HUM - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Humana Third Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Amy Smith, Vice President of Investor Relations. Thank you. ahead. go Please

Amy Smith

and good President and Chief a Bruce XXXX moment, Officer, XXXX. outlook Thank Chief morning. Executive Humana’s results quarter third and discuss Kane, updated Officer, Broussard, financial will for you our In our and Financial Brian

with remarks, session analysts. these a prepared the for will we Following up open lines question-and-answer industry

to management’s Our Officer, on of Humana’s Joe page the Bruce remarks the for later Brian We related Chief analysts. Ventura, encourage joining humana.com, Q&A both replay be Relations Legal website, This being Q&A public That investing listen and the media call available and and will Investor replay prepared recorded will also to purposes. session. with the be for is today.

I actions our factors other could to are particular impacts participants financial discussion, risks uncertainties. and local risks operate matters filings disruptions to ability press COVID-XX healthcare advise taken with to we markets forward-looking one, in in two, uncertainties to Actual the expand discussed forward-looking among call the connection of of of four, spread could begin of creates and cautionary for Investors detailed all Certain in involve differ in COVID-XX; governments need of additional of advised community business. this discussed and potential of relax conference and to and as effectively; in the and third and read three, results forward-looking which and our the our and business pressure employment risks are these our negative they state with provide XX-K, others, response by call members economic, XXXX mitigate for release quarter statements our spread our Form Commission to relief risk and Securities relate Exchange to note for the turn our number our us be provider and those us the COVID-XX to to statement. our taken impacted benefits including to a by that Before the by actions statements latest in in pandemic, related restrictions; earnings federal, materially. and the

on therefore filings Our and these with our or be results. SEC of filings update any additional in risks Accepted should use We the Call GAAP. release, financial obligation our address our are future non-GAAP our SEC regarding all accordance and Principles that in release. included historical our uncertainties available of discussed or site. measures press statements other risks in to with financial to with or reconciliations press non-GAAP financial these note of Investor considered Accounting light participants filings. news includes along undertake GAAP the statements no and forward-looking forward-looking Relations communications publicly also are in Today’s business explanation in Management’s or that are should discussion today’s releases, Generally measures today’s not measures for

I’ll turn conference earnings refer that, call to common Finally, EPS the earnings references per during or any call share. share Broussard. to made over Bruce diluted per this With to

Bruce Broussard

for showing and out reaching they thank delivery from associates members, access making food. to us. needed to check and our thanking by much on Amy sure you care up you, begin members' Thank our of joining to morning to want proactively medications, and good on I for have doorsteps

the and providers. to meet continue associates and go our to needs beyond Our members above of

us care the quality Stars on improved then experiences. and improved ratings, Star bonus dollars focus again, additional leadership quality plans invest in putting incentivizes Our consumer MA both evident in recently driving our team's and and key A is system the the Plans of Humana's benefits, discipline announced care and experience, the continued peers. position clinical Star better among on rating focus a member tenet in to outcomes. program,

in approximately our members MA that or proud enrolled are currently X of X.X are stars XX% rated or plans We million higher.

XXX,XXX For X in members, a straight received years, covers than Florida, more X-star CarePlus MA rating. our plan which

than plans X remain It what personalized MA testament care. customers our commitment empathetic In to human of contracts call retirees simple, with above. trust and a XX% and is outstanding our more stars our are building we addition, to group rated through results and associates' These in experiences. our

ad an a the company, seen for is needs. probably how care have strategy we our ads. on is Human members', more new most centering holistic our human Care You campaign. health that important care addresses than run It care

continuing your their safely. and pandemic care ongoing This members Our the several conditions. engage for of of importance newest to ad one health care of their the doctors making Humana encouraging for to is it seek is to how messages managing to take members, them our to with continue stresses health during easier

implement As I've you remove determinants members our that to the improved access among of financial during care and support the over address know, Medicare Humana and described for to CMS industry quickly benefit few initiatives in social changes health needs many pandemic. associates. partnership members, the calls, to in with past providers our the was Advantage of barriers, first earnings

I So them. repeat won't

evolve the our However, of to the pandemic our constituents. will as changing progresses, meet actions to continue needs

program need, highlighted as into share story lonely program. about to identified members this the several South communities. has social Humana pandemic or Humana I'd the college matches social importance to Otis, such the of interaction. severely In students a needs, Florida A that as like extended member. response with a lonely example, For

singing His impacted birthday birthday Otis birthday. him to noticed a motion, over overcome action the that she with PAPA's for and who someone that since registering phone. Otis' and had even Humana, case immediately case managers home. had out and noting delivered a a reaction wished much team Corporate happy been so his him cake to Otis' years reached Otis it had took While the was the PAPA to program, began happy birthday manager was

Papa element in big smallest someone's Programs make the addressing action like an needs important holistic the a our Sometimes members. can life. of are difference in

As members continue we with to our stable for provide holistic to that most to are XXXX, commitment of look we reflect able their our plans health. or forward benefit to enhanced

clinical drive allow savings supplemental strong Papa member benefits programs and well those as determinant by social that like dental, health Our Medicare the expand Part hearing, needs benefits and that outcomes prescription MA cost like membership beyond platform. and original Humana and to programs gym including covered address improved quality coverage, and invest plans B, as A vision, drug benefits clinical

will meals health, COVID-XX the and testing COVID-XX with delivered and Humana the physician outpatient a for XX% be for XX-day plans. insulin plans care and other Members preventing health approximately XX% in of enhanced for An program spread or XX MAPD premium. nearly $XX under coordination for co-pays XXXX home zero our a and member Primary of half of co-pays third including essential PDP members For for members Other our plans our and flu. members supply for insulins. kit will less plans not a care more item Medicare like of zero that care paid approximately services Humana's MAPD visits, benefits than all zero members, highlights original with co-pays zero days viruses number for our select a the telehealth treatment and benefits will of and include care primary with on of co-pay. and including behavioral pay no of offer offered of XX% of included diagnosis $XX XXXX, COVID nearly savings enjoy urgent useful

to have eligible who at-home. help access Medicare their own at-home remaining independent need Advantage In manager through Humana members Humana personal care addition,

former are all customer of We U.S. are pleased plans military. and that commitment satisfaction recommended financial for MAPD of and the company security by for known to current a USAA, XXXX, Humana the and members its

Medicare and offer holistic to offers dynamics meet a providers both models, part given tolerance unique our benefits organizations Medicare full an individual and for on of risk health private for value-based risk partner care driving the in the under two-thirds are Advantage provider. by are and chronic local care changing Approximately members market on where customized due arrangements on in structurally care value-based is because the customize original care the focus payment. Our health-based condition deeper arrangements. With enhanced care. Humana members of providers one-third responsible provider Advantage management and just of in to for relative to program for like with incentivizes This a ability of with is system. capitated we is this models our value to to and to focus of our opportunity Humana's the based the a of entirety peers, programs Medicare ability large the key care to together industry health faster adoption The

demonstrating surplus, XX% We our are that these driving in the of clinical approximately partners in outcomes improved of models. care success value-based are pleased

included the XX.X% physicians in effective experience. X.XX plants lower under XXXX Humana XXXX by when on XXXX and value-based arrangements improved additional Medicare key compared an of through creating screenings, X.X for Advantage Humana fee-for-service. end annual to room XXXX, of value-based a to treatment Our arrangements. adherence care would planned hospital and emergency original with physicians the average Medicare. they current arrangements a based and XX.X% star several covered management Prevention members in value-based of arrangements $X findings less care of medical an based in have Medicare Physicians Medicare at for score had rate incurred Humana have expenses billion reductions. non-value these with of value-based served been HEDIS visits with members all admissions under report Advantage XXXX patient compared physicians medication and contributed had

and value-based in care limited direct including Initially, on primary both plan Our new contracting we health models, us program. other our deep care as for intend direct to entities a positions assets contracting value-based participate basis. the contracting participate well to experience

number working closely begin they programs before clarification of are of the as We CMS a in XXXX. points still very are needed with

impact members, interesting be could do to test evaluating we contracting the original learn have we take operations results or fee-for-service expect this for believe our XXXX direct implementing we to as participation material opportunity on our will and not approach Medicare a program. to an and a on employ While

Before to call on for turning our touch the Part PDP want offerings Brian, XXXX. I to over Medicare D or stand-alone

of years, a price become the with have leader plans discussed couple last we've of PDP all growth. commodity As essentially capturing the low

losses low we our to Walmart. members. in PDP regions with after premium million by premium one our for to plans plan XXXX, our and result, plan in offer membership competitively a made plan a almost majority most two space portfolio adding to changes significant XXXX, This of create substantially the the low meaningful grew combining co-branded price was As new

extremely to and taken a membership We've industry plans. low For remains approach the with XXXX, enterprise. the growth to competitive overall disciplined impact premium balancing carriers offering PDP the multiple pricing,

be not in XXXX, range lowest a will to plan value similar benefits. Walmart the the cost low result, priced in competitive a premium As other but is leader with plans

of well sponsor one an an rest offering outlier However, plan below priced the market. is with the

While market we as choose plans again overall Medicare shrink PDP will in anticipate seniors with once increasingly the prescription coverage. drug Advantage XXXX,

mail contributions high to PDP and PDP time. to expect overall MAPD order continue We converting with pharmacy enterprise, to over utilization the making meaningful members more

Our members premium demonstration, can senior monthly insulins get certain include $XX. cost where model will plan the maximum new savings a of at

of addition, in to PDP will offerings, three again reduce the access, price discuss a enhanced pharmacies competitive member in XXXX, preferred their our all plans network costs. convenience membership Brian marketplace headwind for out-of-pocket have remarks. the options to very expanded will be his as PDP In Despite and improve

committed the importance I election not already vote benefit public-private of the the the call outcome the duty solution-oriented to will everyone, system be and this day. that coming they meaningfully exercise to day. is Regardless years. out that, are of healthcare get have if I'll Brian. Turning and to drive so, that over on Humana I in to civic encourage done to if the remiss With didn't their partnerships results of election, turn the would

Brian Kane

to first Stars we the and Bruce, challenge. Medicare program and you, I good enterprise-wide our organization associates. the made ago, everyone. morning, everyone an years across to begin thanking would like Thank rose priority the Several by also

these our offer with growth. of to the benefits peers, Medicare for or four-star row, year higher efforts, in Medicare and gives led invest This products our us Advantage a a in to plans. our we membership ability result members enhanced the great As for compelling drive continued of in third Advantage XX% accomplishment members

increasing financial utilization our reported quarter results last financial third Today, quarter, treatment to ongoing costs the by were These adjusted EPS and impact $X.XX. of to the Turning of and testing crisis impacted results. relief we compared efforts. company's COVID-XX

half XXXX, including medical our resulted that entirely first from expect in outperformance in experienced the second half the continue fourth to anticipated year historically loss As I to the will the an the discuss moment, quarter results we a of utilization levels. of for significant offset in low

all levels running see medical expectations, trending and though was physician early March running continue of lower. We in, experienced April. bit approximately utilization running above and a non-COVID and to at pre-COVID and the below September at normal, In well utilization bit outpatient slightly inpatient end October, a with the trough higher XX% of medical

senior a in cases more members. to compared Medicaid to as number expect country, a throughout With Group quickly end to below of expectations have continue our rebound a Specialty and perspective, line utilization again the increasing medical remain we non-COVID business of COVID non-COVID the Medicare slower through modestly segment we bit XXXX. From and utilization pre-COVID seen for the our recover

increase per previous relative treatment commercial costs our seen higher than Medicare Regarding to member both and an COVID our products. also we anticipated with utilization, expectations, have for

run in a we pull-forward with result, a out the a early pharmacy a and treatment volume largely expect and refills seen costs the to $X now year leveled utilization representing normal continue change. XXXX. of full close to net testing has standpoint, second we pharmacy in the As within billion scripts levels quarters, rather to COVID to expect more first out, approach for year than and rate From

members new However, healthcare not pharmacy in quarter, plan to results also medication number as we as more members order which through mail And the services health are mail I the benefits seeing expected use Humana's said utilizing to but higher service, last adherence. persist generally EBITDA, order only of those is increased starts. the as continue better

any the the providers, provide and expect the members, serve. lower our we indicated that experienced communities fully medical groups, As we we from have by we support since offset the beginning we of will be impact utilization, pandemic, employer for that entirely

we lower and treatment testing expected the previously costs. is offset largely than that Given experiencing utilization COVID higher are by

on of to fourth year. support quarter, the We full previously expect expect the levels record loss largely $X as same of are expectations our range a to XXXX guidance remain in the basis billion guidance of still and of communicated for approximately tightening our we $XX.XX, $XX.XX approximately full Accordingly, to an to $X.XX year prior a to EPS adjusted our within EPS COVID. initial

by and lowest support which will quarter quarter and XXXX, As impact EPS contribution I of is more always reminded weighted the the our investors costs increasing as fourth continued historically, rebounding and for constituents, to is heavily last expected, fourth utilization quarter, in fourth levels. the COVID-XX quarter, our be treatment the testing impacted the along with

this the XXXX As meaningfully investment quarter both a relative with in in utilization the sequential segment segment ratio Specialty than to than at sequential disproportionate and to sequential as The expense well in reflects fourth quarter higher third XXX non-COVID as least quarter the consolidated and benefit result, segment increase levels. medical increase a increase. Group adjusted we points be expect Group segment higher MER higher seasonally modestly a and ratio our the consolidated ratio, Retail increase our basis Specialty lower the fourth

the our AEP. making our investments the Moving last that I to channels, can dollars brokers to well as and equipping for distribution as we distribution they operating quarter, costs, are Medicare described partners interact and increasing significant as provide with we digitally telephonically training consumers marketing including so in

support the costs you the As quarter. quarter. weighted foundation higher to be now operating estimate now are over primarily Consequently, the channel. increase investments full Medicare announced consolidated in the to work to expect XXX to last our increase we costs, in pandemic them are with COVID-related know, costs virtually our associates the fourth These ratio due primarily to year provided modest we last higher an to half these contribution to than the our to enable approximately and points Humana The estimated distribution year, basis is pre-COVID back than heavily be response our expectations. in of the quarter marketing other previously along to the

to Turning membership.

XXX XXX,XXX continued expected XXX, increasing range growth representing to to membership our XX%, reflecting compelling in year individual part previous expected are Medicare from members We growth of the members, D-SNP sales. full of XXX,XXX Advantage approximately approximately year-over-year

XX, a September XX, or members, approximately from to our XXX,XXX XX% approximately of net As grown XXX,XXX increase had lives December D-SNP XXXX. of membership

primarily the grace normal extension previously sales losses to returned membership more expect for in full to economic from over XXX,XXX Specialty in as now and membership Accordingly, more after have XXXX, to although December from business, standalone will estimate reflecting our outlook as contract we been the year In on XX, With of MA we economic likely severe progressed additional Medicaid, Additionally, of our new due expected XX in of terms pandemic. driven Group transition small of occur membership the improving well to XXX,XXX as as the the X, levels approximately Medicare XXXX. account members January Kentucky as have September increased CareSource downturn segment, and the than nonpayment anticipated. by especially modestly from our lose declines nonpayment XX% to pandemic. date of risk XXX,XXX are year of broadly XXXX, members. PDP has to Furthermore, XXXX, for approximately reduced particularly enrollment, to for by of period tracking the environment, the opposed previous resulting less XXX,XXX, primarily today, members we We COVID Florida, due the medical membership for being COVID-XX the current challenging or premium. respect are

businesses were and have for improvements teams lower delivery overall as related to Lastly in Medicare increased membership expenses the pharmacy provider offset operations in primarily who including our of offset of with with higher during Advantage operational company's services costs taken associated COVID-XX, partially growth, XX% by partially to provider throughout adjusted timely EBITDA by Conviva clinical Services PDP additional pandemic, a result fueled by declines. continued membership utilization with costs These the in our measures, COVID, earnings pharmacy in anticipated additional year-to-date, result the administrative of and the the along segment, as a to our along Healthcare ensure safety our provide assets, improvements prescriptions crisis.

by Home, you'll COVID. quarter have call Regarding earnings home our first we adversely Kindred mentioned at admissions on new that health impacted recall been

stabilized, Las to the volumes As of the able clinical overhead has with across be offset Further, the with our Vegas, are X double COVID, years. has we year, of in our materialize. first have continues, over strong beginning initial more footprint and clinics of company and our by X Wells planned partners been open a X year through to XX the days, Despite provider opened and quarter expected In in demand the business, of the expansion progressed, operate our rebound of next in Including are clinic footprint by early have with and X the the signs centers cost care these controls will to challenges in few in organization. pace opening year later on the we under brands. with these and early primary our partnership we to next XXXX. challenges Carson end first remainder Conviva, end deepened opened this the XXX additional clinics approximately last X quarter Houston, to further

XXXX. to Turning

XX%, increasing remarks, on of most fee. are in seeing to As period, view industry. Bruce Medicare part approximately by bit the in removal our This annual our described Based Advantage membership at grow be we to MA health XXXX. benefits early to what or MA for XXXX members membership represents individual permanent to of offer members of a we're pleased above is to XXX,XXX stable we individual XXX,XXX which to individual due ongoing for or of his X% growth industry the large election insurance the expect growth our in in the able

depending today in. ultimately sales develop how come we are change providing number could and voluntary on the where materially However, terminations

growth Group have accounts we little With cycle. based on data point of as typical, vary is widely AEP As this at out respect year-to-year we can termination to have pipeline bid. Medicare from very the the previously to opportunities, Advantage, stated, membership large particularly in going

the from experienced robust particularly including have couple compelling years, account winning with large last in a competitor. of group growth We and XXXX a MA growth

be As group accounts, we large particularly to XXXX, competitive. look accounts, ahead to jumbo continue

won group by XXXX. expect mid-market in membership While and large growth expect and we Accordingly, space members contracts. MA decline membership we our seeing to group XXXX, in nice XX,XXX approximately are we pressure the group for we where small the some membership both MA net-net, in lost segments, have

low described in his Bruce leader a as in remarks, to plan the value with PDP, competitive priced but low-cost the benefits. not Regarding range other similar is XXXX, will Walmart plans in be premium

deferred an plan what the decline PDP an offering members been in one I period-to-date, well experienced membership losses the previously the However, XXXX expect priced have in XXXX, which below sponsor market includes described. on annual net in rest is with of membership that we've we XXX,XXX that Based in as outlier election XXXX, were approximately originally to anticipated a of

However, still balance will early the continuing earnings perspective, sustainability. earnings integrated performance. that in we long-term to caution I briefly believe we invest AEP. model are membership while expected our XXXX growth turn between now struck we an we the and appropriate create From to have to our in financial were

guide removal EPS be to midpoint taking of the $XX.XX, for not Given rate deductible balanced which initial for a expect industry our XXXX EPS purposes, account insurance of for our the to of tax the of and our above guide off fee, health into long-term initial midpoint XXXX. approach the EPS was of XX% permanent growth adjusted adjusted of our modestly XX% baseline we

treatment XXXX. providing our around month With uncertainty for that specifics final and created severity member per as Accordingly, first In early which pieces the including are we well forward we estimate levels per as that, adjusted caller. estimates, scores our revenue, impact queue, pandemic. utilization from by one our expected acknowledge the there as multiple of determined waiting and in will you mindful risk it more up and we cost that are lines enter question. in questions. as moving will quarter the Given is fourth non-COVID visibility COVID the pandemic, the XXXX earnings EPS we impact has duration to yourself of look February. the our open introduce increases your fairness We those limit call on to to ask Operator, the evolve the will please our

Amy Smith

Operator?

Operator

[Operator comes first Jones Instructions] question Robert Sachs. Your from Goldman with

asked You questions. may now your

Robert Jones

question. Great. I Brian, go maybe just very point. guess, Thanks XXXX, starting for on to the back helpful to the view initial the have to

as COVID. other swing should with as as tailwinds. major year about any far headwinds You could thinking XXXX? considering little But pieces reinvesting moving know And that then we we half, share letting more hip about some how I just maybe highlight of bit the a mentioned any it's drop initial moving would on you that think other be through? look major and tricky you're a factors you versus at that the

Bruce Broussard

XXXX to say, out way roll about the we how XXXX you not a I portion to a forward have why, $X, $X, -- that's I'd about to working and to for of forward With just as your really adjustment. of respect given XXXX, much, to really works. guys remarks, Medicare With we in COVID. risk exactly XXXX and from the my above ones the midpoint, we've roll forward morning. that actually material impact the approach to our and take think frame it's would relate above parse I would from other portion $X.XX. math range. Sure. HIP, our we members. in headwinds And revenue $X to of think And balanced be the respect. tailwinds, back We're XXXX, taken we you said, XX% Good that to respect to at said modestly place from XXXX, were I to through the the would a the HIP say, approach to as roll modestly tried shareholders be the just rather for it, When on the would be balanced but XX% about in a just I to XXXX as still

place XXXX As know, dependent have investors in for our I risk the we think revenue XXXX. on is

And part extent to and medical so at below least impact it's doctor that that's our predicated, on seeing have the an the the could members, entering in on system normal, revenue.

to right well multiple our times, they the the we're members clinical have and documentation As number care of get as needs mentioned as code. process, that taken that appropriate a ensure doing we're in to of we've collecting things ensure

is So non-utilization. working we're through wildcard our as COVID COVID Obviously, treatment that. cost a

on. As below headwinds and remarks, remains tracks focused tailwinds side the Medicare we that those our are how would on utilization non-COVID really related see said in I bit normal, say But a major we'll we're that forward. and the

Robert Jones

Appreciate that. Thank you.

Bruce Broussard

bet. You

Operator

next Your comes from Bank with question Kevin Fischbeck of America.

ask You may now your question.

Kevin Fischbeck

by year, All growth. right, great. this really Thanks. growth the When D-SNP I was the looking at surprised

into then felt obviously, where that tell like about growth well, to how coming see XXXX? COVID, underwriting in you it's of similar also, wonder type you hard Always that Just see I to outsized the expect just see about wanted with -- if do was but And what you feel to growth. business.

Brian Kane

Yeah.

really we identifying really marketing retail think mean, design this our I about good sales buy developing the D-SNP and members members to opportunity, and really team, finding that tremendous job I has team pretty a I team think the Humana. them and appeals out a then these growth. product getting going to feel these done

is smaller. relative a So I competitors say, the our of achieved. actually we're we've very to And footprint, would about few growth our excited

growth for markets. been we've really in adjust great particularly fewer so, in our seeing the when markets, And you we're fact that

D-SNP how product this -- so strikes, expand product. per say, going continue would about grow they and I per do. and because and said, number. as member their those members clinical manage us allow perspective, we're month these to is continue to footprint, we're paid we're a that conditions We our to feel that because good on riding which revenue and the go higher after we've in so, conditions financial always get And from to are growth of excited clinical XXXX, positioned to we'll for we

we're segment continue And so, to attractive and that a pursue. it's to it's one very going

Bruce Broussard

think, Just of part supports basic plan. is social Kevin, offer that, that some the additional we I lot that, an plan important on the around of what experiencing, medical benefits the a we're itself really of also we're finding of issues, the determinant the Brian finding done, where medication as on that lot a indicated, we're really side, sort zone work pharmacy and and we've strong determinants strike this both our And of and social really, for. demand lifestyle is But adherence. our

over-the-counter the offer. And some we benefits of

Kevin Fischbeck

Thanks. Great. right. All

Operator

comes Your Charles with Rhyee from next question Cowen.

ask now question. your may You

Charles Rhyee

Thanks Yes. I D-SNP for a Brian, because I that get plans into your follow-up plan, across taking Humana maybe from programs. Medicaid a comes the you're the Maybe, already higher-margin, if you think both D-SNP. patient of is about a member migrates into that managing if also Hey. that -- that question. to plan, right member one that am could

so, programs are one -- one in if have to your your who -- plan? you into correct, of And in getting having go D-SNP and Medicaid been then a mean, I might is of there that's success members

Brian Kane

question, Charles. Good Yes. No, it's morning. a fair

-- that in I would some of to to those expand identifying has is, the But that of yes. get, at and are we to and of D-SNP sort Medicaid a biggest very the done opportunity -- terms plan. convert incremental Medicaid our benefit coordinated members this D-SNP I the more Medicaid something obviously, it's on opportunity, margin Our of on. and opportunity, committed say, to or job in the side, because already is a the would where plans a opportunities D-SNP nice place much them point the get more as our we team say, our and Florida trying to D-SNP through more members a Medicaid from experience we the fact have on really we to have member. are continue Medicaid population identifying doing, focused which footprint, then a them in they're trying decent we're that

opportunity. see that we about And an think talk do you'll so, And more. time, us I that consider over

Charles Rhyee

cost novo, if road do Maybe maybe think if sort they maybe, profitable in compared rate? kind of for typical a coming we a they I If down come And member? the follow-up about new the then at de retail real at margin just your higher then. initially? just D-SNP MA quick run to members, could more these of they're Thanks. profile And are

Brian Kane

when a more profitable come Medicare than in traditional that initially would they say I member. are they

they're in As typically when non-D-SNP, come in, know, you they initially members our more breakeven.

You cost. high not selling same our from, way. a Depending in the have come not they're where They're clinical they programs. in documented

bit outcomes. years profitable, say, get And to but our and would come the margin. so, is do as takes things several drive a on it little and up there, then take steeper our into off a we really programs get to path them D-SNP performance in they where more they that to through I

opportunity said, very I attractive So, it's like a for us.

Bruce Broussard

that cost the D-SNP experienced the usually Charles, individual on side member. as of that MA And other is side their a we typical revenue thing as or much higher medical than

is the so about think about margin contribution we as about dollars. it as And it's profitability, much the the as

Charles Rhyee

you. Thank Great.

Operator

Lake Justin from comes question with next Wolfe Research. Your

You may question. now ask your

Justin Lake

If margin into you're reinvesting X%. individual the remember morning. I next my the target Medicare math, Good year indicated target correctly, Advantage. X.X% you tax might for your in was that And year business XXXX XXXX, about into benefit to closer given HIP and margin Advantage into coming individual the by your for Medicare be coming here Thanks.

I to Thanks. target X% about specific? getting to path can too And back ballpark in the So first, X.X% if without understand, getting potential just so, the should investors of am going to right forward. talk about think sort you wanted your

Bruce Broussard

morning Justin. Good

So, you're so it say can the on impact target broadly, think the dollars geography or recognize HIP pretax We about the is of without is But important thinking which specifics, way a the target. change ultimately, by towards to membership. whether it's are I below XX% balance margin topline while of growth our giving to show multiple that that. after-tax as say growth to. growth. me we say, EPS up, and is and an EPS really Every where bit having intend and X% of the output, growing times, it's sort margin side, input, that look, heard achieve something though right, back to margin very of something our march the to X. because an It's a X% we to XX we're an we attractive you've year, try also is a to committed an would I not bottom-line that as we organization input. the want

important years Margin to a couple going have we've to target. we've back our we're really we so And above which of mean that past. strike balance. I been had a to continue imagine, over targets, where is time, to I in would input. And we'll our the bounce continue

lot on in over HIP number and distortions So, last created with margin variability lot we a a tax just coming It's of of of had line, out. the as know. years you and reform that the

Justin Lake

Right.

Operator

Fidel Scott comes Your Stephens. next question with from

your You ask now question. may

Scott Fidel

impact any will you Thanks. us by physical sales XXXX early Hi. mix XXXX when the sales on can channel I been and Obviously, give of about digital telephonic. individual evolve know sort how strategies MA sense to digital your but versus that to thinking XXXX? of for versus how if look on a traditional ship will agent in Interested telephonic the versus side, Good distribution having morning. COVID variety in of a implementing also lot mix that, that so of you've interested

Bruce Broussard

Yes.

those and programs, active growing being a years. be think the to have that all impact agents, channel in that and where part with response the they're telephonic number our a individuals' that the of combined to that, to external We're we've over reasons, to continue to circumstance. of from channels, growing actually the able an be way seeing of difficult our that being inside program great if find And community and the with into the we COVID homes number a last and I dedicated be would combined with is we we much we created COVID more of side use. the didn't get both organization just a have For partners telephonic

expense -- question, internal So face-to-face there. us. channel. But career and we're the seeing convenient continued much it's timely growth and the at of to It the your is more answer I think for both it's

preparation channel invested it the able And to complementary to analyze up, although from it's company but of seeing And what as also to to understand the are do they member, in be and making can opportunity use for part plans think want. really us not COVID, digital addition side. both mechanism an of any a -- increasing experience we today. a for a that kind to face-to-face in the the easier combat use digital and the in significantly phone year, We I only our sign and this in in small

Scott Fidel

Thanks. Got Okay. it.

Operator

Our Leering. next from comes SVB question Stephen with Tanal

You may ask your question.

Stephen Tanal

Thanks wanted the ask puts the takes about and inside outlook. Good morning to guys guys. you of for just thinking question. the how I are XQ

be, dollars how force the members out worth for specifically the the much providing side, distribution the called reinvestment in for then if sort out? guidance, of a XXX $XXX the OCR it the how for point to starting increase sense I that you're partners of plan? for may guys impact of a discretionary you us wondering give and the reflects could point the on elements or direct I that Wondering the think So the parse business if basis, of in of about marketing try year of And versus basis that's million. guess that you sort full more increase the much

Brian Kane

overall, those specific in partners, of is call to $X provided various the numbers our granular, there. too providing of to important some support committed too constituents. getting distribution investment we're of Included Without which the, and we've it, to billion some is we're our that

largely telephonic And so on towards our ensure sure set future. that. up for partners wanted in sales, our from we've towards challenges and fully our been make face-to-face weighted our to equipped of would we're migration that a the customers are face focused And that strong that the providers the we include, business to to investing say, given would but I environment also of sales to

And have so that invested we channel. in

below We as utilization expectations. for COVID also the my I mentioned we've seen increase in than in Medicare, an remarks, that have persist really longer treatment seen particularly non-COVID costs, but par,

would so another. just say, really an offset that's to broadly, -- And I that's one

overall and in of switch developed. spending is Some sort seen the of what of migration ratios. of some we've There's have programs our of more really operating the lot MER is a that as not a And the spending tranche done. we've allocations cost between

hopefully, gives of puts you takes. the So some color and that

Stephen Tanal

you've of And in reinvestment big Yes. $X number sneak pretax, if of $X nontax going It maybe on That's of the I deductibility the north X more away. reinvested $X. like just HIF, could helpful. sounds a obviously,

did the part wonder just So went D notice I that, of funded? but wondering, that is the how model the up Brian. funding Part for on $XX and you a gets we cap premiums so savings senior there, Thank

Brian Kane

mix. dollars the into the All Sure. goes

yes. any product I -- implicitly, payment benefit for on HIF that a So away. has there's HIF mean, anytime it, going the

just goes of various So implicitly, the yes, pot our it into expenditures.

out figure the And benefit, the so we do. it's obviously way to have the for right insulin pay thing a to we thought

Advantage number enhanced as well on plan that our side. our as PDP out, And of enhanced rolled so programs a the second Medicare we

that's so of the mix. part And

Stephen Tanal

you. Thank

Operator

Matthew with Borsch from Capital Your next comes question BMO Markets.

You may now ask your question.

Matthew Borsch

Hi.

last try Steve. on with I the question So pick to up

we Amy on communication. enrollment. some unveiled the had the are have costs MA know is magnitude ahead in change of that. I products with out-of-pocket out figure right, what's saying It that that when So about may the open have first to were trying driving you calculated that of

in a than – bit me let seen Sorry, been looks And a – there. we've bit yes. be than quite the quite Still it suggest. more more would a puzzled bit HIP little we've

Brian Kane

it's No, a Yes. fair question.

his HIP the through – on been for this lot, stable crisis a recognize folks. try we've I little would going in or website in of and really certainly to And was are remarks, in we number has way members be all almost our either that of nice helped thoughtful portrayed, of increase of for think up. say and just that are said that the Bruce a benefits a Some finance the these I were members very a as some benefits our folks. confusing

as what an markets extreme benefits. case, of there. But where part been so say as as the we have we website might would less. are where portrayed I always the those of more, invest financing there invest on that And the important some not some But is HIP markets was

So – benefit package. think, but still, a I compelling

Matthew Borsch

All right. Thank you.

Bruce Broussard

we I actuarial value. look of just total as would at Matt, our And really emphasize, calculations

– our I fairly are think our competitors. to We are changes similar

Matthew Borsch

Okay.

Bruce Broussard

more mid-tier that and So are there's we're others in I sort think not there say and aggressive. are there's year, there. the less of that aggressive – some I out would every that

Matthew Borsch

Yes. any No, see we see didn't we – actually, an outlier. didn't you as

– you. but very Thank that's So helpful.

Bruce Broussard

okay, Yes, thanks.

Amy Smith

to to some do would for comes add plans, so some of calculations, in. and not I to just be complexity make the to in it's think that's where so value that years changes members I they intended And and year-over-year. Yes. believe really be they the use Plan Finder and intended is I compare benefits way

Matthew Borsch

you. Thank

Operator

with Your Research. next Josh comes Raskin Nephron question from

You may ask your question.

Josh Raskin

you Hi, you're to of specifically the more thanks. these physician for Good strategy? that Humana and sort grow and morning. your Can groups risk benefits the how works capitated what speak path trying to of in broadly to context having best of

Bruce Broussard

Sure. I'll start, and can add to it. Brian

that they're the relationships. get really, not standard see adoption And because find outcomes the of would of and great of tolerance needs to really risk each the out the different. we markets. with we And say, general, in just also of are first, market reasons come value-based but sort being sort think, that the don't and local provider the Medicare we one I local relationships I that programs in to customized the of see

is would the there. local oriented program to dynamics tolerance really and So risk first, our say I that the

and that technology-wise, providing where human And is from us putting coordinators us. the unlike little now to different contract the workers at along ability you a their participation and just and And to risk you where we'll popular walk And path our find way the there's of much support can journey a upside so all do gives support it's with the to It's of to also with in this including in resource in of manage, you sort where XXXXs, became the addition, lot a then time concept offices. and some have down upside see that that risk away. downside, that risk this social – sort perspective. provided. it's help there the some take We provider full some

providers. move hope that more members and we continue more of to Our to our risk

in are grow, but we stayed every because members not we going year in in got to get it the more mid-XXs, and seen because that's there. You've this, more

in program, members in we're that the that surplus. for now growing that year were putting profitable considerable we're you -- in all people providers proud of are the success. as that What them. are are that see quite we're actually XX% this basically into is which do program So is stable, the are

them. that great So in making means than that they're the And opportunity that's a more for side. would money they fee-for-service

And continuing we the demonstrate see so program to value.

member of base also We view, building point our provider continue grow our side. the in being devote a and continue home to value the from do to to health the to clinics able see want demonstrate from us point from the through special of value program support. view way the We

the there. with whether partners partnerships our to more our are or care the it, with models primary oriented moving that and value-based to providers the some it home our more see along and So do through to solutions product, the payment we in of you Conviva ability externally internally care, really primary do product

Josh Raskin

things that, plan of financial fair for say is differentiated to you're it side implications just on And for follow-up to the as result well? the financial that a health Humana, now seeing

Bruce Broussard

about the you the it's it's think the has with that member financial see value. of -- would there would outcomes from the lifetime I but retention I we only not -- see a longer stars that Yes. the the that say view, that term yes, you so. very value side, the happening. point It's And much when value-based

plan benefit from be and the seeing we is in this, health today. yes, feel provided to significant So the care the system best it's

Josh Raskin

Thanks.

Operator

Your next Ralph with from comes question Citi. Giacobbe

ask now may your You question.

Ralph Giacobbe

Thanks. Good morning.

the above think midpoint the XX% the clarification I commentary, initial quick the range. modestly modestly Just to of on of XXXX you not said above XX%, the end high

how MA in and can And wouldn't to then providers or faster. factor you want we've utilization why then commercial that. And you is manage about concerning cited acuity, Just what Thanks. certainly the it? acuity that going a how that lag? into returned base, just be release, the year? seen segment given in your press next reasons then factor the And Any population noted clarify

Bruce Broussard

Ralph, try morning. to I order All right. will these in here. take

above XX%, As so the modestly we be our of to the modestly above the -- XX%, guide the above modestly the above end. it so expect midpoint XX%, relates to guidance, high

sort Medicare, of the think right. versus that's I On commercial

members, the I medical to system think, that the just slower we return obvious be commercial will for reasons. seniors expect would than to

bit once And see expect And where doesn't there. so, goes. that we vaccine Obviously, of see the continue. little surprise happens, we disparity a we'll to it that us a that

that COVID that reentering the encouraging all Our be the they there's reach And about. expectation doing that side. get more that, paid will say need, are higher programs at just our care the per comfortable very member we've the would talked seeing the which is we're we costs, Medicare is on acuity, we With why that side. that to respect point out much to Obviously, system. the gets on premium are seniors I particularly seniors medical XX%

a So XX% any time COVID there's on DRG. premium code, the a entire there's COVID flag and a

acuity. And does in result higher so that

which mindful haven't something our our That's is something And on monitor we've the that's something of been closely. that health seen, we're very focused of baked members that, expectations. clearly that very obviously into we What so, we've very our deteriorating. teams that is, and

get care as need. yet. proactive we're that there to can so But outreach. that meaningful our We to why sure we impact members Obviously, we've get normal haven't been that a the they that that's in make seen back hopeful

Ralph Jacobi

helpful. Okay. Thank That’s you.

Operator

Rice Crédit from comes with A.J. question Suisse. next Your

Your may now ask your question.

A.J. Rice

say, you around just the from I’d the a -- thinking it's MA your there, about about, I and Hi, comments sometimes files. are one can I'm you're comments and them, the claim also because all hard competitively landscape the subtlety plans about out there's I another, everybody. to competitive guess, appreciate landscape that the it. assess now PDP as assess to

vaccine, for for the testing, a you up further did approach potential environment, know would more that think incremental twist your variability another holding HIP therapeutics, structures these being about what in a those potential the is, you Can some next how outliers the plan competitive that year? give 'reinvested'. are in some your are whether And how the you're for modest, PDP the flavor got that eaten on setting you year lot the pent-up you've issues shake demand. little or the deferrals, that as of factors, out variables you the And that out, benefit, in then, you -- you for maybe, got back highlight you that for make tax seeing on more some that pocket, set at of getting of potential of You've delivering look ongoing of huge comments a I any don't more they're us you still would your if things the next because Is disruptive? that so side to ends might about just that up deliver. these any market when these

Brian Kane

A.J. morning, Good

some to to with do, targets. did say, to thoughtful about be how try try As prudent our good I we our always clearly we're balanced we But about pulled Bruce how invested, the relative expectation. to which as our positioned would largely; financial People most we and respect feel competitors. we people and back. was invest, benefits, set said,

as trends. we're a variables exist COVID that variability that in with out, now we try account predict additional adds we blend I the know. would are claims, still lot say, membership go it is pricing forward, call And year. top on incorporate from respect it a point in financial I uncertainty we clearly on would more financial to side But complexity. various there's next try as you then, fourth potential want did always into high-level all no perspective, of how our update would roll and we just We clearly, with June. a there. to try as about to we guidance The positioned COVID, our any about into There revenue in and We we back XXXX quarter I to of it. good is I trends with reflects and to of and tricky. that on gave mean, reflected the both what we that we today, that non-COVID have thoughts the as and reemphasize initial think, variables So lot feel financial that, there of bids And as guidance. fact guidance. doubt the again,

A.J. Rice

Okay. Thanks.

Operator

from comes Stanley. question next Your Ricky Morgan with Goldwasser

You question. may your ask

Ricky Goldwasser

Yes, hi. morning. Good

you clearly, there's So just utilization, just to following around lot think to a my variability assuming baseline on utilization And are or second above? your all, first of be as clarify, early next with up question you But that into about year. is is of backed guidance going PDP. to

a couple MA shift times mentioned the structural of product. call the You the to lives of on PDP

as to think you. be So, this there or do a is term, point that about entire Thank reach integrated? benefit you that of a think expect you where you you balance ultimately sort longer shift

Brian Kane

On the so to are I'd countervailing Clearly, utilization forces, give side, rather there not speak. specifics.

will around CMS. our vaccine and covered into vaccine So, comes for play the as Medicare by expectation a be

meaning the be that would answering comfortable expense an extent clearly, vaccine not that system, to gets but people will that's go down. non-COVID would more we're the about. impact implemented, So, worried that But costs utilization, the treatment

pull run so specifics you scenarios how there and And sort things we do would into vaccine focused plan. that giving question Where And respect the and XXXX. without And coming that's so there's just with we've and the XXXX reenter into incorporated again, that around a would always various happen the natural the push scenarios I I do to on. any and would we've also with in the -- just otherwise, reemphasize, medical I documentation various people system. various tell we're of just year can Medicare respect there's to important. those our end revenue say we financial Advantage And

benefit do Bruce MA, think, to PDP there provides a the that on product, in it think MA. believe side. moving only side the I his comprehensive more think is -- remarks, to On said not a We as we I shift

your So, get MA/PD. you -- generally plans are most

part You of have PD as MA.

care you MA other because an remarks. walked coordination your provides relative support a to significant many you So, host but But as in benefit that financial the it's organization, just PDP. many, drug member's also benefits get other for also, through his provide get journey the of beyond in free importantly, benefit zero times Bruce that and we premium,

getting not you're you're If a called. not cost you're -- the some a standalone of to sharing, you product sub PDP member, even cover if still have financial med

meal getting not You're home. to sent your

support the our also a going clinical to Medicare that and of to more provides to element more And getting we members. not we Humana the are we've You're Advantages think seen. differentiating people And consequently, that's think product. migrate

Bruce Broussard

the is penetration a we're articulated, you great health look a you taking just to whether continuing health, that than are of With outcomes aspect that the programs value reinvesting where Medicare part and to business. system it's demographic we of to result and MA individual as outcome, the of Humana the have of today improve premium are the plans also a Advantage how declining them continuing health proposition of value increase social companies to the a the the and growth, the Brian growth greater proposition the I just natural it's like into inefficiencies coordination care the really of determinants and X the the in mean in And care as and example and at increasing, system. is the

Ricky Goldwasser

you. Thank

Operator

with Valiquette Steven from comes question next Your Barclays.

You your question may ask

Steven Valiquette

morning the question. Good Thanks Brian. for and thanks. Bruce taking Great,

So MA for membership pretty looks outlook for the obviously, individual gains positive. initial 'XX,

has on PPO it have made we PPO forward company on HMO premium the looks the from push year. offerings plans made number the side for even on like But side. of next with that a Just competitors regarding that data the it of an the fairly X push your some and balanced bigger seems both attained,

if in that give skewed just your you're HMO heavily PPO around now landscape XXXX. competitive gains So individual membership offerings, a versus or how then MA the more curious more one other you the us can for and on thinking just way little about expected color considering

Bruce Broussard

start on. Brian add I'll can and ask just and Brian then

the between has of the most growth HMO been all plans, I balanced been and have think We our PPO. out

being interventions able You've to the see them continue allow be all we people and Humana that to the value-based help that chronic to And we've our capabilities our to year be system. the to any the And concentration a health it's same we time, able product seen like coordination organization, to geographic find be care platform broader in to be able balance. allows are are a we and highlighted -- dedicated continue next the in care we whether that concentration, care at how that Home, in through those don't have side. physician and attributed important to have people really opportunity have that care to at that members the find HMO the to technology get that the in navigate

out and but a of member, variety and we we're freedom in they or more want they of HMO, benefits PPO of much very, obviously, get to a So we the side. serve model our biased, within effective an be care a the being need whether companies, all the want able to feel in very prepared

to our has be you are we we're to I is the And one product, and We but know say able as the offer see in marketplace. it to articulated, grow added, we one to would just few going we'll in many competitors not say be product, that years, would last Brian the that we much say on than do in -- to products. more base it's don't more opportunity that product over will grown will have way more we And continue would continue the offer I that product of of have. one much, the if some fashion that know look have market we that I that but a you Brian, balanced We've much based than grow. anything. at serve in relying to much so that that. broader primary I have that on

Brian Kane

I agree. answer. I it's perfect think a

Steven Valiquette

Okay. Appreciate the color. Thanks.

Operator

Your next JPMorgan. question from Gary with comes Taylor

question. You may ask your

Gary Taylor

around Hi, good is morning. capital question My deployment.

check on the to cash of active of recall have suspended held if pending officially pandemic. was just or But share repurchase I at the the been sort it year. parent sort related this ever can't in not very is uncertainties building. You

much haven't repurchased stock. You

in on to cap. You're XXs low the debt

years. just disproportionate in next capital does deployment repurchase share So maybe outlook And of little bit Thanks. the guide your two upon on rely a XXXX the in any way?

Brian Kane

capital M&A ample for care, for capital plan opportunities we We space. deployment identified, do over would believe have plant next health hunt around we've opportunities is important. Gary. We pharmacy. the on balanced always the to and say which the whether We're that look I the few home, flexibility, a primary have morning, expect years, always that areas in we strategy. Good priority in strategic it's

extent, a even a are there. But state that's in state closely. plan at look So the a plan if We a opportunities to complete were for there's where of look Medicaid Medicare We in fewer deal there particular at us. that. we it a able interest. were There would to

our our important that side. deployment be return plans strategy. say And part just is of would M&A I capital repurchase So on the an will balanced clearly, share capital

to continue that. will do We

does XXXX capital capital guidance – and we'll in deployment some number. assume deployment, through Our there that, some that we'll we're do but is how how working

Operator

George from with comes next question Hill Bank. Your Deutsche

question. You may ask your

George Hill

Hey, most I you there a going I PDP, guys a product forward? do And it It guess with to MA, have unusual sounds product? a there. PDP morning. guess, you just historically space. sense an you for follow-up make in saw a motivation, growth if one company as environment. questions funnel And to the guys middling opposed how important kind product it competitive a have seen my a have given have people competitive have highly does conversions, I answered. Good think wanted of different or to And MA different highly I'll PDP of is to on But I in the there. like guess, been the competitive setup as a

Brian Kane

as is on remarked initially, has turnaround. it's few I product much to of does Well, see years. numbers, by last and you it's really become over a driving it Bruce – pharmacy our driven particularly pharmacy extraordinary EBITDA, think really say, a its less The pharmacy in contribute, our think Conviva an I business. business – the contributor which It's in has to the EBITDA growth had been

there pharmacy of of part the all of well penetration EBITDA continue our an the undertaken be to our care an has the have the so pharmacy interaction growth part And element part is order with to mail as, group important that and efforts rate candidly, is members. the and advantage important PDP increase as that, although that

year-over-year, the continue side, nice on and you'll MA increase of order part the particularly a on seen is that. You've mail to that. see side, PDP

Advantage growth, few our Medicare the strategy be do to will really that continue strategy members. contribution time, up years, us those funnel into over amped an to We convert relates we've last it As for that important MA. to to over think

few Over we That's year have tapped the have what seen than last say more and as we nice think We'll as this all opportunity in I XXXX would growth. sort expectation years cross-sell saw XXXX, of even for XXXX, expect far. nice our well. so we've we

element And figure happen. an closely and Medicare our make out our that together how side it's we the so teams of important to the cross-sell definitely particularly can working sales and teams growth on and PDP company and

George Hill

Thank you.

Operator

Wilkes comes Your with next question Bernstein. Lance from

ask question. may your You

Lance Wilkes

what's would talk particular Can really a Thanks you also capabilities of Medicaid? a you the lot. for pipeline about And looking little of is a if little a there? you the talk on priority Medicaid? could bit are deployment Meaning, capital Great. tuck-ins, types be there little and on then it

Brian Kane

see active we would that We to think to of feel states a participate year two, the we going when next we're or as states can be we in desires value of add are I a -- of the Yes. state. RFPs. say, a to result response what want I we the significant about that that it's number think seeing fairly and

organization just a think go So on I basis, in the would responses of you're organic an I see pretty first, there. active to going say, number

of capability lifestyle a point we a the are health where -- feel view to the side, member the way all really about the of good from serve need we a to from ability an side. On from

have to outcomes. satisfaction clinical look successful, providers scores, very our you with So whether to be programs relationships to at proven

And so really really, our good we about feel programs.

is cycle have the we I right procurement process. procurement and think that the the now biggest challenge

strategic process does are And barriers the view. we states therefore, a about as point from it sense acquisition point is enter of of acquisitions, more there? make procurement procurement of around And and what view. more to so we the And it's process think is the an lot then want there a to and -- from

as I I you're see mean when you're to probably to say deployment orientation and So more large all to capital more one-off acquisitions. see going purchases in that, deployment, state -- and specific going opposed

Lance Wilkes

Great. Thanks.

Operator

Jefferies. Windley question Dave with next from Your comes

may ask question. now your You

Dave Windley

wanted of to know here. thanks taking just Hi, my clarifications. long questions. getting a we're couple I ask for I

core So that all-inclusive, of one, across i.e., all on is is and books, utilization, inclusive XX% that or the COVID utilization?

Brian Kane

all of That books. is across core utilization, exclusive COVID

Dave Windley

you've is Brian, you about driven. light some in mean, it you're referenced XXXX? to parts to answer a what specifically a And for possible, bids? I'm expectations. COVID costs that there's would is little that of you fair already that moving how headwind of some year. Okay. then, And coming of COVID I assume are than is captured above it lot driven, is when wondering, you In a know kind is expectations, highlighted one that next that in I higher per the above think commenting of I not maybe in said have thinking But member

Brian Kane

a of be XX% Yeah. positive that fully positive that a attached, COVID to on treatment. increased baked payment identification It's code test. we there part COVID Obviously, related DRG where really on get a that that’s the and needs something now in. COVID to there's COVID premium it's to of Remember,

see XXXX, And that for particular of answer modest cetera, how relatively it. is to got yes. those the continues. mean, -- I all the scheme happens is whether things, are we factor say we But in to seeing on We it but so things. that would premium, issue et I what the

Dave Windley

for to back fourth come can real I If Okay. on the quarter. quickly one, first just clarification

the in, wondering get third has dramatically? so the helped that to will the quarter? you of magnitude negative why And does on swing that that COVID does the quarter just kind layer you above XXX light that, exit of -- If as to shed I'm the you fourth

Brian Kane

below the commercial you I Medicare if the Medicare side, what say a baseline, -- bit on bit we're today. just is the above side would baseline. The that is still Well, COVID, a where include on comment I'll

expectation impacts COVID third fourth largely lower utilization see It'll increase so largely roll any we'll from -- three cost But that on fourth by why offset our from largely, happens quarter. quarter will forward we guidance to And what quarter, as is offsetting what the sort we for treatment of our it's be which unchanged. is be ago. months expected

Dave Windley

very much. it. Got you Thank

Brian Kane

bet. You

Operator

question next Your Cleveland Willoughby comes from Steve with Research.

You question. may now ask your

Steve Willoughby

squeezing morning. Thanks Good in me fir here. Hi.

marketing thing It you. like for one for payments into you're Just dollars sounds AEP more year. reinvesting this

because increased something lower partners. benefiting that keep from we running sound forward probably year, year level more at and when to this future, and that that utilization that the you're this this year because it money in similar maybe expected here, roll like year. the need that spending a dollars wondering to you the you’re Just providing of HIP Is spending obviously

Brian Kane

about to I this would of field partners question. -- particularly we’ve conversations selling. fair a telephonic way that, of year, more dollars transparent to our the with available had of the had convert a in It’s the say partners our as and some who’ve pretty

I think some that. do dollars have helped them of the

AEP, very But we've going we competitive forward. competitors just doing year we that. that we expect But how be partner dollars of some very on as about channels. Although, important wanted may of into very to some investing where And to we different have And I distribution this we're and thoughtful that every of go or to wherewithal continue have, committed that be support that do year. where may been our year to say we we'll persist stand, the some landscape, the channel. do center but transparent the the we is about a this next partners circumstance, We'll that very we we've the been would sort judge channel financially things not in call our year.

those variables. calibrate we so, given our to try And investment various

Bruce Broussard

than I'd we previous our a years for financial year, we year. but a is from was what every it combination you would difference. I considering I how of year we think as And as both year to in year. at sort approach And that. just needed, look see it, no not different would is what that, I it like investment that say, this say do goals. this reemphasize no proper the also next statement this approach and would happen is

Steve Willoughby

Thank you.

Operator

question Halper Steve Your from with Cantor. next comes

your ask now You may question.

Steve Halper

Hi. Good morning.

housekeeping question. a Just

loss, So loss EPS the in assumption $X.XX, guidance? rate that quarter in estimate, of the tax what's fourth that the

Brian Kane

Yes. have given of sort disclosed, well, say sure I we've -- know, we HIP, -- -- our, would don't sort sort what it, range, it's of of it's XXs low Amy, not I'm I call but the, the probably. in

Amy Smith

Yes.

We rate haven't disclosed But... the tax guide.

Steve Halper

of for right, But benefit going -- pre-tax you're the tax a be loss, presumably, you'll to because quarter, correct? the report

Brian Kane

it's But to going annual Sure. on out. -- all all it's an basis, net

effectively it. the get loss, XX% the think a way to is for You benefit about

Steve Halper

that year out it -- But nets the worried, just Understood, $X.XX. I -- quarter just in it. focused -- just about on I’m full Thank was worried not I and the you. there the Yes. as but but what's got Got implied it. for the

Brian Kane

Okay.

bet. You

Operator

Morgan Your with next question RBC Markets. comes from Frank Capital

ask now question. may You your

Frank Morgan

Thanks. MA having you investments. quarter this see -- are around plants Yes. how year? year? any enrollment have around actually that of real you online what first And this AEP? digital But been then expectations the next of switching quickly, And are my I'm expectations mentioned curious, of much Most AEP have answered. for will you in this your just during in

Brian Kane

side, the we'll see it. plant switching On to have

mentioned, height terms crisis, decline in the of during down. switchers the going we Those of COVID saw we a have and normalized. As sort largely

given sort though, I switching new that higher of sources, those XXXX, and normal channel, think new season. just as channel a telephonic overall, rates of term significant of lot we in sales more the we've on fact I had from telephonic growth have to expect say, both more switching. of or tend that as the have top the XXXX a come of would our members well

our amount that would into small. we where so But we very, out. growth. have point have -- The data termination baked at is of see very this comes that we'll So,

of have hard variables mean one that's we're year. that's thinking biggest still so time always that. -- But we how of forecast in we've at broadly, it. and of And to this about we're it's the I got AEP time left plenty so

with We ultimately, It's information, we a find through start have they provide the think going live we more -- that can members and forward. channel. But sale other to the invested in digital shop. They is online. going a of it's is broker. consummated can be What sort more conversation

benefits. or to that conditions, them. their for but and actually proprietary expect which their understand understand we've allows right plan input capability We they is continue, They members in that digital invested various channels digital to use can the drugs really

single-digit terms options. And still so the investment understanding their conducive to sales. -- an again, overall -- digital experience more digital members important of in make it's percentage that's of channel But to ours the really the

Bruce Broussard

in what as themselves. for we Frank, do are same for we digital the invest member, brokers use technology the seeing channel is, the that we

a used twofer, It's the to by the member, for so with help members able these their used that on speak, based that. plan broker to tools find also it So, but best being of history. our is it's medical to historical only not by the

able leverage are way that we make. really to So, it's we a the investments

Frank Morgan

you. Thank

Operator

Your question next comes with Sandler. Sarah from James Piper

You may are question. now ask you

Sarah James

thank Hi you.

on pieces other on Going or both us a ESRD? big back manage and for update pieces the to And Medicare on carbon scale build-out hit to book. goals I of the guess XXXX the margin, is network to hitting the your how you margin pieces is question for and preparing headwind And and much that needed price big moving profile Thanks. the manage control targets? the margin like under unit on book, margins implications can that ESRD

Brian Kane

Good perspective, it morning headwind. a say, Sarah. be would I a would from percentage margin

be crashing to on us partnerships other Fresenius how number people that use manage where that ESRD disease ESRD that excited progression slow very CKD allows as we��ve members it program out contribution the to cost a something will of and that in I of we've sure announced really the introduced we dialysis help ultimately with innovate machines mitigated effective. at a ER, CMS players also at partnerships home We've clinically, the been experimentation those the important gone allows to us lot networks and to really and happen. We're we we've all innovation that. has a Again, so nontraditional And dialyzing really through or having it make of time, and home. about efforts players with broadly, think the we love about excited we're think aren't the into to it feel the through, is ending public more do. good that's up and about margin overall announced use over build which to

our innovation encourage the into and sharing not risk so we on put many encouraging to programs that. that only place, but going really members financial care are relationships partnerships sharing ERSD the we market of longer-term the about so taking And get, create well also our and think, And I of how thoughtful being, about sort very in we we we but we're of with obviously, approach the think thinking side, we XXXX. clinical these regulations providers, and benefits of also with are how

we're excited about And so that.

Sarah James

you. Thank

Operator

from Whit UBS. comes with Your next Mayo question

question. ask your You may now

Whit Mayo

you're think, I and one. the your And looking guys for continue wondering around you perhaps thinking revise hope you to this? members around wasn't to can next And called were out last waive how guys clear posture your I'm what responsive are co-pays just I'm signposts specifically. long be what the that I wasn't, year cost-sharing to members? I

Bruce Broussard

I that's members perspective. XXXX, cost-sharing evolves currently our that's lack of end something fourth of and of cost how question. quarter Whit, to that our or the a what how cost the do around the we're going have at pandemic savings good mean, to evolves, sharing see our It's currently, and the we what's ends sharing.

XXXX. pandemic move mind obviously as something And we how so things that's continues we've just the as got of here. that's top to see evolve into But

Operator

this There closing are to I'll no Brussard Bruce remarks. over the call at further question hand any back time. for

Bruce Broussard

that a on is the for for time extended everyone had this Yes. we've record staying Well, thanks probably us. and

really our appreciate we So of allowing are for to as And obviously, shareholders. a be our of but us always importantly, we to basis, company associate able support result as daily appreciative a But on that. support. our shareholder for deliver members both results for as interest the in the these our importantly,

And you. a thank election great have So day. everyone

Operator

Earnings Thank you. Humana's XXXX Call. Third Conference that And concludes Quarter

You may now disconnect.

Humana (HUM) 3 Nov 202020 Q3 Earnings call transcript