Humana Inc. (HUM) Earnings Call Transcript & Summary

All right. The meeting will please come to order. I'm Kurt Hilzinger, Chairman of the Board of Humana. I will act as Chairman of this meeting. Joe Ventura, Chief Legal Officer of the company, will act as secretary of the meeting. Joining us on the stage is Bruce Broussard, Humana's President and Chief Executive Officer. I'd like to welcome all stockholders and guests to this meeting, including those stockholders participating through our webcast. We've made available the rules of conduct for this meeting, which we ask participants to follow so that we may conduct the meeting in an orderly fashion. As outlined in the rules of conduct, I wish to remind you that only stockholders may address the meeting. And in fairness to all stockholders, please do not address the meeting until recognized and limit your remarks to the item of business currently being discussed and to no longer than 3 minutes. At this time, I'd like to ask Joe to give a report of the secretary.

Thank you, Mr. Chairman. The record date for voting at this meeting was the close of business on February 28, 2022. An affidavit will be incorporated in the minutes of this meeting attesting that notice of this meeting was properly given, that the stockholder list as of the record date has been maintained for review and that the inspectors of election appointed by the Board of Directors have been duly sworn in. The stockholder list shows that holders of 126,743,282 shares of common stock of the company are entitled to vote at this meeting. Based on a preliminary report, I have been informed by the inspectors of elections that a quorum is present.

Thank you. The meeting is therefore properly convened for the transaction of business. Following the business portion of the meeting, Bruce Broussard will provide a report on current corporate affairs. We will then allow time to review and respond to questions from stockholders, if any, which are germane to the business of the company. Joe, please begin a report on the items of business for today's meeting.

There are 3 items of business being considered at today's meeting, each of which has been moved for approval by the Board of Directors and seconded by proxy. First, the election of 13 directors of the company as identified in the proxy materials for this meeting. Second, the ratification of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the year ending [ December 31, 2021 ]. [Technical Difficulty]

Thank you. We will now open the window for voting. If there are any stockholders present who have not already voted by proxy or wish to change their previous proxy vote, then please raise your hand and the inspectors of election will provide you with a ballot. I'd like to now introduce the members of our Board of Directors, all of whom are present via webcast or in person. For those attending in person, as I call your name, please stand and be recognized: Bruce Broussard; Dr. Raquel Bono; Frank D'Amelio; Dr. David Feinberg; Dr. Wayne Frederick; John Garratt; David Jones, Jr.; Karen Katz; Marcy Klevorn; William McDonald; Jorge Mesquita; James O'Brien. We'll now close the polls. Joe, please proceed with disclosing the voting results.

By order of the Chairman, the polls are now closed. The inspectors of election have presented their preliminary report to me, a copy of which will be filed with the minutes of this meeting. According to the preliminary report, each of the director nominees has been elected. PricewaterhouseCoopers has been ratified as the company's independent registered public accounting firm for the year ending December 31, 2022. And the advisory vote with respect to the compensation of the company's named executive officers has been approved.

Thank you, Joe. We'll now entertain a motion to adjourn.

So moved.

All in favor? [Voting]

Opposed? [Voting]

The motion is carried. The 2022 Annual Meeting of Stockholders is now adjourned.

At this time, Bruce Broussard, Humana's President and Chief Executive Officer, will make some remarks. Let me remind you that we may make forward-looking statements during this portion of the meeting, including predictions, projections or other statements about future events. Actual results may differ materially from these forward-looking statements because of a variety of risks and uncertainties about our business, which we describe in our filings with the SEC. Bruce, over to you.

Thank you, Joe. And thank you for everyone joining us. I know this is the first meeting in person for 2 years, and it's good to see everyone and be in person. I'll share few just updates about the business. And I think at the end of the presentation, I know our shareholders will walk away both excited and -- that they are an investor in the company as a result of our performance, both pre-COVID but as importantly, post-COVID and all the great things that we've done. As you look at the growth of the company, you'll see that the company has continued to grow at a pretty impressive rate. Our EPS growth has been at about 15%, while our revenue growth has been 11.5%. Really contributing to this has been our Medicare Advantage franchise that continues to grow, along with our organic Medicaid business and our Healthcare Services business, which includes Pharmacy, Primary Care and also Home (sic) [ Home Solutions ]. As you look at our largest -- here we go. As we look at our largest division, which is our Medicare division, you see really impressive growth from a customer point of view. As you can see since 2017, we have grown at 11%, which the market has grown at around 9%. So continuing to improve our market share. And then as a result of not only the value proposition that we've provided to our customers in the past, but also our great quality outcomes that you see, both in our experience from a Net Promoter Score, and in addition from our STARS ratings, which really measures the quality of the care that's provided to our members. As you look at 2022 and the growth in 2022, we did only grow at about 4%. And we really feel that as a result of our value proposition in a very competitive market. So in result, we have committed this year to reduce our operating cost by about $1 billion so that we can invest that in our customer and continue to increase our customer value proposition as we enter 2023 and resume the growth of greater than market going forward. In addition to our Medicare franchise and along with our Medicaid franchise, we continue to grow very strong in our Healthcare Services side. First, as you look at our Primary Care area, we have opened on an average of about 20 to 30 clinics a year. We anticipate over the coming years to increase that to 30 to 50; that is both the organic openings along with acquisitions. We continue to grow in our Pharmacy business, both in growth and revenue, but as impressively, continuing to move more and more to home delivery as our members are choosing Humana as their pharmacy. And then lastly, which is a newer part of our business, is our Home Solutions, which includes Kindred at Home. We completed that acquisition just recently in September of last year. That today covers about 65% of Humana markets. And in addition, as we look at the future, we have a goal of about 270,000 members being covered by our value-based relationship of both One Home and Kindred. And most importantly, as we've looked at the company over the years, and I know many of our shareholders has seen a very purpose-driven organization, an organization that is not only driven in supporting our members but supporting the communities we serve and also continuing to advance our ESG work. I won't read all the accolades on this slide today, but you'll see that the organization continues to be really driven towards not only about what we do business-wise but how we can continue to make our communities and the United States a much better place. So in conclusion, I would say that we, as an organization, continue to look at improving the members' health, at the same time continuing to simplify health care as it is a complex and a very hard industry to navigate through. So with that, Joe, I'll turn it over to you. Do we have any questions?

We've not received any questions in advance.

Okay. Do we have any questions from the audience? Okay. So I'd like to just thank our Board members, our associates and our shareholders for supporting the company through the many years that we have been apart and together. At the same time, I really am excited about the future of the organization as we continue to execute on our strategy of being an integrated delivery system. So thank you, and that concludes the meeting.