Humana Inc.

Good day and thank you for standing by. Welcome to Humana's fourth quarter 2023 earnings call. At this time all participants are in a listen-only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host today, Lisa Stoner, Vice President of Investor Relations. Please go ahead.

Thank you and good morning. I hope everyone had a chance to review our press release and prepared remarks this morning, both of which are available on our website. We will begin today with brief remarks from Bruce Broussard, Humanities President and Chief Executive Officer, and Jim Recton, Humanities President and Chief Operating Officer. 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 fourth quarter 2023 earnings press release as they relate to forward-looking statements along with other risks discussed in our SEC filings. 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, our historical financial news releases, and our filings with the SEC are also available on our investor relations site. Call participant to 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 financial press release. Any references to earnings per share or EPS made during this conference call refer to diluted earnings per common share. Finally, 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. With that, I'll turn the call over to Bruce Broussard.

Thank you, Lisa, and good morning, everyone, and thank you for joining us. We're going to dedicate the majority of our time today to Q&A, but I wanted to first highlight a few key messages that we hope you'll take away from our discussion today. As shared in our prepared remarks, which we posted this morning along with our earnings release, I'd like to start by stating the obvious. We are disappointed in the update provided today. The Medicare Advantage sector is navigating a complex and dynamic period of change as we are all working through significant regulatory changes while also absorbing unprecedented increases in medical cost trends. The increase in utilization that emerged late in the fourth quarter was a significant deviation from an already elevated level impacting the industry. We take our commitment seriously and are disappointed we are where we are unable to fully offset these higher cost trends, despite our best efforts to identify mitigation opportunities throughout the year. While the near-term impacts of the higher utilization are disappointing, our confidence in the long-term attractiveness of this sector and our position within has not changed. We provided you with our initial outlook for 2024 of approximately $16 in adjusted EPS. Given the recency and magnitude of the uptick in the utilization trend, we have prudently assumed that the higher costs seen in the fourth quarter persist throughout 2024. Based on our review of our initial claims data, we believe that the seasonal factors are not driving the increase. We are committed to updating you on our progress and understanding and addressing this change throughout the year. Importantly, the MA program was designed to be dynamic and respond to changes in medical trends. Looking to 2025, we are evaluating MA pricing actions and expect earnings growth and other lines of business as well as our ongoing productivity and trend mitigation initiatives to quickly restore our margins and resume a path of compelling earnings growth. Our current expectation is to deliver $6 to $10 of adjusted EPS growth in 2025. Notably, any outperformance we achieve in 2024 will be additive to this initial outlook. Before turning to Q&A, I'd like to provide Jim Recton, our president and COO, an opportunity to provide a few comments on our update this morning. Jim?