news release

Regina Nethery

Humana Investor Relations

(502) 580-3644

e-mail: Rnethery@humana.com

Tom Noland

Humana Corporate Communications

(502) 580-3674

e-mail: Tnoland@humana.com

1Q13 EPS of $2.95 exceeds management’s expectations

2013 EPS guidance raised to range of $8.40 to $8.60

2014 earnings growth uncertain

Share repurchase authorization reset to $1 billion

Net cash from operating activities

(in millions)

GAAP

Timing of premium payment from CMS (a)

Non-GAAP (b)

Retail Segment pretax income of $350 million in 1Q13 compares to $128 million in 1Q12, an increase of $222 million. This increase was primarily due to membership and premium growth and lower benefit and operating cost ratios. Retail Segment results for 1Q13 include the beneficial effect of $193 million in favorable prior-period medical claims reserve development compared to $116 million in 1Q12.

Individual Medicare Advantage membership was 2,012,100 as of March 31, 2013, an increase of 128,300 members, or 6.8 percent from 1,883,800 at March 31, 2012 and up 84,500, or 4.4 percent from 1,927,600 at December 31, 2012, primarily due to a successful enrollment season associated with the 2013 plan year.

Individual Medicare Advantage net membership growth during 1Q13 included the divestiture of 12,600 members acquired with the March 2012 Arcadian Management Services, Inc. transaction, in accordance with the company’s previously disclosed agreement with the United States Department of Justice.

Membership in the company’s stand-alone Prescription Drug Plans (PDPs) was 3,202,300 at March 31, 2013, up 261,700, or 8.9 percent compared to 2,940,600 at March 31, 2012 and up 149,600, or 4.9 percent from 3,052,700 at December 31, 2012. These increases resulted primarily from growth in the company’s innovative Humana-Walmart plan offering.

HumanaOne^® medical membership increased to 460,800 at March 31, 2013, an increase of 18,800, or 4.3 percent, from 442,000 at March 31, 2012 and up 16,800, or 3.8 percent from 444,000 at December 31, 2012.

Medical membership in state-based Medicaid plans increased to 73,300 at March 31, 2013, an increase of 27,200, or 59.0 percent, from 46,100 at March 31, 2012 and up 21,200, or 40.7 percent, from 52,100 at December 31, 2012, primarily driven by the addition of the company’s recently awarded Kentucky Medicaid contract on January 1, 2013.

Membership in individual specialty products^(c) of 959,600 at March 31, 2013 increased 111,700, or 13.2 percent, from 847,900 at March 31, 2012 and increased 10,900, or 1.1 percent, from 948,700 at December 31, 2012, primarily driven by increased membership in dental and vision offerings.

1Q13 premiums and services revenue for the Retail Segment was $6.91 billion, an increase of 12.2 percent from $6.15 billion in 1Q12. The increase was primarily the result of 9.4 percent higher average individual Medicare Advantage membership year over year together with a 2.9 percent average increase in the per member premium for Medicare Advantage.

The 1Q13 benefit ratio for the Retail Segment was 85.9 percent, a decrease of 160 basis points from 87.5 percent in 1Q12. The year-over-year decrease was primarily due to a decline in the benefit ratio associated with the company’s Medicare Advantage and stand-alone PDP businesses primarily driven by an increase in favorable prior-period medical claims reserve development and favorable weekday seasonality in 1Q13 versus 1Q12.

The Retail Segment’s operating cost ratio of 8.9 percent in 1Q13 decreased 150 basis points from 10.4 percent in 1Q12. The decrease was primarily the result of cost efficiencies resulting from higher average membership as well as the company’s continued focus on operating cost efficiencies.

Employer Group Segment pretax income of $205 million in 1Q13 compares to pretax income of $129 million in 1Q12, and reflects improved benefit and operating cost ratios for this segment. Employer Group Segment results for 1Q13 include the beneficial effect of $76 million in favorable prior-period medical claims reserve development compared to $15 million in 1Q12.

Fully-insured group Medicare Advantage membership was 412,800 at March 31, 2013, an increase of 55,100 members, or 15.4 percent, from 357,700 at March 31, 2012 and up 42,000, or 11.3 percent, from 370,800 at December 31, 2012, reflecting on-going success in demonstrating the company’s value proposition for retirees to employers. On January 1, 2013, the company lost its sole ASO group Medicare Advantage account which had 28,100 members at March 31, 2012 and 27,700 members at December 31, 2012.

Group fully-insured commercial medical membership increased to 1,197,800 at March 31, 2013, an increase of 15,000, or 1.3 percent, from 1,182,800 at March 31, 2012 and down 14,000, or 1.2 percent, from 1,211,800 at December 31, 2012, as increases in small group business membership were generally offset by lower membership in large group accounts. Approximately 60 percent of group fully-insured commercial medical membership was in small group accounts at March 31, 2013 versus 57 percent at March 31, 2012 and 59 percent at December 31, 2012.

Group ASO commercial medical membership declined to 1,200,800 at March 31, 2013, a decrease of 35,800, or 2.9 percent, from 1,236,600 at March 31, 2012 and down 36,900, or 3.0 percent, from 1,237,700 at December 31, 2012. This decline reflected a continuation of discipline in pricing services for self-funded accounts amid a highly competitive environment.

Membership in Employer Group specialty products^(c) increased to 7,274,000 at March 31, 2013, an increase of 424,700, or 6.2 percent, from 6,849,300 at March 31, 2012 and was up 137,800, or 1.9 percent, from 7,136,200 at December 31, 2012. This increase primarily resulted from increased cross-sales of the company’s specialty products to its medical membership and growth in stand-alone specialty product sales.

1Q13 premiums and services revenue for the Employer Group Segment were $2.83 billion, up 7.8 percent from $2.63 billion in 1Q12, primarily reflecting the impacts of higher average group Medicare Advantage and commercial fully-insured membership.

The 1Q13 benefit ratio for the Employer Group Segment was 79.6 percent, a decrease of 160 basis points from 81.2 percent for 1Q12. The year-over-year decrease in the benefit ratio primarily reflected an increase in favorable prior-period medical claims reserve development and more favorable weekday seasonality in 1Q13 than in 1Q12.

The Employer Group Segment’s operating cost ratio was 15.5 percent in 1Q13, a decline of 110 basis points from 16.6 percent in 1Q12, primarily reflecting a higher percentage of members in group Medicare Advantage plans (which carry a lower operating cost ratio than commercial fully-insured group accounts) as well as cost savings associated with operating cost reduction initiatives.

Healthcare Services Segment pretax income of $125 million in 1Q13 was essentially flat to 1Q12, as revenue growth and the profit contribution from the Metropolitan Health Networks, Inc. (Metropolitan) acquisition were generally offset by costs incurred in expanding our integrated care delivery model.

Revenues of $3.72 billion in 1Q13 for the Healthcare Services Segment increased $434 million, or 13.2 percent from $3.28 billion in 1Q12, primarily due to the company’s acquisitions of Metropolitan and other provider businesses as well as growth in the company’s pharmacy solutions business.

The Healthcare Services Segment’s operating cost ratio of 95.7 percent in 1Q13 was relatively unchanged from 95.6 percent in 1Q12.

Other Businesses reported pretax income of $58 million in 1Q13 versus pretax income of $5 million in 1Q12, primarily due to the beneficial effect of the $48 million favorable settlement discussed above.

On April 1, 2012, the company’s new South Region TRICARE contract became effective with the DoD. The company’s new contract is structured similar to self-funded products versus a fully-insured structure for the company’s previous South Region TRICARE contract with the DoD. This change resulted in significant volatility in year-over-year comparisons for the company’s Other Businesses.

If Humana does not design and price its products properly and competitively, if the premiums Humana receives are insufficient to cover the cost of health care services delivered to its members, if the company is unable to implement clinical initiatives to provide a better health care experience for its members, lower costs and appropriately document the risk profile of its members, or if its estimates of benefits expense are inadequate, Humana’s profitability could be materially adversely affected. Humana estimates the costs of its benefit expense payments, and designs and prices its products accordingly, using actuarial methods and assumptions based upon, among other relevant factors, claim payment patterns, medical cost inflation, and historical developments such as claim inventory levels and claim receipt patterns. These estimates, however, involve extensive judgment, and have considerable inherent variability because they are extremely sensitive to changes in payment patterns and medical cost trends.

If Humana fails to effectively implement its operational and strategic initiatives, particularly its Medicare initiatives (given the concentration of the company’s revenues in the Medicare business), the company’s business may be materially adversely affected.

If Humana fails to properly maintain the integrity of its data, to strategically implement new information systems, to protect Humana’s proprietary rights to its systems, or to defend against cyber-security attacks, the company’s business may be materially adversely affected.

Humana’s business may be materially adversely impacted by CMS’s adoption of a new coding set for diagnoses (commonly known as ICD-10).

Humana is involved in various legal actions and governmental and internal investigations, any of which, if resolved unfavorably to the company, could result in substantial monetary damages. Increased litigation and negative publicity could also increase the company’s cost of doing business.

As a government contractor, Humana is exposed to risks that may materially adversely affect its business or its willingness or ability to participate in government health care programs including, among other things, loss of material government contracts, governmental audits and investigations, potential inadequacy of government-determined payment rates or other changes in the governmental programs in which Humana participates.

Recently enacted health insurance reform, including The Patient Protection and Affordable Care Act and The Health Care and Education Reconciliation Act of 2010, could have a material adverse effect on Humana’s results of operations, including restricting revenue, enrollment and premium growth in certain products and market segments, restricting the company’s ability to expand into new markets, increasing the company’s medical and operating costs by, among other things, requiring a minimum benefit ratio on insured products (and particularly how the ratio may apply to Medicare plans, including aggregation, credibility thresholds, and its possible application to prescription drug plans), lowering the company’s Medicare payment rates and increasing the company’s expenses associated with a non-deductible federal premium tax and other assessments; financial position, including the company’s ability to maintain the value of its goodwill; and cash flows. In addition, if the new non-deductible federal premium tax and other assessments, including a three-year commercial reinsurance fee, were imposed as enacted, and if Humana is unable to adjust its business model to address these new taxes and assessments, such as through the reduction of the company’s operating costs, there can be no assurance that the non-deductible federal premium tax and other assessments would not have a material adverse effect on the company’s results of operations, financial position, and cash flows.

Humana’s business activities are subject to substantial government regulation. New laws or regulations, or changes in existing laws or regulations or their manner of application could increase the company’s cost of doing business and may adversely affect the company’s business, profitability and cash flows.

Any failure to manage operating costs could hamper Humana’s profitability.

Any failure by Humana to manage acquisitions and other significant transactions successfully may have a material adverse effect on its results of operations, financial position, and cash flows.

If Humana fails to develop and maintain satisfactory relationships with the providers of care to its members, the company’s business may be adversely affected.

Humana’s pharmacy business is highly competitive and subjects it to regulations in addition to those the company faces with its core health benefits businesses.

Changes in the prescription drug industry pricing benchmarks may adversely affect Humana’s financial performance.

If Humana does not continue to earn and retain purchase discounts and volume rebates from pharmaceutical manufacturers at current levels, Humana’s gross margins may decline.

Humana’s ability to obtain funds from its subsidiaries is restricted by state insurance regulations.

Downgrades in Humana’s debt ratings, should they occur, may adversely affect its business, results of operations, and financial condition.

Changes in economic conditions could adversely affect Humana’s business and results of operations.

The securities and credit markets may experience volatility and disruption, which may adversely affect Humana’s business.

Given the current economic climate, Humana’s stock and the stock of other companies in the insurance industry may be increasingly subject to stock price and trading volume volatility.

Form 10-K for the year ended December 31, 2012;

Form 8-Ks filed during 2013.

Annual reports to stockholders;

Securities and Exchange Commission filings;

Most recent investor conference presentations;

Quarterly earnings news releases;

Replays of most recent earnings release conference calls;

Calendar of events (including upcoming earnings conference call dates and times, as well as planned interaction with research analysts and institutional investors);

Corporate Governance information.

(in accordance with Generally Accepted

Accounting Principles)

For the year ending December 31, 2013

Comments

Diluted earnings per common share (EPS)

    Full Year

    Second Quarter

Revenues

    Consolidated

Includes expected investment income in the range of $365 million to $385 million

    Retail Segment

    Employer Group Segment

    Healthcare Services Segment

    Other Businesses

$11.0 billion to $11.5 billion

$15.0 billion to $15.5 billion

$1.3 billion to $1.5 billion

Segment-level revenue estimates reflect the business segment reclassifications discussed in this press release. Additionally, segment-level revenues include intersegment amounts that eliminate in consolidation.

Ending medical membership versus prior year end

    Retail Segment

        Medicare Advantage

Includes the January 1, 2013 disposition of 12,600 Medicare Advantage members acquired in the March 2012 Arcadian transaction in accordance with the company’s previously disclosed agreement with the United States Department of Justice.

        Medicare stand-alone PDPs (excl. LI-NET)

        HumanaOne

        Medicare Supplement

    Employer Group Segment

        Medicare Advantage fully-insured

        Medicare Advantage ASO

        Commercial fully-insured

        Commercial ASO

Benefit ratios

    Retail Segment

    Employer Group Segment

84.5% to 85.0%

84.5% to 85.0%

Benefits expense as a percent of premiums. Ratio estimates reflect the business segment reclassifications discussed in this press release.

Operating cost ratios

    Consolidated

    Healthcare Services Segment

14.75% to 15.25%

95.5% to 96.0%

Operating costs as a percent of total revenues excluding investment income

Consolidated depreciation and amortization (D&A)

    Income statement

    Cash flows statement

$330 million to $350 million

$415 million to $435 million

Certain D&A is included in benefits expense on the income statement but shown as a non-cash item on the cash flows statement

(in accordance with Generally Accepted

Accounting Principles)

For the year ending December 31, 2013

Comments

Consolidated interest expense

Pretax results

Segment-level pretax results and margins include the impact of net investment income

    Retail Segment

$1.3 billion to $1.4 billion;

Approximately 5% pretax margin

    Employer Group Segment

$190 million to $210 million;

Approximately 2% pretax margin

    Healthcare Services Segment

$525 million to $550 million;

Approximately 3.5% pretax margin

Effective Tax Rate

Diluted shares

Projections exclude the impact of future share repurchases

Cash flows from operations

Capital expenditures

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Description

Revenues:

Premiums

Services

Investment income

Total revenues

Operating expenses:

Benefits

Operating costs

Depreciation and amortization

Total operating expenses

Income from operations

Interest expense

Income before income taxes

Provision for income taxes

Net income

Basic earnings per common share

Diluted earnings per common share

Shares used in computing basic earnings per common share (000’s)

Shares used in computing diluted earnings per common share (000’s)

Revenues—external customers

Premiums:

Medicare Advantage

Medicare stand-alone PDP

Total Medicare

Fully-insured

Specialty

Military services

Medicaid and other (A)

Total premiums

Services revenue:

Provider

ASO and other (B)

Pharmacy

Total services revenue

Total revenues—external customers

Intersegment revenues

Services

Products

Total intersegment revenues

Investment income

Total revenues

Operating expenses:

Benefits

Operating costs

Depreciation and amortization

Total operating expenses

Income from operations

Interest expense

Income (loss) before income taxes

Benefit ratio

Operating cost ratio

Revenues—external customers

Premiums:

Medicare Advantage

Medicare stand-alone PDP

Total Medicare

Fully-insured

Specialty

Military services

Medicaid and other (A)

Total premiums

Services revenue:

Provider

ASO and other (B)

Pharmacy

Total services revenue

Total revenues—external customers

Intersegment revenues

Services

Products

Total intersegment revenues

Investment income

Total revenues

Operating expenses:

Benefits

Operating costs

Depreciation and amortization

Total operating expenses

Income from operations

Interest expense

Income before income taxes

Benefit ratio

Operating cost ratio

Revenues—external customers

Premiums:

Medicare Advantage

Medicare stand-alone PDP

Total Medicare

Fully-insured

Specialty

Military services

Medicaid and other (A)