Humana 2004 Annual Report Download - page 9
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Please find page 9 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.MichaelB.McCallister
Director,Presidentand
ChiefExecutiveOfficer
SignificantStockholder
Earningsquality
In2004,ourearningsqualityagainwasstrongandweforecastittoremainveryhigh.Wecontinuetobe
amongtheindustry’slowestindaysofclaimsoutstandingwhilemaintainingahighoperatingcashflows
tonetincomeratio.Thiscashflowwillallowustofundourorganicgrowthandbeopportunisticforany
fill-inacquisitions.Also,becauseofthechangeinourTRICAREcontract,thevariabilityofquarterlyprofit
recognitioninthisbusinesswillbesignificantlyreduced,makingresultsfromourmilitarybusinesssmoother
throughouttheyear.
SowhenyouthinkofHumana’snear-termstory,thesearethemainpoints:
• Weexpecttoextendourpositionastheindustry’sleadingconsumer-focusedcompany
• We’reverycomfortablewithourfinancialtargetsfor2005
• WeviewourexistingMedicarebusinessasverysolid,positioningusforstrong
growthin2005andbeyond
• OurcommercialbusinesswillcontinueamigrationtoASO,individualand
full-replacementconsumer-choiceSmartproducts
• TRICAREwillbemoreevenlypredictableoverquarters
• Earningsqualityandcashflowwillremainhigh,and
• Overall,you’llseeexcellentblockingandtacklingonthebasicsofbusiness
execution,combinedwithcontinuousinnovation.
Thefuture
Mostimportant,in2005wewillpositionourcompanyforaccelerationofourgrowthratein2006.Wehave
builtintoour2005financialsthecostassociatedwithseizingasignificantMedicareopportunityin2006.We
believethePPOopportunityisexcellentandnotwellunderstoodbyothersintheseniormarket.We’llshare
moredetailsastimemakesthesedisclosureslessusefultoourcompetitors.
Wealsobelievethatby2006,weshouldbewell-positionedinthecommercialmarketplaceasemployers
increasinglyseeknon-commodity,long-termsolutionstotheproblemofrisingcosts.Inaddition,weareone
ofthefewinsurerspreparedtotakemaximumadvantageofthecomingconvergenceoffinancialservices
andhealthbenefits,basedonoursuccessfulhistoryofmanagingconsumer-choiceproductswithspending-
accountoptionslikeflexiblespendingaccountsandhealthreimbursementaccounts.
WhenyouevaluateHumanaforthelongerterm,thesearesomeoftheaspectsyou’ll
continuetosee:
• Aconsumercompanyslowingthegrowthofhealthcarecostsandprovidinga
betterhealthplanexperiencethroughconsumerengagement
• Continueddiversificationofrevenuesandearningsacrossawidespectrum
ofcustomers,productsandgeographies
• Technologyenablingnewproductsandservicesthatprovidetotalsolutions
foremployersandconsumers
• AcompanyusingR&Dtofosterconstantinnovation,encouragebehavior
changeandreducecosts.
Sincerely,
DavidA.Jones
ChairmanoftheBoard
SignificantStockholder