·	Operating revenue of $3.7 billion, an increase of 21% from the prior year quarter

·	Total membership of 5,262,000, an increase of 497,000 members from the prior quarter, driven by growth across the Company’s government programs in Medicare Advantage, Medicare Part D, and Medicaid

·	Awarded contract with the State of Nebraska to provide services to the State’s expanded Medicaid managed care program which is expected to commence in the third quarter of 2012

·	Awarded renewal contract with the State of Missouri Medicaid program effective July 1, 2012

·	Received Letters of Intent to contract with the Commonwealth of Pennsylvania HealthChoices Medicaid program in the New West and New East zones with expected effective dates of September 1, 2012, and March 1, 2013, respectively

·	Selling, general, and administrative expense (SG&A) of 13.6% of total revenue, a decline of 280 basis points from the prior year quarter

·	Capital Deployment

o	Initiated the first quarterly cash dividend in the Company’s history at $0.125 per common share

o	Closed the Children’s Mercy’s Family Health Partners acquisition effective January 1, 2012

o	Retired $233.9 million of senior notes which came due in January 2012

·	Approximately $900 million of deployable free cash at the parent at quarter-end

·

Commercial Risk. As of March 31, 2012, commercial risk membership was 1,549,000, a decrease of 87,000 members, or 5%, from the prior year quarter which was partially driven by large employer groups converting to self-funded.  The commercial risk medical loss ratio (MLR) was 79.9% in the quarter, a decrease of 10 basis points (bps) from the prior year quarter.

·

Medicare Advantage. As of March 31, 2012, Medicare Advantage Coordinated Care Plan (MA-CCP) membership was 250,000, an increase of 31,000 members, or 14%, from the prior year quarter, driven by successful execution during the 2012 Annual Enrollment Period.  The MA-CCP MLR was 74.1% in the quarter, a decrease of 1,010 bps from the prior year quarter driven by the impact of the RADV prior period reserve release coupled with strong underlying performance.

·

Medicare Part D. As of March 31, 2012, Medicare Part D membership was 1,458,000, an increase of 299,000 members, or 26%, from the prior year quarter, driven by the introduction of a third product, an increase in auto assignment regions, and successful execution during the 2012 Annual Enrollment Period.  The Medicare Part D MLR was 94.9% in the quarter, a decrease of 90 bps from the prior year quarter.

·

Medicaid. As of March 31, 2012, Medicaid membership was 924,000, an increase of 456,000 members, or 97%, from the prior year quarter. The increase was largely driven by 234,000 members from the Commonwealth of Kentucky Medicaid contract, which was effective November 1, 2011, and 208,000 members from the acquisition of Children’s Mercy’s Family Health Partners, which closed effective January 1, 2012.  The Medicaid MLR was 100.0% in the quarter driven primarily by greater than anticipated expenses in the Company’s Kentucky Medicaid business which produced an MLR of 120.9%.

 

 

 

 

 

·	Risk revenue of $12.875 billion to $13.050 billion

·	Management services revenue of $1.145 billion to $1.180 billion

·	Consolidated revenue of $14.020 billion to $14.230 billion

·	Consolidated MLR of 83.6% to 84.4%

·	Cost of sales expense of $251.0 million to $257.0 million

·	SG&A of $2.090 billion to $2.130 billion

·	Depreciation and amortization expense of $138.0 million to $142.0 million

·	Other income of $87.0 million to $93.0 million

·	Interest expense of $99.0 million to $101.0 million

·	Tax rate of 37.7% to 38.3%

·	Diluted share count of 138.0 million to 142.0 million

·	EPS of $3.10 to $3.30

 

		Quarters Ended
		March 31,
		2012				2011
Operating revenues:		(unaudited)				(unaudited)
Managed care premiums		$	3,386,268			$	2,755,336
Management services			305,699				293,602
Total operating revenues			3,691,967				3,048,938
Operating expenses:
Medical costs			2,808,348				2,275,161
Cost of sales			67,952				67,898
Selling, general, and administrative			502,888				498,590
Depreciation and amortization			36,303				35,816
Total operating expenses			3,415,491				2,877,465
Operating earnings			276,476				171,473
Operating earnings percentage of total revenues			7.5	%			5.6	%
Interest expense			25,557				20,038
Other income, net			24,434				19,469
Earnings before income taxes			275,353				170,904
Provision for income taxes			104,634				60,671
Net earnings		$	170,719			$	110,233
Net earnings per share:
Basic earnings per common share		$	1.21			$	0.74
Diluted earnings per common share		$	1.20			$	0.73
Weighted average common shares outstanding, basic			139,323				147,219
Weighted average common shares outstanding, diluted			140,167				148,175

		March 31,				December 31,
		2012				2011
		(unaudited)
Assets:
Current assets:
Cash and cash equivalents		$	1,744,983			$	1,579,003
Short-term investments			118,414				116,205
Accounts receivable, net			254,442				270,263
Other receivables, net			800,536				717,736
Other current assets			200,443				286,301
Total current assets			3,118,818				2,969,508
Long-term investments			2,634,646				2,635,309
Property and equipment, net			259,704				255,485
Goodwill			2,592,522				2,548,834
Other intangible assets, net			375,951				367,533
Other long-term assets			36,178				36,863
Total assets		$	9,017,819			$	8,813,532
Liabilities and Stockholders’ Equity:
Current liabilities:
Medical liabilities		$	1,469,034			$	1,308,507
Accounts payable and other accrued liabilities			433,510				695,235
Deferred revenue			457,673				114,510
Current portion of long-term debt			---				233,903
Total current liabilities			2,360,217				2,352,155
Long-term debt			1,584,823				1,584,700
Other long-term liabilities			370,081				365,686
Total liabilities			4,315,121				4,302,541
Stockholders’ equity			4,702,698				4,510,991
Total liabilities and stockholders’ equity		$	9,017,819			$	8,813,532

 

		Quarter Ended
		March 31, 2012
Cash flows from operating activities:
Net earnings		$	170,719
Adjustments to earnings:
Depreciation and amortization			36,303
Amortization of stock compensation			9,014
RADV Release			(132,977	)
RADV Release – deferred tax adjustment			50,531
Changes in assets and liabilities:
Accounts receivable, net			39,538
Other receivables, net			(84,455	)
Medical liabilities			101,984
Accounts payable and other accrued liabilities			(145,907	)
Deferred revenue			343,163
Other operating activities			32,602
Net cash flows from operating activities			420,515
Cash flows from investing activities:
Capital expenditures, net			(23,517	)
Proceeds from sales and maturities, net of payments for investments			26,157
Payments for acquisitions, net of cash acquired			(46,980	)
Net cash flows from investing activities			(44,340	)
Cash flows from financing activities:
Proceeds from issuance of stock			25,404
Payments for repurchase of stock			(4,564	)
Repayment of debt			(233,903	)
Excess tax benefit from stock compensation			2,868
Net cash flows from financing activities			(210,195	)
Net change in cash and cash equivalents for current period			165,980
Cash and cash equivalents at beginning of period			1,579,003
Cash and cash equivalents at end of period		$	1,744,983
Cash and Investments:
Cash and cash equivalents		$	1,744,983
Short-term investments			118,414
Long-term investments			2,634,646
Total cash and investments		$	4,498,043

 

 

 

 

			Q1 2012			Total  2011					Q4 2011				Q3 2011				Q2 2011				Q1 2011
Revenue PMPM
Commercial Risk		$	311.92			$	303.69			$	305.70			$	303.33			$	304.19			$	301.54
Medicare Advantage(2)		$	1,048.93			$	895.54			$	896.77			$	893.22			$	909.10			$	883.09
Medicare Part D(3)		$	85.44			$	92.41			$	90.95			$	94.10			$	93.72			$	90.86
Medicaid		$	238.74			$	228.85			$	244.71			$	226.39			$	218.28			$	221.16
MLR%
Consolidated Total			82.9	%			82.1	%			82.1	%			81.5	%			82.1	%			82.6	%
Commercial Risk			79.9	%			81.6	%			83.7	%			82.1	%			80.7	%			80.0	%
Medicare Advantage(2)			74.1	%			82.9	%			82.3	%			82.0	%			82.9	%			84.2	%
Medicare Part D			94.9	%			81.7	%			60.5	%			76.8	%			88.8	%			95.8	%
Medicaid			100.0	%			89.4	%			94.4	%			88.1	%			86.9	%			86.0	%

(1)

“Total Health Plan Medical Liabilities” and “Health Plan Days in Claims Payable” are calculated consistent with prior disclosures to exclude the effect of the Kentucky Medicaid business for the fourth quarter of 2011 due to the timing of the contract implementation (November 1, 2011) but include the effect of the Kentucky Medicaid business and the acquired Children’s Mercy’s Family Health Partners business for the first quarter of 2012.

 

(2)	Medicare Advantage statistics for Revenue PMPM and MLR% include the favorable impact from the release of MA-CCP RADV audit reserves.   Excluding this impact, the comparable Revenue PMPM was $923.87 and the comparable MLR% was 82.9%.

 

(3)	Revenue PMPM excludes the impact of CMS risk-share premium adjustments and revenue ceded to external parties.