Humana 2015 Annual Report Download - page 12

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generally requiring us to conduct our business in the ordinary course and subjecting us to a variety of customary specified
limitations absent Aetna’s prior written consent, including, for example, limitations on dividends (we agreed that our
quarterly dividend will not exceed $0.29 per share) and repurchases of our securities (we agreed to suspend our share
repurchase program), restrictions on our ability to enter into material contracts, and negotiated thresholds for capital
expenditures, capital contributions, acquisitions and divestitures of businesses.
On October 19, 2015, our stockholders approved the adoption of the Merger Agreement at a special stockholder
meeting. Also on October 19, 2015, the holders of Aetna outstanding shares approved the issuance of Aetna common
stock in the Merger at a special meeting of Aetna shareholders.
The Merger is subject to customary closing conditions, including, among other things, (i) the expiration or
termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the receipt of necessary approvals under state insurance and healthcare laws and regulations and pursuant
to certain licenses of certain of Humana’s subsidiaries, (ii) the absence of legal restraints and prohibitions on the
consummation of the Merger, (iii) listing of the Aetna common stock to be issued in the Merger on the New York Stock
Exchange, (iv) subject to the relevant standards set forth in the Merger Agreement, the accuracy of the representations
and warranties made by each party, (v) material compliance by each party with its covenants in the Merger Agreement,
and (vi) no “Company Material Adverse Effect” with respect to us and no “Parent Material Adverse Effect” with respect
to Aetna, in each case since the execution of and as defined in the Merger Agreement. In addition, Aetna’s obligation
to consummate the Merger is subject to (a) the condition that the required regulatory approvals do not impose any
condition that, individually or in the aggregate, would reasonably be expected to have a “Regulatory Material Adverse
Effect” (as such term is defined in the Merger Agreement), and (b) CMS has not imposed any sanctions with respect
to our Medicare Advantage, or MA, business that, individually or in the aggregate, is or would reasonably be expected
to be material and adverse to us and our subsidiaries, taken as a whole. The Merger is currently expected to close in
the second half of 2016.
Health Care Reform
The Patient Protection and Affordable Care Act and The Health Care and Education Reconciliation Act of 2010
(which we collectively refer to as the Health Care Reform Law) enacted significant reforms to various aspects of the
U.S. health insurance industry. Certain significant provisions of the Health Care Reform Law include, among others,
mandated coverage requirements, mandated benefits and guarantee issuance associated with commercial medical
insurance, rebates to policyholders based on minimum benefit ratios, adjustments to Medicare Advantage premiums,
the establishment of federally-facilitated or state-based exchanges coupled with programs designed to spread risk among
insurers, and the introduction of plan designs based on set actuarial values. In addition, the Health Care Reform Law
established insurance industry assessments, including an annual health insurance industry fee and a three-year industry
wide commercial reinsurance fee. The Health Care Reform Law is discussed more fully in Item 7. – Management’s
Discussion and Analysis of Financial Condition and Results of Operations under the section titled “Health Care Reform”
in this 2015 Form 10-K.
Business Segments
On January 1, 2015, we realigned certain of our businesses among our reportable segments to correspond with
internal management reporting changes and renamed our Employer Group segment to the Group segment. Our three
reportable segments remain Retail, Group, and Healthcare Services. The more significant realignments included
reclassifying Medicare benefits offered to groups to the Retail segment from the Group segment, bringing all of our
Medicare offerings, which are now managed collectively, together in one segment, recognizing that in some instances
we market directly to individuals that are part of a group Medicare account. In addition, we realigned our military
services business, primarily consisting of our TRICARE South Region contract previously included in the Other
Businesses category, to our Group segment as we consider this contract with the government to be a group account.
Prior period segment financial information has been recast to conform to the 2015 presentation. See Note 17 to the
consolidated financial statements included in Item 8. – Financial Statements and Supplementary Data in this 2015 Form
10-K for segment financial information.