Humana 2004 Annual Report Download - page 4
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Please find page 4 of the 2004 Humana annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Theseoutstandingfinancialresultsareevidenceofprogressinmanyoperationalareaswithinourdiversified
portfolioofbusinesssegmentsandproducts.
• Wewereabletogrowmembershipandrevenuesprofitablyinbothourgovernmentandcommercial
businesses.
• Weannouncedourexpansioninto14newMedicarePPOmarketsandaremakingthenecessary
investments to expand Medicare profitably in 2005 and 2006, based in large part on the many
opportunitiesinherentintheMedicareModernizationActof2003.
• OurTRICAREbusinessformilitaryfamiliesandretireessuccessfullytransitionedtoanewcontract
withnoearningsoroperatingperformancemissteps.
• In our commercial segment, we achieved growth despite the challenges of a difficult pricing
environmentbyfocusingonprofitabilityandbusinessmix.Weexitedunprofitableaccountsandshifted
ourportfoliotowardincreasedadministrativeservicesonly(ASO)andindividualmembership.
• We grew our consumer-choice products and maintained the SmartSuite medical cost trend at
approximately5percent,wellbelowmarketlevels,onagrowingbaseofmembership.
• Weintroducedanumberofimportant new productsincludingSmartExpress,whichforthefirst
timeofferssmallbusinessmanyconsumer-orientedadvantagesthatlargeemployerstypicallyenjoy,
andahigh-deductiblehealthplanforindividualswhichincludestheabilitytousethehealth-savings
account (HSA) funding mechanism. This product introduction paved the way for our planned
expansionintothegroupHSAmarketin2005.
• Overthecourseoflessthan10months,wesuccessfullyacquired,integratedand–importantly–
convertedalloftheOchsnerHealthPlanmembershipinLouisianatoHumana’stechnologyplatform.
WealsoannouncedouragreementtoacquireCarePlusHealthPlansinMiami,whichclosedFebruary
16,2005.
Inreviewing2004andatthesametimelookingahead,we’reconvincedthisistherighttimeforHumana.
ToourStockholders:
In 2004, as in 2003, Humana achieved record levels of revenues and
membership.Earningspershareroseto$1.72,a22percentincreaseover
theprioryear.Consolidatedpretaxmarginincreased40basispointsto3.2
percent – the highest achieved by Humana in its history as a stand-alone
healthbenefitscompany–whilecashflowsfromoperationsapproximated
$348million,1.2timesournetincomefortheyear.
TherighttimeforHumana
Thereareanumberofconvergingforces,bothinternalandexternal,thatpointtocontinuedsuccessforour
company.ThetwokeyelementsarethatweseeasignificantopportunityinMedicarein2005andaneven
greateroneintheyearsahead;and,onthecommercialside,webelievethataggressivecompetitorpricing
isstartingtoease.Asthishappens,customerswillpayevengreaterattentiontoourinnovative,consumer-
choice total solutions that reduce health care costs while offering employers and employees a superior
healthplanexperience.WebelievewehaveasignificantmarketadvantageinbothMedicareandinnovative
commercialproducts,andthatconditionsarerightforustoextendthis“duallead”inthenearterm.