Humana Inc.

Ladies and gentlemen, thank you for standing by. Welcome to Humana First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you wish to remove yourself from the queue, please press the pound key. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. Thank you. I would now like to hand the conference over to your host, Vice President of Investment Relations, Ms. Amy Smith. Ma'am, the floor is yours.

Thank you, and good morning. In a moment, Bruce Broussard, Humana's President and Chief Executive Officer, and Brian Kane, Chief Financial Officer, We'll discuss our first quarter 2020 results and our updated financial outlook for 2020, as well as our pandemic relief efforts. Following these prepared remarks, we will open up the lines for a question and answer session with industry analysts. Our Chief Legal Officer, Joe Ventura, will also be joining Bruce and Brian for the Q&A session. We encourage the investing public and media to listen to those management-prepared remarks and the related Q&A with analysts. This call is being recorded for replay purposes. That replay will be available on the Investor Relations page of Humana's website, Humana.com, later today. Before we begin our discussion, I need to advise call participants of our cautionary statement. Certain of the matters discussed in this conference call are forward-looking and involve a number of risks and uncertainties. Actual results could differ materially. Investors are advised to read the detailed risk factors discussed in our latest Form 10-K, our other filings with the Securities and Exchange Commission, and our first quarter 2020 earnings press release as they relate to forward-looking statements, and to note in particular that these forward-looking statements could be impacted by risks related to the spread of and response to the COVID-19 pandemic, including the potential impacts to us of, one, actions taken by federal, state, and local governments to mitigate the spread of COVID-19 and in turn relax those restrictions. Two, actions taken by us to expand benefits for our members and provide relief for the healthcare provider community in connection with COVID-19. Three, disruptions in our ability to operate our business effectively. And four, negative pressure in economic, employment, and financial markets, among others, all of which creates additional uncertainties and risks for our business. Our forward-looking statements should therefore be considered in light of these additional uncertainties and risks, along with other risks discussed in our SEC filing. We undertake no obligation to publicly address or update any forward-looking statements in future filings or communications regarding our business or results. Today's press release are historical financial news releases and our filings with the SEC are all also available on our investor relations site. Call participants should note that today's discussion includes financial measures that are not in accordance with generally accepted accounting principles or GAAP. Management's explanation for the use of these non-GAAP measures and reconciliations of GAAP to non-GAAP financial measures are included in today's press release. Finally, any references to earnings per share or EPS made during this conference call refers to diluted earnings per common share. With that, I'll turn the call over to Bruce Broussard.

Thank you, Amy, and good morning, and thank you for joining us. First, let me say that these unprecedented times, we are grateful for the tireless efforts of the many clinicians who have been front and center in treating patients with COVID-19. We are all better off for their compassionate and unwavering commitment to the health of others. At Humana, we've been working relentlessly to ease some of the burden on all stakeholders by being proactive and transparent in our engagement as we navigate the global coronavirus pandemic, including the recovery and reentry efforts as we emerge into a new normal that is yet to be defined. I'm thankful for and proud of the extraordinary efforts of our associates in addressing this generational challenge. This crisis has confirmed the strength of our integrated care delivery strategy with a deep focus on member and provider experiences and a multifaceted personalized approach to care that combines digital, data analytics, and telehealth across home and clinic settings to deliver quality care and improve clinical outcomes to those we serve. As an organization focused on serving vulnerable populations, including over 8 million Medicare beneficiaries, we recognize that safety and particularly consumer confidence in the ability to once again safely begin using the healthcare system are top of mind with everyone. and we play a pivotal role in ensuring both. Humana will continue to persist in addressing health and financial concerns for members, providers, and employer groups, while also supporting our associates who are critical to our success. We are being proactive in our actions to support all these stakeholders, including our outreach to nearly 500,000 members most at risk for COVID-19, across our segments, as identified by their proximity to COVID-19 hotspots and those with multiple chronic conditions. One of our key learnings from the crisis is that a significant number of beneficiaries have concerns about food insecurity, social isolation, and access to needed prescription medicines. To help address these concerns around social determinants of health, we've taken several actions, Specifically, we fulfilled orders for over a half a million meals, initiated efforts to address loneliness by connecting members with emotional support services like the Friendship Line and the National Disaster Hotline, and have several pharmacy efforts underway, including early refills and increased mail order delivery. In addition, we've contributed $50 million to the Humana Foundation to support coronavirus relief, and recovery efforts during and in the immediate aftermath of the health crisis, including support of health care workers, seniors, and those experiencing food insecurity. We, along with other payers, have taken numerous proactive steps to do our part. To address our members' financial and health concerns, In addition to the meal delivery and the pharmacy efforts discussed previously, we waived member costs related to COVID-19 diagnostic testing and treatment, expanded access to telehealth services by waiving out-of-pocket costs for services delivered by participating in network providers, pivoted our Medicaid long-term support services in-person care management program to a telephonic model to connect our care coaches and members via FaceTime. Increase the use of digital health for military families, including behavioral services, and help convene TRICARE policy changes, such as disenrollment waivers for military families unable to pay premiums. To support providers, we took steps to ease liquidity concerns. alleviate capacity issues across the system, and allow them to focus on the immediate needs of their patients, including releasing approximately $1 billion in advanced funding for providers at a time when cash flow is meaningfully challenged, lifting certain provider administrative requirements, simplifying and expediting claims processing, suspending in-network clinical authorization requirements, and accepting audio-only telephone visits for reimbursement equivalent to an in-person visit. And lastly, to support our employer groups, we've extended our 30-day grace period for premiums for small commercial groups facing financial hardship, temporarily waived certain active work requirements for employees to maintain coverage, and assisted small businesses with resources to help navigate the CARES Act and Paycheck Protection Program, as well as other sources of funding. Given the changes made to promote and advance the continuation of care while social distancing our providers, especially those in arrangements, we've seen incredible upticks in telehealth for both care related to COVID-19 as well as general health concerns. Telehealth visits with traditional telehealth partners have more than doubled, and the growth is even more compelling when you factor in brick and mortar providers that have pivoted to telehealth. Telehealth, together with increased use of our mail order pharmacy and early fills, allows our members with chronic conditions to continue to receive care to prevent long-term negative health implications. Since the declaration of the national emergency in mid-March, we have closed approximately 630,000 gaps in care. Further, the providers in our value-based arrangements saw the benefit of predictable cash flow streams and were the fastest to innovate and create thoughtful digital telehealth strategies in response to the crisis. To underscore the meaningful and lasting impact of these actions, let me share a story from our proactive outreach to our most vulnerable members. One member emailed me to let me know that he never felt more like an important family member than the day he received a call from one of our associates. During the crisis, who was simply calling to see how he was doing and asked whether he needed anything. Thankfully, he was doing fine and even noted that the Humana mail order pharmacy had renewed his prescription the day before. Our associate had, quote, made his day with one simple action, and he describes Humana as wonderful. This is one of countless stories that show the proactive actions are having a positive impact. I share this not to pat ourselves on the back, but rather to demonstrate the importance of working together with our industry peers to deliver solutions, building our relationships with our members as key touch points for determining and meeting their needs. Perhaps what's most inspiring is the way the healthcare sector and the general business community have come together to address the crisis and the meaningful public partnership led by the federal government. For example, providers and lab companies prioritizing COVID lab tests, manufacturers changing production lines to create respiratory and ventilators, retailers expanding testing facilities by facilitating drive-through testing sites, and not-for-profits working to distribute food in their local markets. We believe this cross-industry collaboration and public-private partnership has enabled agility and innovation as we navigate this crisis. And we're not done. Health plans can play a major role in developing a comprehensive and actionable plan as we serve as a critical link between the individual and the provider and can leverage our data capabilities to inform and guide the recovery. We will continue to invest to help our constituency during and in the aftermath of the crisis, including recovery and reentry efforts, while also building upon the digital, data and analytics, telehealth, and value-based care advances that were accelerated due to the pandemic. These advances will help us progress our strategy as we emerge into a new normal. Before I turn the call over to Brian, I'd briefly touch on our operating performance over the last quarter. As social distancing emerged mid-March, we successfully and rapidly migrated nearly all our 46,000 associates to work at home settings and implemented physical distancing standards and deep cleaning to protect those essential associates needed in the office. We also worked to secure additional personal protective equipment for our clinicians on the front lines and implemented new protocols for their safety, allowing us to keep our wholly owned alliance and joint venture clinics open to serve the patients during the crisis. Our systems and technology are performing well. Our associate engagement scores remain best in class, and our net promoter scores continue to be strong. Now turning to our financial performance. All of our businesses started the year strong from both a strategic and financial perspective. And as we navigate through these uncertain times, we believe that this underlying strength sets us up well for 2021 and beyond. As Brian will discuss in a moment, while acknowledging the uncertainties as to the duration of the crisis, And to the extent to which deferred procedures may resume, we are maintaining our previous full year 2020 adjusted EPS guidance range of $18.25 to $18.75. This also reflects our expected continued investment to help our constituencies and communities that may be disproportionately affected by this crisis. For example, To the extent we continue to see reduced utilization for an extended time, we are committed to taking actions similar to those we've taken to date to address health and financial concerns. These actions could include incremental benefits for members or employer groups, further local community support, continued assistance for providers to ensure , further outreach to members to ensure they have access to quality care. In closing, I want to reiterate that a meaningful public private partnership is the key to long term successful response to COVID-19. The leadership of the administration, Congress, governors, and mayors across the nation, combined with the engine, the private sector is the right foundation to build on moving forward. Humana stands ready to be a strong and willing partner to federal, state, and local governments and community nonprofits. Together, we can take the lessons learned to reshape the healthcare system to provide meaningful access to care and to holistically manage health and lifestyle needs. We thank them for their partnership and look forward to our work together on these shared goals. With that, I'll turn the call over to Brian. Thank you, Bruce, and good morning, everyone.