Humana 2003 Annual Report Download - page 6

With respect to our TRICARE operations, the new “mega-regions” created in 2003 by the Department of
Defense – with Humana awarded the new South Region – become effective during 2004. Our leadership team,
with its breadth and depth of experience in this specialized business, is well positioned to ensure a smooth
transition to the new contract for our TRICARE beneficiaries.
2003 Financial Highlights
We are pleased that our many accomplishments during 2003 have also translated into financial progress for
our shareholders. Some of our significant 2003 financial milestones include:
ŠRevenues now total more than $12 billion, an increase of more than 8 percent from 2002.
ŠMedical membership in the commercial segment grew by 2.4 percent during 2003 despite a challenging
economic environment.
ŠCommercial premiums, net of any benefit changes, increased more than 12 percent on a per-member
basis compared to 2002.
ŠThe Commercial segment contributed a record 35 percent of the company’s pretax earnings.
ŠGovernment segment profits held steady, despite a decline in Medicare membership in 2003 and the
impact of increased international conflict upon our TRICARE business.
ŠEach of our business segments achieved strong operating earnings, evidencing the soundness of our
customer diversification strategy.
ŠOur balance sheet became more liquid than ever, with cash and investment securities accounting for
more than 55 percent of total assets at December 31, 2003.
ŠOur debt-to-total capitalization ratio decreased by 150 basis points during 2003 to 25.9 percent at the
end of the year.
Corporate Governance
A strong sense of business ethics has always been a priority at Humana. Our Board of Directors represents
the beginning point in the corporate governance process. During 2003, we added two new members to our Board:
Frank A. D’Amelio, Executive Vice President and Chief Financial Officer of Lucent Technologies Inc., and Kurt
J. Hilzinger, President and Chief Operating Officer of AmerisourceBergen. Each brings a wealth of experience
and expertise to the oversight and direction of our company.
Shareholders can read more detail about Humana’s corporate governance policies on the Investor Relations
page at www.humana.com.
Leadership in Technology and Innovation
Humana’s leadership in technology and innovation accelerated in 2003. The company’s HumanaAccess
MasterCard was heralded as the first combination health plan ID card and stored value card in the industry.
Cardholders can access funds set aside in a flexible spending account or health-reimbursement account by
swiping their card at their doctor’s office or pharmacy. Funds are then deducted directly from the member’s
account, which eliminates the need for members to pay cash at the point of service, complete forms and await
reimbursement checks.
In January 2003, we launched an improved version of our innovative Personal Nurse service that guides
members through the health-care system, providing information to help them take control of their health
conditions. Available to all of Humana’s commercial members, the Personal Nurse service is staffed by highly
skilled registered nurses, who provide support, information and resources primarily to members who have acute