Humana Acquires Harris, Rothenberg International

Company a pioneer and leader in HR strategy, leadership development and workforce productivity

LOUISVILLE, Ky.--(BUSINESS WIRE)--Humana Inc. (NYSE: HUM) announced today it has acquired Harris, Rothenberg International, Inc. (HRI), a provider of work/life services and employee assistance programs. Terms were not disclosed.

HRI currently serves approximately 5.5 million people in the U.S. and another 70,000 internationally. Now in its 31^st year, HRI provides services to employers assisting employees in dealing with personal issues ranging from emotional, financial and legal problems to child/elder care needs to alcoholism and drug abuse. HRI’s services include employee coaching and training.

“Employee Assistance Programs and work-life programs are key elements of Humana’s ‘total well-being’ approach to helping people lead healthier lives,” said Sean Slovenski, leader of Humana’s Health and Productivity Solutions unit. “HRI will help facilitate the expansion of Humana’s EAP and work-life offering – integrating and enhancing many aspects of the offering.”

Additionally, HRI will open a new pathway for growth as Humana creates a product that better addresses 3^rd party and Humana internal customer needs.

HRI’s highly customizable offering directs members or their caregivers to value-added services while also offering certain ancillary products that assist employees with day-to-day life issues. The acquisition will support Humana’s efforts to help employer-customers reduce health care spending while also targeting productivity challenges. Loss of productivity due to problems with presenteeism, absenteeism, health issues and disabilities represents up to 10 percent of a typical employer’s payroll expense.¹

“We’re looking forward to helping Humana’s members live healthier lives,” said Edward Trieber, J.D., Ph.D., President and Chief Executive Officer of HRI. “Over the years, we have helped our employer-customers and their employees achieve greater success at work and in life by providing industry-leading employee assistance programs and work-life services.”

Humana’s acquisition of HRI is not expected to materially impact Humana’s financial earnings guidance for the year ending December 31, 2012.

¹Institute for Health and Productivity Studies, Cornell University

Cautionary Statement

This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in investor presentations, press releases, Securities and Exchange Commission (SEC) filings, and in oral statements made by or with the approval of one of Humana’s executive officers, the words or phrases like “expects,” “anticipates,” “intends,” “likely will result,” “estimates,” “projects” or variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and assumptions, including, among other things, information set forth in the “Risk Factors” section of the company’s SEC filings, a summary of which includes but is not limited to the following:

• If Humana does not design and price its products properly and competitively, if the premiums Humana charges are insufficient to cover the cost of health care services delivered to its members, or if its estimates of benefit expenses 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 that is extremely sensitive to payment patterns and medical cost trends.
• If Humana fails to effectively implement its operational and strategic initiatives, including its Medicare initiatives, the company’s business may be materially adversely affected, which is of particular importance given the concentration of the company’s revenues in the Medicare business.
• 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.
• Humana is involved in various legal actions and governmental and internal investigations, including without limitation, an ongoing internal investigation and litigation and government requests for information related to certain aspects of its Florida subsidiary operations, any of which, if resolved unfavorably to the company, could result in substantial monetary damages. Increased litigation and negative publicity could 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.
• 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 our 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 administrative 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.

In making forward-looking statements, Humana is not undertaking to address or update them in future filings or communications regarding its business or results. In light of these risks, uncertainties, and assumptions, the forward-looking events discussed herein may or may not occur. There also may be other risks that the company is unable to predict at this time. Any of these risks and uncertainties may cause actual results to differ materially from the results discussed in the forward-looking statements.

Humana advises investors to read the following documents as filed by the company with the SEC for further discussion both of the risks it faces and its historical performance:

• Form 10-K for the year ended December 31, 2011;
• Form 10-Q for the quarter ended March 31, 2012;
• Form 8-Ks filed during 2012.

About Humana

Humana Inc., headquartered in Louisville, Kentucky, is a leading health care company that offers a wide range of insurance products and health and wellness services that incorporate an integrated approach to lifelong well-being. By leveraging the strengths of its core businesses, Humana believes it can better explore opportunities for existing and emerging adjacencies in health care that can further enhance wellness opportunities for the millions of people across the nation with whom the company has relationships.

More information regarding Humana is available to investors via the Investor Relations page of the company’s web site at www.humana.com, including copies of:

• 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

About HRI

Harris, Rothenberg International offers an array of comprehensive, integrated human resource programs and services designed to maximize organizational and employee performance. Founded in 1982, HRI is a pioneer and acknowledged leader in the field of HR strategy, leadership development, and employee productivity. HRI partners with clients of all sizes and all industries, from Fortune 100 companies to privately held businesses and nonprofit organizations.

For more information about HRI, visit www.HRIworld.com.