amended, commonly referred to as
“sequestration”; other provider contract disputes; and qui tam
litigation brought by individuals on behalf of the government) and
governmental and internal investigations, 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.
- The Healthcare Reform Law, including
The Patient Protection and Affordable Care Act and The Healthcare
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 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. Additionally, potential legislative changes, including
activities to repeal or replace, in whole or in part, the Health
Care Reform Law, creates uncertainty for Humana’s business, and
when, or in what form, such legislative changes may occur cannot be
predicted with certainty.
- Humana’s continued participation in the
federal and state health insurance exchanges, which entail
uncertainties associated with mix, volume of business and the
operation of premium stabilization programs that are subject to
federal administrative action, could adversely affect the company’s
results of operations, financial position and cash flows.
- 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 the company’s cost of doing
business and may adversely affect the company’s business,
profitability 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’s pharmacy business is highly
competitive and subjects it to regulations 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.
- If Humana does not continue to earn and
retain purchase discounts and volume rebates from pharmaceutical
manufacturers at current levels, Humana’s gross margins may
decline.
- 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.
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, 2016;
- Form 10-Q for the quarter ended March
31, 2017, June 30, 2017, September 30, 2017; and
- Form 8-Ks filed during 2017.
About Humana
Humana Inc. 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171214006467/en/
Humana Inc.Investor RelationsAmy Smith, 502-580-2811Amysmith@humana.comorCorporate CommunicationsTom
Noland, 502-580-3674Tnoland@humana.com
Humana (NYSE:HUM)
Historical Stock Chart
From Mar 2024 to Apr 2024
Humana (NYSE:HUM)
Historical Stock Chart
From Apr 2023 to Apr 2024