Humana Inc.

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 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 both available on our website. We will begin this morning with brief remarks from Jim Reckton, Humana's President and Chief Executive Officer, and Chief Financial Officer, Celeste Malay. Following these remarks, we will host a question and answer session where Jim and Celeste will be joined by George Renanen, 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 fort-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 second 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 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 GAP. Management's explanation for the use of these non-GAP measures and reconciliations of GAP to non-GAP 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, the 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 will turn the call over to Jim Reckton.

Thank you, Lisa. Good morning, everyone, and thank you for joining us. As you've already seen, we delivered a good second quarter and first half relative to our expectations. The outperformance was driven primarily by Centerwell Pharmacy as well as better than expected individual MA membership. Our second quarter medical cost trends were in line with expectations, and given these results and our solid first quarter, we are raising our full year 2025 EPS outlook from approximately $16.25 to approximately $17. While we still have challenges to navigate, the external environment this year continues to evolve largely in line with our expectations, and we are executing against our plan. There's actually a lot happening, and I have a great deal to cover today, so let me just remind everybody that I'll frame my comments as I typically do around the four basic drivers of our business. The first driver is MA product and experience, which drive customer growth and retention. Second is clinical excellence, which delivers clinical outcomes and medical margin. Third is delivering a highly efficient back office. And fourth is capital allocation and growth in both Centerwell and Medicaid. Let me start with our Medicare product and experience. Individual MA membership, as I mentioned before, has declined less than we expected. Part of this improvement is that we've seen more bounce back members, and so these are members who chose another plan last autumn during AEP, but have come back to us during OEP and ROE. These members typically have better year one economics because we know them and we can provide better clinical care. As you may remember from Investor Day, our retention strategy is an important lever for us on our path to a more sustainable and reliable margins, and so we're excited to see these members returning to Humana. We're also taking aggressive steps to continue to improve the experience for our members in an effort to build upon this performance. There's a couple of examples. The first is last week, Humana announced new actions to simplify and streamline the prior authorization process. This builds on the recent commitments made by multiple health plans, including Humana, that were announced by AHIP in June. Humana's actions, which go even further than our initial commitment through AHIP, will help ensure our members get the right care in a timely manner, while also reducing administrative burdens for physicians as well as improving the experience for our members. I think it's important that we remind everyone that we believe that prior authorization is an important check and balance to ensure appropriate care. It's just that it should be invisible to our members. In another example of our focus on experience, we have entered into a new partnership with the health care software company Epic. This partnership makes Humana the first health insurer to integrate health plan information directly into MyCharts accounts. Why is this important? This brings health plan coverage information into the same place where members frequently go to manage their care decisions. In essence, it provides increased transparency to the cost of care. We know that visibility into the cost of care when care decisions are being made is a big deal for our members, and we want to do everything we can to provide that visibility and transparency. Now let me turn to clinical excellence. We are going to focus today almost exclusively on STARS. We'll hit BY27 and 28 along with the STARS litigation. I'll start with the STARS litigation. The court dismissed our case a couple of weeks ago on administrative grounds. They did this because we had not exhausted the optional appeals process with CMS when we originally filed our lawsuit. The appeals process with CMS is now over, and so we have refiled our STARS case in the same court. As we wait for a new ruling, our path forward remains the same. We are continuing to press ahead with urgency on BY27 and BY28. Operationally, we are continuing to make strong progress. We are closing gaps in care and driving both quality and experience for our customers, and so there's no change in our message or our tone here today. As a reminder for BY27 results, we will be entering a quiet period when we receive plan preview data. So after today's call, we will not be discussing BY27 STARS until the final results are released by CMS in October. Shifting to the area of a highly efficient back office, we have a lot of activity happening in this area right now. During Investor Day, we shared that we were focused on transforming the organization, transforming the organization to enable scalable growth and drive operating leverage. This is a multi-year transformation, and it will include both near-term tactical cost programs, but also longer-term efforts to change how we operate through increased automation and use of technology. This week, we notified eligible employees of an early retirement program to help accelerate efforts with our operating model and to streamline costs. In the next few months, we will also be expanding our efforts to contract out additional aspects of our shared services functions. We are doing this in an effort to streamline and optimize outsourcing capabilities. We will also be evolving some of our employee benefits to bring them in line with industry standards. I really want to emphasize that while these changes will reduce cost, the intent is to enable our broader strategy. This will be a multi-year transformation. It will be taken at a measured pace, and the objective is to create a more nimble, technology-enabled organization that can respond more quickly to consumer needs and expectations. Now, let me turn to capital allocation and the growth of our Medicaid and CenterWell businesses. We're seeing exciting progress in both businesses right now. Strategic expansion of Medicaid continues with the launch of the Virginia contract. This brings our active footprint to 10 states, with three more states awarded and pending. I know there's been a lot of curiosity about the impact of the Big Beautiful bill. Our footprint in Medicaid is largely in non-expansion states, and it tends to be skewed towards the LTSS, or long-term support services, population. These geographies and this population are less impacted by the bill. So while the bill will certainly have some impact, we expect it to be more muted for us versus Medicaid broadly. We remain committed to our Medicaid strategy and the assumptions we made at Investor Day about margin progression. Finally, we are encouraged by our CenterWell Pharmacy Outperformance year today. This has been driven by two things. We've seen higher -to-consumer volume, and we have seen favorability in specialty pharmacy, which is seeing higher volumes and more favorable drug mix than expected. So to conclude, all in, we are pleased with our solid performance year today and our improved full year 2025 outlook. As we look ahead, we remain focused on delivering a more stable and compelling MA margin. We continue to have conviction that the strong core fundamentals and growth outlook for MA will allow us to deliver compelling shareholder value over the long term. And with that, I will turn it to Celeste for a few remarks before we go to Q&A.