Humana Inc. (NYSE:HUM) Q1 2018 Earnings Conference Call - Final Transcript
May 02, 2018 • 09:00 am ET
(Operator Instructions) And our first question comes from the line of Ana Gupte with Leerink Partners. Your line is open.
Good morning. Thanks for taking the questions. The questions was about the difference in the Final Rate Notice from February to April, which look quite significantly good. Can you tell us what your thoughts are around the margins that you would target then into '18 -- into '19 and the progression back to the 4.5% to 5%? Do you think that might accelerate? Or might you, again, just funnel that back into investments and the like?
Brian A. Kane
Sure. Good morning, Ana. Yeah, I'd rather not talk about specifically what we'll do from a competitive perspective, of course. But as I mentioned in my remarks, we do intend to guide next year to an EPS target in excess of our long-term target range of 11% to 15%. I know there's been a lot of questions about that, and so we thought it was important to make sure that was clear.
As it relates specifically to our 4.5% to 5% margin target, as we've said previously, we expect to make meaningful progress on the road to getting back to that margin level. Just as a reminder and to level set, one of the reasons, the major reason why we're below the margin target is because of the tax reform investments that we invested in our associates and in our business. And as we've said, over time, we will work to get back to our 4.5% to 5%. But as I said, we will make a meaningful progress in that regard next year and guide to a range above our long-term EPS guidance range.
Okay. If I could just ask one follow-up on the -- when you look at the selling season now and in context of the potential CVS Aetna deal with retail clinics and you are doing a lot of primary care, and you think about your clinical and your distribution strategy, do you have a mixed view of you should do primary care and clinics relative to retail clinics and store and the like? Or is it one or the other from a strategic perspective?
Bruce D. Broussard
I mean, today, we are looking at all different ways to build and develop clinics, both standalone and retail centers, which today, we do in retail centers, not directly in the store, but adjacent to stores. And we'll continue to look at that. We do see convenience as being an important part of the decisions that individuals make when they choose a primary care clinic.
Got it. Thanks so much.
Amy K. Smith
Next question, please?
Your next question comes from line of Matt Borsch with BMO Capital Markets. Your line is open.
Yes, thank you. Could you just talk about -- sorry, let me ask you just on the individual business, this is now the second year that you've been out. It's separated from your operating results, and yet it's making a pretty substantial earnings contribution to you. How