Humana will sustain to concentrate its efforts on the increasing population of aging seniors in the U.S., the insurance company stated during its annual shareholder meeting Thursday.
The Louisville, Kentucky-based insurer is celebrating a great fiscal year despite its very public breakup with Aetna and its decision to pull out of the individual insurance marketplace next year. Humana CEO Bruce Broussard claimed during the meeting that it was “quite remarkable” how the company performed during the 2 years of merger talks, citing progress in revenue and membership for its primary demographic Medicare Part D and Medicare Advantage sufferers.
The country’s aging baby boomer population represents an important opportunity for healthcare companies. In the year of 2016, about 41 million Medicare beneficiaries, or 71 percent of all Medicare beneficiaries nationwide, were enrolled in Medicare Part D plans, while 17.6 million beneficiaries – 31 percent of the Medicare population – were enrolled in a Medicare Advantage plan, in accordance to a 2016 study released by the Henry J. Kaiser Family Foundation. Humana will concentrate on Medicare Part D & Medicare Advantage patients in the year of 2017.
A merger between Humana and Aetna would’ve accounted for 25 percent of Medicare Advantage enrollment nationwide – more than UnitedHealthcare, which covered 21 percent of the Medicare Advantage population in the year of 2016, in accordance to another 2016 study published by the Kaiser Family Foundation.
Humana and Etna called off their proposed $37 billion merger in the month of February after working on the deal for close to 2 years. They decided not to appeal a federal court’s decision to block the deal based on antitrust purposes. Humana announced hours later that it wouldn’t sell health coverage on the ACA exchanges next year.
When inquired about the possibility of taking an active role in shaping new healthcare policy, Broussard said the company will focus on improving the health of the country’s aging population.
“Our involvement with the administration and Congress is actually around how can we advance taking care of seniors and our engagement is not around non-Medicare Advantage or non-Medicare businesses because we find that is actually not where we can best serve the society as a whole,” Broussard stated during the meeting. Humana will concentrate on Medicare Part D & Medicare Advantage patients in the year of 2017.
Humana anticipates some financial fallout from its decision to exit the exchanges. The company had an operating loss of $1.37 per diluted common share in the year of 2016 for its individual commercial business because of the company’s planned exit. Diluted earnings per common share dropped from $8.44 in 2015 to $4.07 in 2016, in accordance to generally accepted accounting principles.
Humana projects an operating loss of almost $45 million pretax, or $0.17 per diluted common share, for its individual commercial business in fiscal year 2017 stemming from its decision to pull out of exchanges.
Also during the meeting, shareholders voted to elect the board of director’s nominees, affirm PricewaterhouseCoopers as its accounting firm, approve executive compensation contracts as well as a proxy access proposal.
The California Public Employees’ Retirement System and the New York City Pension Funds considered the proxy access plan involving ownership of at least 3 percent of Humana’s outstanding stock, 3 years of continuous ownership and the right to nominate up to a quarter of the company’s board. The systems have a combined $480 billion in assets and own 846,000 shares of Humana stock.
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