Humana 2014 Annual Report Download - page 72

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flows as we built a receivable in 2014 that is expected to be collected in 2015. The net receivable balance associated
with the 3Rs was approximately $679 million at December 31, 2014, including certain amounts recorded in receivables
as noted above. In September 2014, we paid the federal government $562 million for the annual health insurance
industry fee.
In addition to the timing of receipts for premiums and services revenues, payments of benefits expense, and
amounts due under the risk limiting and health insurance industry fee provisions of the Health Care Reform Law, other
working capital items impacting operating cash flows primarily resulted from the timing of payments for the Medicare
Part D risk corridor provisions of our contracts with CMS and changes in the timing of the collection of pharmacy
rebates.
Cash Flow from Investing Activities
Our ongoing capital expenditures primarily relate to our information technology initiatives, support of services in
our provider services operations including medical and administrative facility improvements necessary for activities
such as the provision of care to members, claims processing, billing and collections, wellness solutions, care
coordination, regulatory compliance and customer service. Total capital expenditures, excluding acquisitions, were
$528 million in 2014, $441 million in 2013, and $410 million in 2012. Excluding acquisitions, we expect total capital
expenditures in 2015 to be in a range of approximately $575 million to $625 million primarily reflecting increased
spending associated with growth in our provider services and pharmacy businesses in our Healthcare Services segment.
Proceeds from sales and maturities of investment securities exceeded purchases by $411 million in 2014. These
net proceeds were used to fund normal working capital needs due to an increase in receivables in 2014 that will be
collected in 2015 associated with the 3Rs in addition to the timing of payments to and receipts from CMS associated
with Medicare Part D reinsurance subsidies, as discussed below. We reinvested a portion of our operating cash flows
in investment securities, primarily investment-grade fixed income securities, totaling $592 million in 2013 and $320
million in 2012.
Cash consideration paid for acquisitions, net of cash acquired, was $18 million in 2014, $187 million in 2013, and
$1.2 billion in 2012. Acquisitions in 2014 included health and wellness related acquisitions. Cash paid for acquisitions
in 2013 primarily related to the American Eldercare and other health and wellness related acquisitions. In 2012,
acquisitions included Metropolitan, Arcadian, SeniorBridge and other health and wellness and technology related
acquisitions.
Cash Flow from Financing Activities
Claims payments were $945 million higher than receipts from CMS associated with Medicare Part D claim subsidies
for which we do not assume risk during 2014, $155 million higher during 2013, and $341 million higher during 2012.
As discussed previously, our 2014 financing cash flows have been negatively impacted by the timing of payments to
and receipts from CMS associated with Medicare Part D claim subsidies for which we do not assume risk. We experienced
higher specialty prescription drug costs associated with a new treatment for Hepatitis C than were contemplated in our
bids which is resulting in higher subsidy receivable balances in 2014 that will be settled in 2015 under the terms of our
contracts with CMS. Our net receivable for CMS subsidies and brand name prescription drug discounts was $1.7 billion
at December 31, 2014 compared to $713 million at December 31, 2013. Refer to Note 6 to the consolidated financial
statements included in Item 8. – Financial Statements and Supplementary Data.
Under our current administrative services only TRICARE South Region contract that began April 1, 2012,
reimbursements from the federal government equaled health care cost payments for which we do not assume risk in
2014. Health care cost payments were less than reimbursements by $5 million in 2013 and exceeded reimbursements
by $56 million in 2012 due to the timing of such receipts. Receipts from HHS associated with cost sharing provisions
of the Health Care Reform Law for which we do not assume risk were $26 million higher than claims payments for
the year ended 2014. See Note 2 to the consolidated financial statements included in Item 8. – Financial Statements
and Supplementary Data for further description.
We repurchased 5.7 million shares for $730 million in 2014, which excludes another $100 million of stock held
back pending final settlement of an accelerated stock repurchase plan, 5.8 million shares for $502 million in 2013, and