Humana Inc.

session to ask a question during the session you'll 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 speaker 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, which are available on our website. We will begin this morning with brief remarks from Jim Recton, Humana's President and Chief Executive Officer, and Chief Financial Officer Celeste Millay, which will be followed by a Q&A session where Jim and Celeste will be joined by George Runadin, President of Humana's insurance segment. 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 2025 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 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 gaps. 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. 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 Jim.

Thanks, Lisa. Good morning, everyone, and thanks for joining us. We are pleased with our start to 2025. We are reaffirming our four-year guidance. We came in ahead of plan for Q1. I will note that some of the outperformance in the quarter is timing related. It is also still early in the year, so we are continuing to monitor trends. This includes changes in consumer behavior due to the IRA. There's nothing new on our litigation related to CMS's 2026 star ratings. We are still waiting on a ruling. I think the best way to describe where we are at at this moment is that while there are still challenges to navigate, there are no surprises. The external environment is evolving as we expected, and we are executing against the things we control. We have scheduled an investor conference on June 16th. We have three objectives. One, provide a clearer picture of the earnings power of the business. Two, explain what it will take to unlock that earnings power. And three, give you clarity on how to track our progress. Now I will briefly describe the progress we are making operationally. And as usual, I will frame my comments today around the four basic drivers of our business. That is product and experience, which drive customer growth, clinical excellence, which delivers clinical outcomes and medical margin, a highly efficient back office, and capital allocation and growth in CenterWell and Medicaid. Regarding our Medicare product and experience, there are no changes to our membership guidance for 2025. We had strong performance in OEP and the early outlook for the rest of the year is trending positively. As we head into the bid cycle, we believe the rate notice better reflects the trend environment and should enable greater industry stability. Regarding clinical excellence, operationally, we continue to make progress on STARS. We are closing gaps in care and driving both quality and experience for our customers. For example, through recent partnerships, we are better engaging members who don't have a primary care provider. We are doing this by pairing in-person home visits with virtual health. We expect this work will close gaps in care by 25% year over year. Another effort is through our medication adherence campaigns, in which we are seeing 30 to 50% reduction year over year in members with late refills. Regarding a highly efficient back office, our G&A costs for the quarter were slightly better than expectations. This was largely due to the timing of costs that will be incurred in the second and third quarter. However, we are also seeing good progress in our cost management efforts. One example is increased use of AI in our contact centers. This technology quickly surfaces complex information so our representatives can have more impactful interactions with our members while reducing call times. Regarding capital allocation and growth in our Center Well and Medicaid businesses, we're seeing robust patient and membership growth in primary care and Medicaid, continued growth in our value-based models in home health, and volume growth in specialty pharmacy. Over the last year, we've added 30 new centers through acquisition and partnership, which are helping to fuel our growth in primary care. We received an intent to award notice from Illinois for their new dual eligible special needs program. And Centerwell Pharmacy has started its work as the fulfillment center for Novocare's weight loss medication directed to cash pay customers. As you may have seen in the news yesterday, we have also reached fulfillment agreements with three other companies in the past few days. All in, I am encouraged by our recent performance and growth. And with that, I will turn it over to Celeste for a few remarks before we go to Q&A.