Humana 2005 Annual Report Download - page 5

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creatin
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smart, proactive consumers ...
f
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.
in 2006 and prepare ourselves for future growth in 2007.
And our 2005 growth refl ects the positive initial impact
of this fi rst-mover advantage, as Humana’s infrastructure
development, network expansion, innovative consumer
marketing partnerships and one-to-one relationships
with prospective senior buyers led to signifi cant Medicare
membership gains even before the new programs took
effect January 1.
Following are more detailed comments on results and
prospects in our Government and Commercial segments.
We’ll then close with a summary, and introduce two board
members who joined us in 2005 while saying farewell to a
long-serving member who will retire this year.
Government Segment
In 2005, our TRICARE business continued to perform
well. TRICARE has been a steady contributor to our
bottom line for the better part of a decade and we expect
that to continue in 2006.
Turning to Medicare, Medicare Advantage (MA)
membership grew ahead of our expectations. Total
Medicare membership was 558,000 at December 31, up
181,000 members year-over-year, with much of the growth
in our private fee-for-service plans.
Our fi nancial progress in 2005 can be summarized by these highlights:
• We recorded earnings per share of $1.87, up 9 percent from 2004.
• Revenue, net income and medical membership all reached new highs.
• We had excellent performance across every line of business.
• We were able to make a major investment for future growth in Medicare while successfully achieving current earnings targets.
• This investment enabled us to increase our Medicare membership by 48 percent in 2005, followed by a much more substantial
rise in early 2006 after the new Medicare prescription drug plans (PDPs) and regional PPOs took effect on January 1.
February 2006 Medicare membership approximates 2.4 million, of whom 1.7 million are enrolled in our PDP offerings.
• Sound pricing decisions and utilization management initiatives enabled us to achieve pretax profi t in the Commercial segment
of $98 million, despite the absorption of some unusual expenses.
• We acquired CarePlus Health Plans, a 50,000-member Medicare Advantage HMO in South Florida, and Corphealth,
a behavioral health care management company based in Fort Worth, Texas.
• We settled class action litigation that had been pending against the company for six years, thus strengthening our collaborative
relationship with physicians.
• We substantially increased cash fl ows from operations, which continued to outpace net income.
2 Annual Report 2005 3