Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Executives

Regina Nethery - Vice President, Investor Relations

Mike McCallister - President and Chief Executive Officer

Jim Bloem - Senior Vice President and Chief Financial Officer

Jim Murray - Chief Operating Officer

Chris Todoroff - Senior Vice President and General Counsel

Analysts

Matthew Borsch - Goldman Sachs

Charles Boorady – Citi Investment Research

Josh Raskin – Lehman Brothers

Greg Nersessian - Credit Suisse

Scott Fidel – Deutsche Bank

Justin Lake – UBS

Carl McDonald – Oppenheimer

Peter Costa – FTN Midwest

Doug Simpson – Merrill Lynch

Matt Perry – Wachovia Capital Markets

John Rex – JP Morgan

Humana Inc. (HUM) Q2 2008 Earnings Call August 4, 2008 9:00 AM ET

Operator

I would like to welcome everyone to the Q2 2008 earnings release conference call. (Operator Instructions) I would now like to turn the call over to Regina Nethery, Vice President of Investor Relations.

Regina Nethery

In this morning’s call Mike McCallister, Humana’s President and Chief Executive Officer and Jim Bloem, Senior Vice President and Chief Financial Officer will briefly discuss highlights from our second quarter 2008 results as well as comment on our earnings outlook.

Following these prepared remarks we will open up the lines for a question and answer session with industry analysts. Joining Mike and Jim for the Q&A session will be Jim Murray our Chief Operating Officer, and Chris Todoroff, Senior Vice President and General Counsel.

We encourage the investing public and media to listen in to both managements prepared remarks and the related Q&A with analysts. This call is being recorded for replay purposes, that replay will be available on Humana’s website www.humana.com later today. This call is also being simulcast via the internet along with a virtual slide presentation. For those of you who have company firewall issues and cannot access the live presentation an Adobe version of the slides has been posted to the Investor Relations section of Humana’s website.

Before we begin our discussion I need to remind each of you of our cautionary statement. Certain of the matters discussed in this conference call are forward looking and involve a number of risks and uncertainties. Actual results could differ materially. Investors are advised to read the detailed risk factors discussed in our most recent filings with the Securities and Exchange Commission. All of our SEC filings are available via the Investor Relations page of Humana’s website as well as on the SEC website.

Additionally, investors are advised to read Humana’s second quarter 2008 earnings press release issued this morning, August 4, 2008. This press release and other historical financial news releases are also available on our website. Finally, any references to earnings per share or EPS made in this mornings call refer to diluted earnings per common share. With that I’ll turn the call over to Mike McCallister.

Mike McCallister

Before beginning our call I’d like to take a moment to thank Art Hipwell who retires from Humana today for his numerous years of service. He’s been invaluable and will be personally missed. We’re pleased to have Chris Todoroff here with us today and I hope you’ll join me in welcoming him to the Humana team. Chris is a dynamic leader and will, I’m sure, be a tremendous addition to our team as General Counsel.

I’m pleased to report that for the second quarter we were ahead of our EPS guidance and for the first half of 2008 despite the problem with PDP plan we’re up slightly year over year. The improved quarterly result primarily reflects the fact that our PDP issues is playing out better than anticipated. We now expect to be at the lower end of the $330 to $390 million pre-tax earnings impact for the year that we first described in March.

Second quarter results also reflected year over year progression in our commercial and Medicare Advantage businesses. As a result of our PDP outcome year to date we’re raising our EPS guidance for the year while again reiterating the fact that the PDP situation comes to an end on December 31, leaving us nicely positioned for a strong 2009.

Let’s review a few of the more significant recent events for Humana and discuss our operating results in more detail. First, our Medicare bids for 2009 plans both Medicare Advantage and PDP were filed on June 2nd. Both our bid development and bid review process were enhanced to help ensure we do not face a repeat of the PDP issues we experienced as part of last years bidding process. We’ll be watching competitors plan designs closely when that information becomes available in the fall and we’re comfortable that plan design changes we filed for 2009 are both adequate and appropriate.

Tom Liston our new Senior Vice President of Senior Products and Steve Bruckner, who’s retiring from that leadership position are working jointly to help ensure a smooth transition for that critical leadership post.

Our Medicare Advantage enrollment is on track with our guidance for the year although excluding acquisitions is now trending toward the lower half of our expected range due to the combined effect of the lower group sales we discussed last quarter and slightly higher terminations in more recent months associated with members moving to other carriers special needs plans during the lock in period.

Turning to our Military Services business unit, at the end of June our team filed its bid for T3. The competitive bidding process for the next generation of TRICARE contracts with the department of defense. We believe our South Region bid clearly reflects the value proposition we bring to the table for military beneficiaries and retirees in terms of service and access while providing a cost effective means for the Department of Defense to provide such benefits.

Our relationship with the DOD is strong but we expect to win this contract on the quality of our proposal with our long term performance serving as an assurance of our capacity to execute. This favorable track record is important in the bid process as recent DOD award decisions demonstrate the power of incumbency.

On the acquisition front we completed two acquisitions and announced our intent to acquire Metcare during the second quarter. Additionally this morning we announced our intent to purchase Cariten Healthcare in Tennessee. As with our other recent acquisitions we expect to benefit from expanded provider arrangements and an additional book of business that’s well positioned for future growth.

Finally, turning briefly to capital deployment which Jim Bloem will cover more fully in his remarks our Board of Directors has increased the company’s share repurchase authorization indicating its continued confidence in our business.

With respect to the wider business environment the headline event was the recent passage of the Medicare Bill HR 6331. The most impactful element for our sector will be the elimination of provider deeming for private fee for service programs across much of the nation in 2011. To properly assess its probable impact on Humana I’ll start with some context.

As we discussed with you over the last few years we’ve always assumed the future of Medicare Advantage would be built on network based products. While we were an early mover in private fee for service beginning in 2004 we’ve also been an early mover in both product design and network development across our broad geographic footprint.

We believe HR 6331 stabilizes physician payments unfairly by cutting benefits to our nations seniors we are prepared to operate and grow successfully in this changing environment and believe that by 2011 we’ll be even better positioned.

The next series of slides further demonstrates why Humana is well positioned to successfully address the strategic and operational impacts of this law. It’s important to note that counties in the United States with less than two network plan choices will be exempt from the requirement that private fee for service plans must as provider networks.

Those counties across the nation that are expected to be exempt are shown in white on this map from our trade group, Americas Health Insurance Plans or AHIP. This exemption effectively preserves the choice of a private plan in most of the US and also means the growth opportunity for Humana remains national in scope, a point I’ll come back to in a minute.

When you look at our PPO network coverage the picture brightens further. Currently 82% of Humana’s private fee for service enrollees reside in geographies where a Humana PPO plan is offered. We’ve always believed private fee for service to be a transitional product as people age into Medicare we’re seeing that they increasingly select PPO plans the kind of coverage they’re used to in the work place and the most popular work place option in survey after survey.

When you look ahead to 2011 and consider our current membership in terms of both our existing network offerings and deeming exempt locations its better still. As you can see we expect only 6% of our current private fee for service membership will fall outside of a PPO offering or deeming exempt geography.

With three open enrollment period ahead of us before the new law takes effect we already have the products built and licensed, the networks in place and our clinical capabilities in our Medicare PPO’s continue to expand and mature. In essence then we’re well prepared to preserve what we have but more importantly we’re also prepared to grow.

With the spectacular growth of the Medicare Advantage resulting in approximately 10 million highly satisfied seniors now enrolled nationwide what remains good news is that where Humana has PPO offerings, low penetration levels presents significant opportunity for us over the long term. Also while employers have not yet fully embraced group Medicare PPO programs we believe over the long term our PPO footprint, the variety of our Medicare product offerings and the popularity of our senior value proposition will appeal to employers and retirees as the best answer for group Medicare.

Of course Medicare Advantage is not only popular with seniors it’s also good for the nation. We have long made the case that private sectors partnership with Government through Medicare Advantage brings a dual benefit. Cost savings over time for the financially strapped Medicare program as well as better benefits and better health outcomes for Medicare beneficiaries. This comes from the power of Care Coordination an essential component of Medicare Advantage that is absent from original Medicare.

Taking hospital inpatient days per 1,000 members and admissions per 1,000 members is but two among many examples, this slide shows the dramatic beneficial affect that Care Coordination which at Humana includes such programs as personal nurse and disease management has on member wellness and cost. This slide is only the small part of a much larger bigger story.

Through our many care coordination programs and services Humana is making progress toward our goal of a more effective healthcare environment for seniors which over time is expected to achieve Medicare Advantage annualized costs well below traditional Medicare on a sustainable basis. Results oriented clinical management, quality doctors who are cost aware but not cost driven on behalf of the patients and comprehensive consumer education initiatives all play a roll in this growing success.

With the Medicare program facing fiscal catastrophe in a relative short period of time and with none of these measures available outside Medicare Advantage the societal need for these efforts will only become more urgent. The current payment rates make possible the build out of these capabilities to the benefit of seniors now and for our nation over time.

Turning now to our Commercial business this segment once a problem area now consistently adds value to the bottom line. It continues to demonstrate year over year earnings growth and did so again in the second quarter. In addition, we are not experiencing pricing problems in the market due to discipline and targeting specific accounts and lines of business to pursue.

We have an extremely well balance medical membership portfolio and our benefit expense trends remain unchanged. In particular our Commercial business has already benefited from the specialty product acquisitions we made in the fourth quarter of 2007. These products tend to be higher margin and help us remain competitive in our Commercial offerings as employers increasingly turn to companies like ours that have the ability to offer comprehensive solutions.

Our continuing success in this segment is also built on the expansion of our geographic footprint and industry leading tools and service to the agent broker community.

In conclusion our ability to raise EPS guidance for the year today was due largely to our PDP issue playing out better than expected. Favorable trends in our Commercial lines and Medicare Advantage businesses also helped ensure the continued progress we expected there. Our analysis of HR 6331 yields the conclusion that our network development efforts in Medicare combined with the two year transition before major provisions take effect mean that the measures impact is manageable. There will probably be some up side competitively as other carriers scramble to respond.

The quarter’s stand out take away is that we performed effectively across all our business lines and as we look to 2009 putting our PDP issue behind us on December 31 of this year we’re pleased with our prospects. With that let me turn the call over to Jim Bloem for a detailed update on our financial results.

Jim Bloem

This morning I’ll cover the following five topics. First, our second quarter segment revenues. Second, the current expectation for both 2008 overall Medicare benefits ratio and Commercial segment profitability. Third, a comparison of the first half and anticipated second half operating cash flows. Fourth, our investment income in portfolio. Finally, our 2005 through 2008 capital deployment history with a view to 2009 subsidiary dividend capacity.

Let’s start with second quarter revenues. Each segment continued to report solid double digit growth over the second quarter 2007. Commercial revenues grew by over $293 million or 17.7% primarily due to our fourth quarter 2007 specialty acquisitions and a 3.5% or $120,800 increase in our year over year organic medical membership.

Government revenues increased by nearly $631 million or 13.2% on the strength of a 17.2% or $194,700 growth in average Medicare Advantage membership as well as a 6.3% increase in Medicare Advantage premium per member, per month. Solid membership and revenue growth in each segment continued to provide us with balanced consolidated pre-tax growth.

Moving next to the expected 2008 overall Medicare benefits ratio, as Mike described our better than expected second quarter EPS results and today’s increase in full year 2008 EPS guidance primarily reflect the fact that adverse effect of our PDP issue is now expected to be near the lower and of the $330 million to $390 million pre-tax range that we first described in March.

Of course as the slide shows, the PDP issue still makes our 2008 expected overall Medicare benefits ratio higher in all quarters versus 2007. Although today’s better news allows us to lower the 2008 expected benefits ratio range by 50 basis points to between 85% and 85.5%. Accordingly we’ve also increased our 2008 Medicare operating margin guidance by 50 basis points to approximately 3.5%.

Turning briefly to our Commercial segment we’re pleased with our progress there today as well. Our first half pre-tax income of approximately $203 million represents a nearly 40% increase when compared to the prior year to date. The benefits ratio for the first half of the year shows 110 basis point improvement year over year. This improvement is driven primarily by the acquired specialty businesses combined with stable cost trends and disciplined underwriting around our commercial medical business.

Looking now to the remainder of the year we’re quite comfortable with reiterating our Commercial pre-tax guidance of $280 to $300 million and would further add that we see the full year 2008 Commercial benefits ratio improving by 50 to 100 basis points over 2007.

Turning next to cash flows from operations, we are reaffirming our full year guidance of $1 billion to $1.2 billion based on the expected second half component ranges shown on the slide. Higher expected second half net income due to the normal PDP quarterly earnings pattern as well as significant collections of accounts receivable including Medicare receivables combined to drive our second half cash flows to an anticipated range of between approximately $900 million and $1.1 billion.

Also, as mentioned in the press release we collected over $257 million in Medicare receivables in July. Our first half comparison of 2008 versus 2007 operating cash flows was weak due to the improved claims cycle times discussed in the first quarter which continued into the second quarter. As we mentioned on April 28, we believe improved claims cycle times strengthened our relationship with both providers and consumers.

As we look to second half of this year the comparison with the second half of 2007 strengthened significantly due to the amount of the prior year Medicare risk share repayment. In 2007 the Medicare risk share repayment totaled $726 million and in 2008 it’s expected to be approximately $80 million.

Turning now to investment income in our portfolio the second quarter investment income fell $9.1 million sequentially primarily due to first a 50 basis point drop in portfolio yield and second, a $1.2 million impairment charge recorded on seven of our 1,200 securities. The lower portfolio investment yield primarily reflects the 100 basis point drop in the Federal funds rate since March 18.

Our portfolio continues to perform well, benefiting from high credit quality and relatively short duration. That said, in order to be a well diversified $6.3 billion fixed income portfolio one can expect to have various types of securities and issuers which have attracted negative media attention of late. With that fact in mind, the following is a June 30, 2008 compilation of the four types, amounts and issuers that we closely monitor.

First, sub-prime mortgages, as discussed in the February call we retained $4 million of AAA rated sub-prime securities from three issuers. Second, Alt-A mortgages. We also retained $7 million of AAA rated Alt-A mortgage securities from four issuers. Third, auction rate securities, we hold $95.5 million of primarily AAA rated securities after a $5 million mark to market in the second quarter. These securities comprise 36 issues from 21 issuers. Lastly, Fannie Mae and Freddie Mac preferred shares; we hold $17 million in three A rated securities. These securities were rated AA at June 30, 2008.

For each of these four classes all of the above mentioned securities are current on both principal and interest and we expect that to continue to be the case. Combined at 1.9% of the total portfolio most of these securities with the exception of the Fannie and Freddie preferreds have had their ratings reaffirmed within the last 180 days.

The Fannie and Freddie preferreds will probably be favorably reevaluated in light of the Federal Housing and Economic Recovery Act of 2008 which was signed by the President last week. Once again, our high credit quality, our short duration and our ability to hold securities to maturity continues to serve us well. They’ve enabled us to guide to 2008 full year investment income of $345 to $355 million up 11.4% at the mid point from the $314 million that we received in 2007.

Turning finally to the subject of capital deployment, I would like to briefly review our sources and uses of cash for the four year period 2005 through 2008. This period is relevant since it covers the years from the 2005 ramp ups of Medicare Advantage and Part D through the initial three years of these programs. These programs represent and these changes represent the most significant changes to Medicare since it’s enactment in 1965.

By both designing products which meet the needs of seniors and then deploying capital to build infrastructure as well as to recruit and retain the people necessary to implement these changes we’ve been able to double our revenues and nearly triple our net income over this important four year period. During this time we’ve been able to generate $4.7 billion of cash and raise through debt offerings an additional $1,350,000.

The combined cash total of just of $6 billion enabled us to successfully meet the changes contained in the Medicare modernization act while continuing to grow our other lines of business. As the left side of the slide shows the major categories of the $6.1 billion of cash disbursements over the same period are divided up in four or five groups.

The computer chooses net differences a reduction of approximately $50 million in parent cash. The point here is not to precisely predict the change in parent cash but rather to indicate the near quality of the cumulative cash sources and uses over this important four year period. As the pie chart on the left shows that’s really history.

What we’re really here to talk about is the future. As we progress toward 2009 we should be well positioned to continue to generate and to a lesser extent borrow in amounts which are consistent with our investment grade credit ratings, the funds which will continue to enable us to increase the value of Humana.

Our capital deployment strategies going forward will continue to primarily involve capital expenditures and acquisitions. Now also the return of discretionary capital through share repurchases. As an additional source of cash looking forward we anticipate that the cash required to fund operating subsidiaries will continue to decline. In 2006 required funding reached $724 million, last year was $307 million and this year we expect to be required to fund $175 million or about 25% of the 2006 amount.

We believe this years $175 million to be more representative of the amounts that will be required going forward. In contrast to these 2005 through 2008 required subsidiary funding amounts our capability to dividend capital from our operating subsidiary should continue to increase after this year’s reduction due to the PDP issue that we’ve talked about so many times and announced in March.

Dividends to Humana from a dozen or so of our major operating subsidiaries were $248 million in 2006, they rose to $377 million in 2007 and they were $296 million this year. We expect to be able to dividend approximately $500 million in 2009 and this would represent a one third increase over the $377 million that we dividended in 2007 which was the first year at bat that we weren’t adversely affected by this years PDP issue.

Briefly to summarize, we see balanced membership revenue and pre-tax growth in each of our segments. Our Commercial segments Medicare benefit ratio continues to improve both in the first half of this year and as reflected in our expectation for the full year. We anticipate strong second half operating cash flows which allow us to reaffirm our full year guidance of $1 billion to $1.2 billion. High credit quality and short duration continue to provide us with the liquidity and strength in and of our balance sheet in these volatile credit times.

Finally, our four year capital deployment for Medicare is now largely complete, signaling a higher capacity for 2009 dividends to the parent from our operating subsidiaries. Higher subsidiary dividends will enable us to deploy more of our capital to continue to raise the value of our company.

With that we’ll open the lines for your questions. We ask that you limit yourself to two questions in fairness to those who are waiting in the queue. Operator, would you please introduce the first caller.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Matthew Borsch - Goldman Sachs.

Matthew Borsch - Goldman Sachs

Could you talk us through where your outlook on the Medicare drug plan business improved? What were the specific driver where your assumptions proved to be somewhat conservative? What is the likelihood that we might see further improvement against your assessment as we move through the balance of this year?

Jim Murray

As you would guess everything is around utilization, that’s the biggest estimate in the calculation. When we were back in March we actually didn’t have two months behind us. We were looking at such things as what could adversely develop more than what we had thought. We think that we’ve captured it very clearly and that the utilization really is to reason that things are better.

Jim Bloem

In addition to Jim’s point about utilization we’re seeing continuing improvement in our generic dispensing rates and also I think there was probably some risk share money that we received on the PDP we don’t accrue for. All those elements added together to create the improvement that we reported on today.

Matthew Borsch - Goldman Sachs

Another question on the outlook as you think about 2009, I recognize that you haven’t provided guidance yet. You’ve talked earlier about conceptually 2009 being a growth rate based off the mid point of your old 2008 guidance which was $545 million. Is that still the framework for your thinking and has there been any evolution in the way that you’re looking at that since we got the last update from you.

Mike McCallister

No, there’s no change there. We have said all along that we’ll get a little more granular about it once we get a chance to look at everyone else’s Medicare products and pricing and that sort of thing because Medicare Advantage is a key component in what ’09 is going to look like. We’re pretty comfortable that we have taken care of the PDP issue. I think that still stands.

We had one issue as we talked about many times and it produced a reduction in this year over what we previously a pretty good growth rate and as we look into ’09 it’s a one time event, it lasts throughout the year and it ends on January 1st and so there’s no reason to expect us to retrace to a lower starting point. I stand by that $545 million as a kick off point relative to ’09 that we’ll share more detail around that at the third quarter call.

Operator

Your next question comes from Charles Boorady – Citi Investment Research.

Charles Boorady – Citi Investment Research

On deeming, how will you be able to assess the willingness of providers to contract with you for coordinated care network based products in the markets where you now rely on deeming?

Jim Murray

One take away this morning is we’re not really all that reliant upon deeming. We have to get people to ultimately shift to a PPO product but in terms of the provider side of it I think at this point we’ve come to the conclusion that providers are going to be willing to work with us in most parts of the country. As I’ve described a network strategy in the past it’s not built upon getting better deals from them than Medicare paid them. You’ve got to ask yourself why would they not want to work with us if we’re willing to pay them as well and faster than the Medicare program.

If they do that the only thing they’re doing is keeping a private choice opportunity away from the seniors in their communities. At the end of the day I think the providers will be working with us across most of the nation and there may be some isolated spots where they are recalcitrant but out experience tells us that’s not going to be the case that they can be done, it’s hard work, you have to burn shoe leather, people have to go out and do what it takes time but they’ll work with us.

Charles Boorady – Citi Investment Research

On prior period developments that went up a bit this quarter can you characterize what contributed to that and I want to confirm TRICARE is no longer included in that number. If you could just tell us what was Commercial versus Medicare?

Jim Murray

Generally speaking as we mentioned briefly in the press release on the Commercial side we did have a prior period development between $10 and $15 million when you looked at compared to last year. If you take 2007 there was about a 130 basis point difference between the first quarter and the second quarter Commercial MER that was due to the fact that we had a lot of high deductible plans that we added and a lot of HSA type plans that we added. Those were new to us last year.

This year we started out knowing what the incurred would be for those types of plans we had quite a few of those plans. Again now it really swelled to 470 that difference. When we look at the first half that’s really what we’d like you to focus on the first half 110 basis point improvement that basically will tell you what we think is going to happen in the year and as I said in my remarks we’re expecting a 50 to 100 basis point improvement this year, year over year for the full year Commercial MER.

Jim Bloem

To restate some of what Jim’s already said is that last year’s first quarter was better than we had anticipated because of the high deductible health plans and the HSA’s and some of that favorable development that occurred in the first quarter of last year rolled into the second quarter we reported as such. That’s why it’s more appropriate to look at our first half versus first half. We feel very good about the progression of MER this year and going forward because now we have a good feeling for how the folks utilize those plans.

Charles Boorady – Citi Investment Research

Is there a same store Commercial MER that you can give us without the specialty products that had a downward impact on it?

Jim Murray

The specialty products are new this time they added about 5% to our Commercial pre-tax total. You can see they’re in the improvement but as I mentioned the improvement is approaching 40%. They have an affect but they have a relatively small affect as we begin to ramp those up and work those into our business. The main thing really is on a same store basis if you go back to what Jim said and what I said about the 110 basis point improvement looking at it from the first half standpoint and what you can expect for the year that’s the way we believe that you get the apples to apples you need going forward.

Operator

Your next question comes from Josh Raskin – Lehman Brothers.

Josh Raskin – Lehman Brothers

On the risk adjusters I heard Jim I think mentioned that there was a true up in the risk adjustment in the PDP side it sounded like I was under the impression you were accruing everything but maybe the magnitude of one time or non-accrued risk adjustors.

Jim Bloem

On the MA we do accrue the risk adjustor because we have the risk share. We do, do that because we understand what the part ‘a’ and part ‘b’ is for each of the people that we have for the risk adjustor. We understand that for MA PD. On the PDP we waited for the remittances that we get from CMS because we don’t have that information. We don’t really know what the risk adjustor is for those people and so in that case it’s more in line with what we received and what we got knowledge of receiving in the second quarter.

That’s the primary reason for the improvement in the PDP that we mentioned going now to the lower end of the $330 to $390 million range. Then we just took the part of it that applied in the first half and flipped that over also to improve the second half.

Josh Raskin – Lehman Brothers

The PDP you actually got your reconciliation from CMS. On the MA side Jim there was no 2007 final reconciliation in the second quarter, there’s nothing materially different versus what you had accrued is that what you’re saying?

Jim Bloem

No, our accruals are right on so we’re very happy with how that reconciliation turned out.

Josh Raskin – Lehman Brothers

In terms of the 2009 bids without getting into absolute bids I’m curious what are the target margins, I don’t think you talked about products but I think you talked the overall Medicare book I’m curious what the target margin was for 2009 all in Medicare?

Jim Bloem

The same 5% that we’ve talked about over the number of years remember if it’s better than that and we enrich benefits and it’s less than that then we take a look at benefits.

Josh Raskin – Lehman Brothers

We should expect, excluding PDP losses this year, if we do apples to apples it looks like you guys are bidding to get back down to the 5%.

Jim Bloem

Yes, that’s correct. That’s always our goal, as we said, we raised it 50 basis point today based on the improvement in the first part of your question.

Operator

Your next question comes from Greg Nersessian - Credit Suisse.

Greg Nersessian - Credit Suisse

A quick question on PDP, any color you can give us on enrollment next year based on your bids so far.

Jim Bloem

Probably not until we see the other competitors offerings. We obviously, as Mike said earlier on his remarks we feel pretty comfortable that we’ve addressed the problems that plague us this year but until we see what other folks have done it’s really difficult to identify or estimate the amount of gains or losses that we would have on that.

Greg Nersessian - Credit Suisse

There aren’t any significant geographies or product types that you discontinued all together?

Jim Bloem

We put in our bids, the way this works is that the rest of the industry puts in their bids and then they develop what’s called a benchmark and depending upon how that benchmark turns out for everybody and where we’re at relative to that tells us whether there’s geographies where we may lose some of what are called dual-eligible members or auto-allocated members. We don’t know the answer to that yet.

Greg Nersessian - Credit Suisse

There are geographies that you decided not to bid on that you’re in currently.

Jim Bloem

No, not at all.

Greg Nersessian - Credit Suisse

Do you have any idea of who or how many other bidders there were in the South region of TRICARE and also if you could give us a little color there’s a Medicaid contractor losing is that the ASO contract?

Jim Bloem

We have no idea how many TRICARE bidders are, we won’t find that out until the contract is awarded then the Government gives you an opportunity to understand all aspects of the bidding process. The ASP contract that we lost is in Puerto Rico, the Metro North contract that we got about two years ago and there was some re-pricing of that this past year and we felt we were pretty tight on what we had bid in the prior years and we weren’t willing to do anything different. That was awarded to another competitor on the Island.

Jim Murray

The entire Puerto Rico business is not material to our results so this small component of the Puerto Rico business is less material.

Greg Nersessian - Credit Suisse

When you do actually lose that membership?

Jim Bloem

On November 1st.

Operator

Your next question comes from Scott Fidel – Deutsche Bank.

Scott Fidel – Deutsche Bank

If you can talk a little bit about your initial expectations for medical cost trends in 2009 and I know most of the competitors are talking about pricing for a bit of an upward drift maybe 50 basis points or so. I’m interested in your initial views on that and how you plan on positioning pricing as well for ’09?

Jim Murray

As we shared with you on prior calls we have a committee of folks that get together every Friday and we work on medical cost trends for both our Commercial and Government business and put initiatives in place to monitor and control those costs. I can’t speak for the rest of the industry, we feel very good about where medical trends are and we don’t anticipate anything negative occurring in the future. A drift up, as you refer to it we don’t see that.

Obviously there are hospital systems that periodically will want to get some rates that are bigger than they’ve gotten in the past but we negotiate with them and we work through issues with them. We haven’t found anything significant in the last several months or several years that has negatively impacted us. As we look forward to 2009 we don’t see anything significantly different. Perhaps we’re in a different position than the competitors who are talking about that. As it respects us I feel actually pretty good about what we see going forward.

Scott Fidel – Deutsche Bank

So your view is stable trend heading into ’09?

Jim Murray

Yes.

Scott Fidel – Deutsche Bank

I’m interested in some thoughts around the group Medicare products. Obliviously for the industry overall not a lot of pick up there yet, obviously there’s been a lot of political uncertainty. I’m interested in your thoughts on what gets this market started or do you think that with the Dem’s potentially coming online that could leave employers hesitant given that that would equate to additional reimbursement uncertainty over the next few years.

Mike McCallister

I think that there’s no question that the political noise is kept employers largely on the sidelines. There’s been a lot of movement of public entities toward group Medicare because of Gasby. Having said that I think that we’re going to have an interesting time here next year as the political situation settles in. Once we understand the long term nature of the private sectors involvement in this program which I’ve said many times I think we’ll be significant and in fact growing.

Once that gets clear I think employers are going to be a little more comfortable in sitting down and trying to figure out exactly how these programs work for them. There’s a lot of interest and there has been. I’ve heard competitors talk about their pipelines being full and all that. Yes, it’s a lot of interest, the phone is ringing off the hook but at the end of the day we’ve also said this in the Commercial business in the large space, there’s a fair amount of inertia in the employer space and I think that’s what’s at play still.

Jim Bloem

Being the quasi salesman with the finance background it’s hard to say that I’m a sales guy. I would quickly point out that with our compliment of PPO’s and HMO’s and something unique to us where we’ve embraced the regional PPO’s a little bit more than some of our competitors have. I would argue that we offer a pretty unique opportunity for groups that are looking for some cost savings. I continue to be very, we’ve struggled through this past year, I feel very good about the value proposition that we can offer to a lot of the employers who again are looking for some alternatives.

Mike McCallister

Let me just reinforce that one more time. What Jim is basically saying is that employers have been hesitant to rely on private fee for service as a retirement solution because of uncertainty around that and the noise associated with it. Clearly, in our opinion there’s a long term opportunity in the network environment across much of the country. That represents a pretty good footprint for large employers who have people in many locations.

I think we’re in a slightly different spot than others who are completely dependent on PFFS for the retiree group. Again, I think it’s a combination of political noise quieting down, them coming to understand how the PPO can work. It will be up to us to execute around sales distribution strategy. I’m with Jim; I’m relatively optimistic long term about the employer group. Its pretty inertia bound at the moment.

Scott Fidel – Deutsche Bank

On Commercial MLR your thoughts around seasonality of that in 3Q versus 4Q, I know last year it was pretty much flat 3Q versus 4Q but will you maybe have some mix or deductible type differences this year?

Jim Murray

We think that last year would be pretty indicative by the time it got to the second half of the year we understood. You’re very familiar with the pattern as it goes through the year so it’s generally declining as we go. The MER goes up, the profitability declines.

Jim Bloem

You might reference him back to the first half change over last year and where you see the rest of the year coming that would be an indicator of what we see happening in the back half.

Jim Murray

As I mentioned a few minutes ago we see a 50 to 100 basis point improvement based on the 110 that we see in the first half.

Operator

Your next question comes from Justin Lake – UBS.

Justin Lake – UBS

On Part D revisions I want to make sure I understand that specifically what the changes are around, you quantified them pretty well just the one. Of the improvement in Part D how much of that came from higher risk score payments you expected? How much was on actual utilization improvements? Within that utilization improvement can you give us an idea of how much of that occurred in the enhanced product versus the problem you identified within the duals?

Jim Murray

We laid out three separate items that caused the improvement. One was the utilization and the slow down that Jim referenced. I added that the generic dispensing rate is improving and then there’s the risk. I would estimate that each of those played about a one third roll in the improvement that we’re seeing.

Mike McCallister

You have to remember the improvement is measured off something that we did with about 45 days worth of days. Now that we’re safely through half the year I spend less time wondering about how are off that initial estimate, that’s important because we gave that and it was the best we could do at the time. When you look at the risk share payment not being accrued and the possibility at that time for further adverse development based on the little sample size we have of the 45 days.

That really explains the $330 to $390 million and now as we work through it staying toward the lower end of that it neither surprises me nor does it really confound me given what we had to work with when we did the original estimate.

Justin Lake – UBS

Between the enhanced products was any of the improvement in the enhanced part or was it all on the basic plan?

Jim Murray

I would guess that it was probably 50/50 between standard and enhanced a little bit on the complete as well but not a significant amount.

Justin Lake – UBS

I think you mentioned that there was a $257 million receivable collected in July for Medicare, what’s that relate to.

Jim Bloem

That generally relates to the MRA payment. They let us know at the end of the second quarter but we collected it in early July. That’s really one of the big explainers around the cash flow that I mentioned. That’s really why we bring it to your attention.

Justin Lake – UBS

The MRA payments is that just the in year for ’08 or is that the ’07 and ’08.

Jim Bloem

It’s the ’08.

Justin Lake – UBS

If I look at that $257 million from a risk score standpoint can you give us an idea of how much of that was Part D versus Medicare Advantage?

Jim Bloem

Generally we said that the biggest part again is the part we don’t accrue which had to do with Part D and then the other part the payment comes through. When you look at what the difference between what we told you before and what we have now it’s obviously the part that relates to Part D.

Justin Lake – UBS

I’m just looking at the absolute dollars of that $257 million how much of that, is that mostly Medicare Advantage.

Jim Murray

It’s mostly Medicare Advantage. The PDP is something based upon the Medicare fee for service world and what’s happening with those individuals. There’s nothing there, it’s not a very significant portion of the $200 million or so that Jim referenced.

Justin Lake – UBS

The reason I ask, as you look at the $257 million if it is mostly Medicare Advantage and there’s about $2.5 billion in ’08 and there’s $2.5 billion of premiums it would look like the risk scores went up 10% if you just divide those two numbers. I’m curious to see what’s driving that, is it a sicker population, if I’m correct, is it better continued improvements in coding and how you look at that look going forward.

Jim Bloem

It’s all of those items added together. The population, the folks that we get is whatever it is and at times we see that the risk scores are going up as you referenced but there’s also a work that we’re doing around the coding infrastructure. I don’t know where you got your number from but it’s a part of our day to day operations. We think we’re very good about identifying risk scores and conditions. One of the things that we feel very comfortable about is that we’re trying to get payments for the risks that we’re assuming from the Federal Government.

Justin Lake – UBS

I got that number by dividing the $257 million into your year to date Medicare Advantage premiums. We can take that offline.

Operator

Your next question comes from Carl McDonald – Oppenheimer.

Carl McDonald – Oppenheimer

I was wondering if you have any data you can share on how the PPO network today compares to private fee for service. If you look at private fee for service and say the network is essentially 100% of the market what would a comparable or an average PPO network look like in relation to the relationship to that, also from a unit cost perspective if you’re paying docs 100% of fee for service in the private fee for service program what’s a comparable reimbursement rate today for PPO?

Jim Murray

Let me address your second question first because I’m trying to make sure I understand the first part. We pay Medicare allowable generally that’s our principal and that’s our philosophy. There may be a system or two throughout all of where we do business where we’ve given a little bit more or a little bit less but generally we pay a Medicare allowable which is equal to what the hospitals and doctors get from the Federal Government.

On your first question I think what you’re asking is how large is our PPO network relative to the network that exists for the seniors to use if they were in a fee for service.

Carl McDonald – Oppenheimer

Or in your private fee for service I assume they’re roughly comparable.

Jim Murray

I would guess that we’re probably 75% of the existing population of hospitals and doctors in a particular area. That’s a broad generalization that we serve. Obviously it’s better in some locations and worse in others. Generally speaking I would estimate that it’s probably 75% of the choice that the seniors could otherwise have were they in a private fee for service plan.

Mike McCallister

I think it’s fair to basically say that our strategy and philosophy around the completion of those networks over the next couple of years is that we’re going to end up generally around 75% in most communities. We’re not looking to get to 100% that’s not the right way to do this. We’re not out chasing contracting every doctor and every hospital in every community that is not the strategy. We get to somewhere in the 75% range we think we’re going to adequately meet the market relative to having a good product offering as well as a good broad array of positions primarily as choices even more so than hospitals.

Carl McDonald – Oppenheimer

On the 2009 guidance just to confirm you are expecting to give it on the third quarter as opposed to investor day?

Jim Bloem

Correct.

Jim Murray

Justin, we’ve looked at our Medicare Advantage revenues year to date and we’ve taken the number of $260 million which was our MRA payment and actually the percentages that we’re calculating, that’s why I said I’m not sure I knew where you got your number from is not the 10% but more like 3%. I wanted to clarify that for everybody online rather than doing that one on one.

Operator

Your next question comes from Peter Costa – FTN Midwest.

Peter Costa – FTN Midwest

As a follow up to the last one, can you tell us exactly how many doctors that you use today are in your PPO network. I know 82% of the geographies but what percentage of the doctors that are being utilized are currently networked into your PPO products? How do you expect to roll that out in terms of migrating membership or getting people to switch into the PPO’s? Are you going to start trying to do that right away or do you think that will wait till the last year?

Jim Murray

As we answered with the last caller across the system we would estimate the 75% of the providers throughout in our system are in our PPO that also exist in our private fee for service. Generally speaking doctors are easier to contract with than hospitals unless the doctors are associated with the hospital that may not want to contract with us. We feel very good about our ability to contract with doctors throughout the United States to be a part of our PPO plan.

As Mike referenced a while back on the call there are some hospital systems in very select parts of the United States that heretofore have held out for monies above 100% of Medicare allowable and we’re just not there yet. The second part of your question had to do with migration of folks from the private fee for service to our network based plans.

This past year about 12,000 folks shifted from a private fee for service to PPO plan because our career sales force walked them through the choices that they had and those folks felt better about our PPO plans as opposed to the private fee for service offerings that they had available. That’s number one.

Number two, the one thing that we shared with you a long, long time ago was that we created two private fee for service plans this past year with the expressed intent to try to get people to begin to think about PPO like offerings so that it would be easier to migrate them to those kinds of plans over the future.

This past year we have what we call Plan ‘A’ and Plan ‘B’. For years we’ve been offering Plan ‘A’ which has some doctor payments that are co-payments but a lot of benefits that were more co-insurance base. This past year we produced Plan ‘B’ which is all co-payment based which looks very similar to our PPO Plan. This past year about 100,000 folks shifted from our Plan ‘A’ private fee for service offerings to our Plan ‘B’ private fee for service offerings.

That tells us that people like co-payment based plans and since our PPO’s are all co-payment based plans we feel very good about the prospects for continuing to migrate them into PPO plans going forward. On the experiment that we shared with you a number of quarters ago and it seemed to have worked out very well for us this past year.

Mike McCallister

If you back out the acquisition fees that are generally all network product and just look at what we attracted on our own what Jim said is very true you can see that we’ve made very large strides this year in attracting people who we contacted by these products to pick a network product.

Peter Costa – FTN Midwest

In general will there be a premium paid by the senior either in 2009 or 2010 that’s higher for the private fee for service product versus the PPO type product?

Jim Murray

Obviously we don’t want to share any secrets until the Medicare website is produced with all of our competitive. One of the things we have our regional folks sit back and do is to try to create a product continuum which includes our private fee for service or regional PPO’s or local PPO’s and our HMO’s and try to set up a very logical benefit choice for the seniors to make with the thought in mind that there’s a continuum and there’s different folks out there that like different things.

One of the things we’ve done is we’ve studied our seniors and we identified those types of seniors who like particular kinds of benefit offerings and we try to identify what appeals to all those seniors and we’ve created products and we taught our captive or career sales force how to attract and discuss some of those benefit offerings with those folks based upon their attitudes. A lot of work in that regard.

Mike McCallister

Our ethnic-graphic work basically has told us that this is not a homogenous crowd and we’ve been building products and offerings to appeal to a broad group of different segments.

Peter Costa – FTN Midwest

I believe I failed to say when I first asked the question doctors I was referring to is the primary care doctors is that actually 75% of primary care doctors?

Jim Murray

Yes.

Operator

Your next question comes from Doug Simpson – Merrill Lynch.

Doug Simpson – Merrill Lynch

Taking a step back with the stumble this year on the PDP and the complete plan a couple years ago, what have you learned from that and how is that factor into ’09 and how do you have confidence that you won’t have a hiccup in some form or fashion going forward?

Jim Murray

As you might expect I’ve learned quite a bit. What we’ve learned is that the seniors are extremely budget and shopper conscious. Some of the things that we did this past year was we made ourselves more attractive because of some of our benefit offerings. We’ve learned a lot in terms of what the seniors are able and willing to do to try and find a bargain.

It changed our thinking about the nature of this business and so we’ve learned a lot in terms of how we have to match competitive offerings and find ourselves on the competitive spectrum with our offerings. We’ve also studied as you might expect a lot of the cost infrastructure as respects generic dispensing rates and use of mail order and we understand a lot more about the hydraulics of all of that and what the impact that those have on trend development.

We’ve learned quite a bit and we feel very good because of what we’ve learned on how our bid for this coming year addressed a lot of the situation that we confronted on March 12 this past year.

Mike McCallister

I would add it’s been fascinating to watch the conversation around PDP’s in particular over the last few years because we all remember all the noise and all the criticisms that these seniors would never figure it out, it’s way too complicated, they’re not capable of understanding how to make choices. It all needs to be simple and we want to treat them as a homogenous crowd. We’ve heard all of that noise.

At the end of the day we can tell you after three years of this they are very good at finding the best value for them. They work at it and you better make sure that from a transparent environment when they’re shopping and doing the things Jim described that you have positioned yourself property to get appropriate mix of risk and that you’ve built your products and your priced them accordingly.

It’s been fascinating to watch what is truly a consumer retail business one decision at a time play out in a bidding environment. It’s been interesting, it’s been painful at times but I think we’ve learned an awful lot about consumers in general and seniors in particular.

Doug Simpson – Merrill Lynch

On the M&A front there’ve been a number of recent deals can you talk a little bit about valuation expectations from buyers relative to what you were seeing in the market either 12 or 24 months ago. Wrap around that comments about the competitive landscape shifting as others look to prepare for changes to deeming in 2011 and to what extent that creates further opportunities.

Mike McCallister

We’ve got plenty of other opportunities out there and I think that’s the first part of your question about the valuation. People are becoming more and more aware of the valuation generally of the five or six largest companies and how that pertains to their valuation given the fact that there still would appear to be a fair amount of consolidation that’s left to be done in the industry.

You need the scale, you need a lot of things to get by to build the capital to be able to provide the service and to be able to have the kinds of things that we’ve developed for example in the Medicare and with respect to the deeming as you mentioned before and the new law that just was passed last month. Generally I think these kinds of increasing challenges give smaller plans, provider owned plans, other people who own plans generally the impetus to take a real look at the economics of the plan in relationship to the plan with other entities they might own.

Looking at those valuations we think that they’re correcting and getting in line with the correction that’s occurred in our industry overall.

Operator

Your next question comes from Matt Perry – Wachovia Capital Markets.

Matt Perry – Wachovia Capital Markets

Thinking about the deeming change in 2011 how are you thinking about how you will consider or how you will measure success in transitioning private fee for service members over to network products. Do you have a timeline for how that process will occur over the next three open enrollment seasons?

Mike McCallister

I talked about it in my comments. We’d like to the extent possible protect the business we have and you saw from this morning’s information that for a very small sliver of the pie we showed you we actually have wonderful opportunity to have these people stay with us. My view of it longer term has always been when you get through with these changes to the program which have been inevitable do we still have a growth opportunity going forward after that, that’s why I spent a little bit of time this morning talking about that.

We will continue to build out in mature networks, we’ve got a lot of people applied to have had them out there for a couple years to build out and be in a position to offer the most attractive possible PPO option to everybody we do business with. We will continue to network in places where we currently don’t have PPO’s so I think by the time we reach January 2011 we feel like we’re going to be very well positioned and to keep what we have.

I’d also mention there are places around the country where there are just not enough folks there to really make all that work all that useful. There will be some that we will not deliver a PPO to but not many. The good news is as we build out the PPO networks to support the existing business that in and of itself represents a long term platform for growth because that work will have been accomplished, our competitors will be hustling to catch up so I think we’ll be out there in front of everyone again with this new product array which is the PPO being the primary driver.

To me its question of how much of our existing business will transfer and I think it’s going to be a lot. Do you have an opportunity for growth after that based on building out those networks and those products being attractive and the answer to that is yes, I think there’s a big up side still.

Matt Perry – Wachovia Capital Markets

Secondly, when you talk about the environment for Medicare Advantage changing, I would think that maybe your thinking would include a reduction in the benchmark to get them closer to fee for service at some point over the next couple years. If the benchmarks go down to 100% of private fee for service would you still target a 5% margin and if you did target a 5% margin how can we think about the potential growth. The ultimate question is can you get a 5% margin and growth under that environment?

Mike McCallister

That’s our intent. We believe that’s possible. Several things have to drive that. First of all I don’t know what’s going to happen with rates. Here’s what I do know rate cut mean. Rate cuts in the short and mid term definitely mean benefit cuts to seniors. There’s no question about that, nobody should be confused. Having said that, over the long term every quarter you’ll notice we tease up some clinical activities to give you some sense of where the opportunities are to actually more effectively coordinate the care.

You’ve got the efficiency and productivity we’re seeking inside of the program which gives more room for either richer benefits or more sustainable benefits as people attack this program. In any case, I think at the end of the day we have to be as efficient as possible. We are targeting driving a lot of efficiency and effectiveness around everything from administration to clinical coordination.

We know there’s a big up side on the clinical coordination in the senior population. We’ve been working with this population for 20 plus years. You can even take it back further we used to be a hospital company and saw from the provider side for many years. We understand what Medicare looks like and the way the utilization plays out.

We understand how big of an opportunity there is in just blocking and tackling coordination because it’s a mess in the traditional program. We have a big opportunity there and the quicker and more mature we get our clinical coordination efforts and we bring in data mining and connectivity and all those other things that are evolving in this business the longer this program has to be widely successful for us no matter what happens in Washington.

That’s the way we think about it, that’s the way we’re building out, that’s how we’re spending our money and we plan to be in this for a very long time and to the extent the private sector is involved in this there is huge up side from where we are today. You have 10 million people in Medicare Advantage approximately, you’ve got 40 million over the age of 65 that number is going to get bigger and bigger you’ve seen that chart many times.

This is the growing market in health insurance in the United States and we’re glad to be where we are, we’re positioned beautifully for it and we think through efficiency and productivity and all the things we’ve been investing in that we have both a short, mid term and long term opportunity but it’s not simple insurance work it’s managing costs and coordinating care.

Jim Murray

The only thing that I would add to what Mike said is that geographically obviously there’s certain locations in the United States where people live and reimbursement rates are such that we think we can make amounts above that target that we’ve talked about but there’s obviously a lot of places in the United States where there aren’t as many people critical mass is not as strong and with a lack of critical mass comes our inability to put a lot of the resources that we otherwise would put in an MSA that is critical mass and good revenues to provide some savings opportunities.

When you think about all of the regions of the United States added together some are going to be higher than the target that we have and some would be lower and I think we feel pretty comfortable that they could average the 5% that we’ve been pretty consistent about.

Matt Perry – Wachovia Capital Markets

In your current HMO and PPO businesses if you were to offer, how much would it cost you to provide the equivalent ‘A’ and ‘B’ benefit to private fee for service? One hundred percent of the fee for service payment, 90%, and 80%, where do you think that falls out?

Mike McCallister

It differs by the markets that we’re discussing. Some markets we do very well and others it gets a little bit closer to the 100%. It’s all market driven. If you look around the United States and you see the payment ranks for the different counties you can get a sense for what I’m talking about.

Operator

Your last question comes from John Rex – JP Morgan.

John Rex – JP Morgan

A quick question on overall trend, a few other health noted something about acuity creep or higher number of catastrophic claims. I’m wondering if you’re seeing any indications of that in your books or any kind of indications of that potentially being about coding practices and how you’ve analyzed that.

Jim Murray

In our Commercial book of business it’s mostly per diem reimbursement but there was a change that was made this past year in the way that hospitals code for DRG’s and so we have a market where we’re seeing some of the coding creep that you’ve heard referenced earlier. We think that there’s opportunities to fix that based upon the nature of our contracts were obviously also evaluating the heck out of it as it relates to our private fee for service business because as you know that’s all paid out of DRG basis.

We spotted this a while ago. We’re already in corrective actions and we feel pretty confident that we’ll get it under control. On the Commercial side it’s obviously not widespread. On Medicare we’re seeing a little bit of it but not a lot.

John Rex – JP Morgan

That’s mostly related to the MSDRG?

Jim Murray

Yes.

John Rex – JP Morgan

In terms of addressing that in that book do you have to increase the audits?

Jim Murray

Yes, and we have to have price protection in our contracts and we do.

John Rex – JP Morgan

Nothing though fundamentally in terms of what you think in terms of just actual acuity creeping more so coding practices.

Jim Murray

No, not that we’re seeing.

John Rex – JP Morgan

Longer term when you think about your Part D business over time can the auto signees and the retail base co-exist in the same plan or you continue to try to separate those. Can they co-exist profitably in the same plan is my question?

Jim Murray

You might address that question to CMS. We’ve done a lot of studying and we have a lot of data around costs and what have you. There’s different utilization patterns between the two populations I will tell you that.

John Rex – JP Morgan

Some of your plan design initiatives for ’08 it looked like you were trying to address that and potentially creating a retail plan that might be more attractive without undermining the duals, that’s the one you’re addressing. It seems like ultimately it’s tough to keep them in the same plans as they are today, is that true?

Jim Murray

Mike has talked a long period of time about the enhanced plan and what we’ve done around benefit designs around the enhanced plan. We feel very good about the way the enhanced plan is running for us. As is chronicled we’ve struggled a little bit with our standard plan and as you point out it has duals, it also has low income subsidy members in it and it has some voluntary members in there. We’ve struggled with how they can co-exist in the same plan.

Mike McCallister

Let me wrap this up. I think we could say this is a good quarter for Humana; we’re pretty pleased with where we are across all of our businesses. We spent a fair amount of time this morning talking about our PPO preparation around the Medicare business. I would characterize our position as good. We are competitively in a really good position. We will see our competitors attempt to move to the network environment and we will deal with that as it progresses.

I want to remind everyone that our investor day is on November 20th in New York City, we look forward to seeing all of you there. Thank you for joining us today and I want to thank the Humana associates that are on this call for making this good quarter possible. Thank you very much.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Humana Inc. Q2 2008 Earnings Call Transcript
This Transcript
All Transcripts