Humana 2015 Annual Report Download - page 72
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64
Operating costs
• The Group segment operating cost ratio of 26.5% was unchanged from 2013, reflecting the impact of the non-
deductible health insurance industry fee and other fees mandated by the Health Care Reform Law as well as
a higher percentage of small group commercial business which carries a higher operating cost ratio than large
group business, offset by operating cost efficiencies.
Healthcare Services Segment
Change
2014 2013 Dollars Percentage
(in millions)
Revenues:
Services:
Provider services $ 1,147 $ 1,195 $ (48) (4.0)%
Home based services 107 94 13 13.8 %
Pharmacy solutions 99 59 40 67.8 %
Clinical programs — 2 (2) (100.0)%
Total services revenues 1,353 1,350 3 0.2 %
Intersegment revenues:
Pharmacy solutions 16,905 13,079 3,826 29.3 %
Provider services 1,149 1,102 47 4.3 %
Home based services 585 326 259 79.4 %
Clinical programs 208 186 22 11.8 %
Total intersegment revenues 18,847 14,693 4,154 28.3 %
Total services and intersegment revenues $ 20,200 $ 16,043 $ 4,157 25.9 %
Income before income taxes $ 738 $ 520 $ 218 41.9 %
Operating cost ratio 95.6% 95.8% (0.2)%
Pretax results
• Healthcare Services segment pretax income of $738 million for 2014 increased $218 million from 2013. The
increase is primarily due to a decline in the operating cost ratio in 2014 on a revenue base that reflects growth
from our pharmacy solutions and home based services businesses as they serve our growing Medicare
membership.
Script Volume
• Humana Pharmacy Solutions® script volumes for the Retail and Group segment membership increased to
approximately 329 million in 2014, up 20% versus scripts of approximately 274 million in 2013. The increase
primarily reflects growth associated with higher average medical membership for 2014 than in 2013.
Services revenue
• Services revenue for 2014 were relatively unchanged from 2013, increasing $3 million, or 0.2%, to $1.4 billion
for 2014.