Q3 2019 Earnings Call
Ladies and gentlemen, thank you for standing by and welcome City, you might know third quarter 2018 earnings call. At this time, all participants aligned incentives and on the mode piece you had five to today's conference is being recorded after the speakers for since they show they'll be a question answer session asked the question.
During this session you wouldn't need to press star one on your telephone other like you had to conference over to Speaker today Ms., Amy Smith, Vice President of Investor Relations. Thank you Sir you may begin.
Thank you and good morning in a moment, Bruce Broussard, Humana's, President and Chief Executive Officer, and Brian Kane, Chief Financial Officer will discuss our third quarter, 2019 result, and our updated financial outlook for the full year.
Following these prepared remarks, well open up the lines for question and answer session with industry analysts or.
Our chief legal officer, Jobin, Terra lots will be joining Bruce and Brian for the Q many session.
We encourage the investing public in media to listen to both management's prepared remarks.
And the related queuing they with analysts.
This call is being recorded for replay purposes that replay will be available on the Investor Relations page of Humana's website Humana Dot com later today.
Well, we began our discussion I need to advise call participants of our cautionary statement.
Certain of the matters discussed in this conference call are forward looking and involve a number of risks and uncertainties.
Actual results could differ materially.
Investors are advice to read the detailed risk factors discussed in our third quarter 2019 earnings press release.
As well as in our filings with the Securities and Exchange Commission.
Today's press release, our historical financial news releases and I've filings with the FCC are all also available on our Investor Relations website.
All participants should note that today's discussion includes financial measures that are not in accordance with generally accepted accounting principles or gap.
MS explanation for the use of these non-GAAP measures and reconciliations of GAAP to non-GAAP financial measures are included in today's press release.
Finally, any references to earnings per share or S made during this conference call refer to diluted earnings per common share with that I'll turn the call over to Bruce Broussard.
Good morning, Thank you for joining US today, we reported adjusted earnings per share $5 in three cents for the third quarter 2019.
And raised or full year 2019, adjusted EPS guidance to approximately $17.75, primarily reflecting improved results in our retail segment.
Our year to date results through the third quarter of 2019, including are significant individual Medicare advantage membership growth now projected to exceed it half a million members for the full year.
Demonstrate the value of our products and services.
The strength of our brand with consumers and our progress and simplifying the health care experience for our members providers broker partners and associates.
The management team continues to maintain its focus on operational excellence.
During our operating results remain consistent despite potential pressure of significant membership growth.
Well, we celebrate these strong results. We also recognize health care will continue to evolve and will require an ongoing balance between improving our productivity.
Innovating for long term sustainability.
Specifically by improving the health outcomes of our members and simplifying their health care experience.
We believe we have a significant opportunity to improve the efficiency and effectiveness of the health care system.
This is highly blighted by a recently completed and multi years study conducted by Humana researchers and published in the journal of the American Medical Association.
The study puts a spotlight on the nearly 25% of our country's annual total health care spending that can be deemed does ways.
That's one out of every for health care dollars for between 760 billion, a 935 billion each year.
Our integrated approach to a holistic held through programs like Medicare advantage uniquely position us to evolve health care.
Driving affordability through improving clinical outcomes and simplifying the experience and reducing the waste in the system.
As we look to 2020 M. beyond we are continuing to meaningfully advancers strategy would centers on improving health outcomes through the most impactful areas of health.
Home primary care pharmacy, behavioral health and social determinants.
In addition, we are making it easier for our members to interact with us and others in the health care system through leveraging technology to develop a health care ecosystem.
An important element of our strategy includes establishing partnerships with key organizations.
Our multi partnership approach allows us to minimize risk move faster and use our capital efficiently.
To that and you will recall last quarter I highlighted our partnership with epic.
And today I'd like to share additional examples of recent partnerships.
And our efforts to simplify the health care experience and our group and specialty business. We recently expanded our partnership with accolade.
First we announced in March of this year.
We've created a differentiated helping gauge been experience for individuals and their employers by integrating our organizations capabilities.
Together, we'll continue to create personalize and simplified member experiences and leverage new opportunities around solution flexibility.
Service delivery partner integration and economic value in health care.
Our partnership which includes the recent additional strategic investment allows us to tailor the humana and accolade solution for a broader base of fully insured and so prospects and clients, including expansion of upstream larger group accounts.
At the core of our strategy is interoperability, which facilitates our relationship with our provider partners, while simplifying the experience of our members.
Recently Humana pharmacy developed what we believe is the first clinical decision support fire integration and production between a payer and a provider via their clinical workflow.
Our partner signified health is now using our one medalist in connection with an in home assessments, giving them the ability to confirm in real time member adherence to their medication and more proactively identify potential adverse drug interventions and drug disease conflicts.
During 2020 will roll the same functionality to all kindred at home and other health care Health home health providers.
Including integration with the new Homecare Homebase system.
The integration of technology like one medalist with kindred at home is enabled by Humana's integration with the homecare Homebase electronic medical record and practice management system.
The integration allows the prescription drug information gathered by the kindred at home nurse to become part of the Humana record, ensuring a more comprehensive record and reducing the likelihood of medication errors.
This will accelerate our ability to proactively identify key clinical interventions, while improving revenue can capture and business and quality reporting.
Lastly, just a few weeks ago, we announced a strategic partnership with Microsoft focused on building modern healthcare solutions for Humana members aimed at improving their health outcomes and making their health care experiences simpler to navigate.
The main objectives of this partnership center on evolving our organization to cloud to improve our speed and efficiency.
Well assisting us in key initiatives such as the build out of our longitudinal record so that our members and their care teams have a complete view of their health records for real time interventions.
Importantly, our partnerships with Microsoft will help amplify our home health strategy through the use of their home devices natural language processing and device data integration.
Similarly, we continue to work closely with key partners like IB EM.
Hoping enable data interoperability.
Across our ecosystem and voice based self service capabilities using Watson to better serve our providers.
These external partnerships complement our internal resources and accelerate solutions, we are developing for our members and providers that simplify their experience in April proactive clinical interventions and advance value based population health management.
For example in January 2020 , we are launching a new population health management platform.
Population insights compass that makes it easy for primary care providers to manage the complexity of value based payment models.
These tools meet a critical need of our providers and that it delivers a single solution for all payers.
This will be a payer agnostic with interoperability with for various information systems complemented with powerful analytics to identify providers that deliver the most effective care interventions.
Providers will have access to multiple sources of data in one location, including medical and pharmacy claims financial data kiedis opportunities clinical programs and predictive models.
Analytics and reporting capabilities will be deployed through a contemporary mobile experience based on the deep knowledge of Humana successful and management of population health over the last 30 years.
When it comes to leveraging the power of value based care Humana has continued to make progress for our M&A members.
For example, when comparing members and Humana M. A value based agreements to those in the Humana M&A for fee for service arrangements, we see 9% more eye exams for individuals with diabetes and 21% increase in blog blood sugar control management.
A testament to humana's experienced in the.
The combination of the 60% of providers being in a surplus and are increasing number of M&A members enforce our plans or greater.
You May know one the Vail and additional value based care results in our sixth annual Medicare advantage value based care report on Thursday morning November 20 Onest.
These partnerships in investments along among others are designed to continue to improve quality and customer service for our members in providers.
Our orientation to these two pivotal aspects of health care resulted in recognition from multiple external stakeholders.
In addition to the awards, we shared last quarter, including receiving the JD Power Award for the number one mail order pharmacy.
We recently ranked as the health insurer brand most recommended by customers and Forresters 2019 consumer experience indexed.
And received a number one net promoter score right ranking by variant foresee in their variant digital experience Index 2019 insurance edition.
Which recognizes the most loyalty inspiring digital experience and health insurance.
Our commitment to patient focused pharmacy benefits also earned us the specialty pharmacy patient choice award in the PBM payers specialty pharmacy category.
This is the second year in a row that MIT and Zeiter insights have presented Humana with this award.
Further and more importantly, our commitment to quality and service as demonstrated by our compelling operational execute thats QC and leading to strong star ratings and significant improvement in our CMS program audit results.
We're pleased that 3.7 million of our existing of Medicare advantage members, representing approximately 92% of our total membership are enforced star and above contract for 2021 bonus year, including 1.3 million members and four and a half Stark contrast.
Thanks, and five star contract in the important state of Florida.
In addition, CMS completes the comprehensive program audits every three years and we saw significant improvement in our results for our recently completed 2018 audit as compared to our two.
2015 audit.
These results are a testament to the strong capabilities, we've built through our Medicare advantage platform, especially in our analytics enterprise wide operating structure talent development.
And management information systems.
Turning now to 2020 , we believe we're competitively positioned in Medicare advantage based on our early indicators from the annual election period.
However, as previously indicated the likely return of the health insurance industry fee or hip and 2020 is particularly challenging.
We began preparing for the return of the hit last year working diligently to identify ways to improve our cost structure by leveraging technology to streamline processes.
These efforts have also included discontinuing work being performed that no longer aligned to our strategy to create capacity for activities that drive the most value to our members and advanced the company's long term sustainability.
As a result, we've had to make some tough decisions and recently announced the 2% reduction in our workforce.
As a result of initiating our productivity planning over 12 months ago, we've been able to minimize the number of impacted team members by redeploying where in a probe and when appropriate.
Many of these individuals to other positions approximately 2000 jobs were impacted by these combined changes.
Despite these productivity efforts there are still members, who will see an increase in premium or reduction in benefits next year, given the magnitude of the hip.
Given that the him as a premium based fee beneficial.
Based fee beneficiaries in Medicare advantage in Medicaid the sicker and most vulnerable populations are disproportionately tax.
As we've mentioned before there is a bipartisan support to further suspend the hip.
Given the significant positive benefit the removal of the fee would have on members. We continue to urge Congress to address the Hess.
We continue to expand our Medicare offerings and segment our products to aligned to the unique needs of ours of certain populations.
For example, we're expanding our dual special needs plan offerings and launch Humana honor Medicare advantage plans.
Then the honor plan, which is available to any an.
Excuse me, which are available to anyone eligible for Medicare.
But our designed in a way that our complement that complement the benefits of a veteran receives through the a healthcare underscoring our commitment to veterans.
We're also expanding our supplement benefit offerings and introduced offerings under the CMS value based insurance design or rebid.
And special supplement benefits for the Chronicle chronically ill or SBC programs.
Our V bid offerings include healthy food cards, part D rewards Seo BD adherence and wellness and health planning.
SSB Cie is a tailored benefit to address gaps in care and improves specific health outcomes that we're piloting into markets as I said previously while it is early based on the results to date in the PC. We believe we are competitively positioned in Medicare advantage.
As expected at the time of bids.
Our brand resonates with seniors, giving our focus on customer service and quality.
Our strong clinical programs and provider relationships as well as our longevity in the M&A market.
We also believe we are competitively positioned in Medicare part D prescription drug plans for PDP.
We introduced a new lineup PDP offerings for 2020 designed to provide a wide range of options to meet the varying needs of people with Medicare.
Following two years of significant PDP membership losses, recognizing that historically individual plans collections have been driven by price alone.
It was important for us to redesign our products for 2020 in order to address the needs of our members while offering a competitive low price plan.
We also recognize that these changes had to be made under CMS is regulation, which limits us to threegpp three PDP plans per region.
Accordingly, we launched in new low price plan co branded with Walmart.
Humana Walmart value Rx plan, we are pleased that the national monthly plan premium of $13.20 is the lowest available in the most markets.
The 2019, Humana enhanced Rx and the 29 teen Humana Walmart Rx prescription drug plans were combined to create the 2020 humid Humana Premier Rx plan.
This plan is designed to include our most robust coverage for 2020 .
Members from the previous plan are now enrolled in the new Premier point Rx plan.
This change affects approximately 2.6 million customers.
We recognize consumers have varying healthcare needs. So we are anticipating a certain level of members movement between our premier plan and our new low premium Walmart plan.
We have empathy for our customers who are experiencing changes to their plans, we've been reaching out to them proactively to find the best plan for their budget and healthcare needs. Lastly, we continue to offer basic plan designed to keep premiums and benefits stable.
These changes are required for positioning us for the long term growth, but create short term uncertainty in PDP membership expectations for 2020 .
Brian will provide more detail 2020 commentary in his remarks, including high level Esa membership guidance.
In closing we are confident that the measures we've taken in 2019 combined with our relentless focus on the activities that drive the most value to our members and advanced the company's long term sustainability will allow us to continue to operate from a position of strength.
That means meeting the commitments, we've made and including to positively impact the health outcomes of our members to consistently deliver growth for our shareholders and continue to create an environment, where our team members can do their best work on behalf of those we serve.
With that I'll turn the call over to Brian .
Thank you Bruce and good morning, everyone.
Today, we reported adjusted EPS of Fido, three for the third quarter exceeding our previous expectations and raised our full year 2019, adjusted EPS guidance to approximately 17 75 from approximately 17 60.
The increase in the quarter, primarily was driven by continued outperformance in our retail segment.
The improvement in our results throughout the year has afford us the opportunity to make important incremental investments across all of our businesses that we expect to help position the company for a solid 2020.
A year in which we are facing a meaningful headwind from the scheduled returned or the health insurance industry fee.
In addition, we're pleased that our strong 2019 financial results together with significant individual Medicare advantage membership growth and improving net promoter scores have resulted in increased incentive based compensation for associates across all segments of the organization aligning compensation to shareholder value and the member experience.
As a result of this higher investment spending in 2019, the benefit 2020 and beyond and the increased incentive based compensation relative to our prior prior guidance. We increased our full year 2019 consolidated operating cost ratio guidance by 15 basis points at the midpoint to a range of 11.3% to 11.6%.
I would note that a number of incremental investments, we're making will occur in the fourth quarter and include among other items higher Medicare annual election period marketing spend and increased sales and service costs associated with the PDP plan changes Bruce discussed in his remarks.
I will now briefly discuss our segment results for the quarter.
In our retail segment, our individual and group Medicare advantage businesses continued to perform exceptionally well with higher than anticipated membership growth and lower than previously expected utilization.
As a consequence, we increased our individual membership growth to approximately 530000 members versus the prior range of 480000 to 500000.
Decreased our full year retail segment benefit ratio by 30 basis points from the prior range at the midpoint.
Additionally, our pretax income for the segment is increasing $100 million at the midpoint.
Our health care services segment also continues to perform well and is delivering strong results as expected.
All of our businesses in this segment, including pharmacy clinical provider in kindred or having a very solid year.
In our group in specialty segment various factors, mostly onetime in nature resulted in higher benefit ratio than previously expected.
I would note however that core trend remains as expected and in the range of 6% plus or minus 50 basis points.
Investments include a dental platform enhancement to position us very attractive business for future growth. This required a significant upgrade and network revisions, including re contracting and rate adjustments, resulting in payments to providers.
We're also making other enhancements to make our commercial infrastructure more robust and scalable to move up market, including investments in local teams in key markets at a medical network that is more attractive to larger groups to capitalize on our new partnerships and the innovation, we're looking to drive.
The higher benefit ratio along with increased compensation from the enterprise incentive based program resulted in $100 million decline in our full year pre tax income guidance from our previous mid point to a range of $125 million to $175 million.
From a capital deployment and cash flow perspective.
You'll recall that we entered into a $1 billion accelerated share repurchase repurchase agreement last quarter.
It is important to note that under the ANSR, we paid the entire $1 billion upon entering into the agreement and received 80% of the shares based on the average share price on that date.
We expect the MSR to complete in the fourth quarter at which time, we will settle it based on the volume weighted average price at which the stock was ultimately purchased over the term of the MSR lessen negotiate a discount.
Additionally, we now expect operating cash flows of $4.1 billion to $4.3 billion for the full year.
The increase of $1 billion from our previous guidance, primarily reflects higher earnings continued topline outperformance driven by significant membership growth, which has exceeded expectations and other working capital changes.
With that I will now discuss our high level expectations for 2020 membership revenue and earnings per share.
We believe that the strong results in 2019, which were able to reinvest in 2020 product design, along with the strategic investments, we've made and meaningful productivity initiatives that we have pursued have set us up to weather. The headwinds we are facing and provide investors with a solid 2020 outlook.
As it relates to the productivity initiatives, we began working on these well over a year ago to prepare for the scheduled hit return and the entire company rallied to not only reduce costs, but also to drive longer term sustainability and a simplified experience for our members across all our major processes.
We looked horizontally across silos to identify efficiencies leveraging automation wherever possible.
We removed management layers that we're keeping us further from our customer we create efficiencies in our local markets will ensure that every customer touch point was adding value.
We rationalized, our real estate portfolio, and we streamlined our corporate structure, eliminating eliminating non value added work from our centralized functions. We did all of this to free up capacity not only to minimize the disruption to our members and our shareholders from the scheduled return of the have but also so we could continue to invest in technology and new.
Clinical models to drive quality, and an improved and simplified experience for our members distribution partners and providers.
Ultimately, we had to make very difficult decisions and as Bruce discussed, we reduced our workforce by around 2% picking a onetime charge of approximately $46 million.
Importantly, we were able to minimize the number of associates associates impacted by these efforts by meaningfully reducing hiring over the past year evaluating the nets that especially have opened roles and where possible transitioning individuals to strategically aligned open positions for mole roles that no longer support our strategy all in.
These workforce initiatives effected approximately 2000 positions.
Notwithstanding the significant efforts the scheduled return of the has forced us to reduced benefits for some of our members we were prudent and thoughtful in our approach and based on what we're seeing early in the ongoing annual election period, we expect to grow our individual membership by 270000 to 330000 members and.
2020.
This represents growth of approximately 7.5% to 9.2%.
The low end, representing our view of 2020 individual MA membership growth for the industry.
The number we are providing today could change materially depending on how sales develop and where involuntary terminations ultimately comment.
As is typical we have very little member termination data at this point in the cycle.
With respect to group Medicare advantage as we've previously stated growth can vary widely from year to year based on the pipeline of opportunities, particularly large accounts going out to bid.
While we had solid growth in 2019, we expect more robust growth in 2020 of approximately 90000 members an increase of 18%. This includes a large contract contract win from a competitor.
Regarding PDP repositioning of the product for 2020 has affected approximately 60% or two 2.6 million of our 4.4 million PDP members.
We proceeded with the important principle that it is critical to have a low premium product in the marketplace to attract a balanced risk pool.
We're also committed to returning to growth in this business.
While the actions, we took were necessary to drive long term sustainability and provide a growth path going forward. Following two years of significant PDP membership losses. These changes are resulting in more uncertainty around our membership expectations for the PDP PDP business in 2020.
Based on what we've experienced in the annual election period to date, we expect net decline in PDP membership of at least a few hundred thousand in 2020.
We expect to grow nicely in the new low price Humana Walmart value Rx plant.
What we're seeing high plants, a plan changes and terminations associated with the Premier Rx plant.
However, we will caution that we're still early in the ATP and the open enrollment period from January to March adds additional uncertainty given the potential member disruption from these changes.
With respect to Medicaid, excluding the Louisiana contract win as we await the results of the protest and member allocations. Among the winning plans. We anticipate 2020 membership growth of approximately 150 to 200000 lives.
This increase primarily reflects the impact of discontinuing our reinsurance agreement with care source and assuming full financial risk for our existing Kentucky Medicaid contract as of one one.
We are currently awaiting the results of the could cut of the Kentucky contract Rebid, which we expect in relatively short order.
Finally in our group and specialty segment, we expect total growth total group commercial medical membership losses in the range of 8000 to 100000 members. This reflects robust membership growth in our small group level funded so products, which will be more than offset by continued pressure in our community rated and large group fully insured box.
As well as our large account so product due to the competitive pricing environment.
I will now briefly turn to our 2020 expected financial performance.
With respect to the topline we anticipate our revenue growth percentage to once again being the double digits, primarily reflecting solid Medicare vendor Mount Medicare advantage membership growth at per member per month premium increases.
From an earnings perspective, we believe we have struck the appropriate balance between membership and earnings growth in light of the significant headwind that hit creates and we continue to expect reasonable growth and earnings per share off of our initial $17 at 25 cents 2019 guidance midpoint, well below our long term target of 11% to 15%.
More specifically, we anticipate that the current wall Street consensus estimate for 2020, EPS will fall within the initial EPS guidance range that we provide on the fourth quarter call, albeit we expect this consensus number to approach the top end of the range that we will provide.
We look forward to providing more specifics on our fourth quarter earnings call in February .
With that we will open the lines up your questions and fairness to those waiting in the queue. We ask that you limit yourself to one question operator, please introduce the first Paul.
Thank you Sam I'm, sorry to ask the question you need to brass, Taiwan kind of falling.
And if they would like to ask a question for ask Taiwan.
Keypad. Your first question comes from the line of crop Jacoby you Fancy <unk>. Your line is open.
Great. Thanks, and thanks for all the other color on the guidance side of things.
So obviously FC topline growth you mentioned some of the margin pressure. Obviously your continued margin pressure largely from sort of half. So if you can balance out sort of how you're thinking about kind of margin in the margin ramp as we think about not just 20, but fed into 21 as well just directional commentary there I know you want to give too much specifics alone.
Just more specifically around this year in the population base that you've captured kind of within individual and say anything you can call out that makes an initial margins, maybe a little bit better than usual.
Core processes, you put in place that help.
Sort of better manage the margin earlier.
To give you sort of maybe some runway as we think about 2020 and actually better margin as we move to the here. Thanks.
Good morning, Ralph it's Brian .
With regard to the individual and a margin we're not prepared to give specifics today I would tell you that for 2019, obviously as we continue to raise guidance, we are getting closer to our margin target, but we're still below it I'll remind you that we've taken some of this outperformance and reinvested that in a benefit design for 2020, so that will.
Obviously adversely impact the margin, but yet we also need to grow pre tax and so I would tell you that our margin for 2020 will continue to be below our long term target, albeit we continue to make progress against that goal.
Beyond that as we've committed is to getting back to that a four and a half the 5% margin target obviously not prepared to give specifics on on beyond 2020 today, but but it's a focus of the organization to do that while we balance membership growth is ultimately what we want to achieve is our 11% to 15% EPS growth target.
With respect to new members.
What I would say is that we've been pleased with how new members are running as you know, we typically price them to breakeven in the first year as it takes.
Several years for them to the documented appropriately and get into our clinical programs to ultimately drive margin from those members I would say that our new members running a little bit better than expectations. As we approach approach the fourth quarter here, So thats, obviously goodness.
Okay, alright, thanks for all callable.
Next question please.
Your next question comes from the line ups, Dave Windley from Jefferies. Your line is open.
Hi, good morning, Thanks for taking my questions.
Also focus on Medicare advantage and enrollment growth. This year I think you've raised now five times in growth is about double where your original expectations were.
So kind of a follow up to Ralph one have you done anything differently from a selling standpoint, either broker channel or anything like that that has driven the intra year growth higher than you normally experience.
And then secondly, Brian on the on the answer you just gave Ralph is the upside to margin. This year more attributable to new membership doing better or is it more of the base is doing better. Thanks.
I was just over the second question I would say, it's more the base I would just tell you that the new members are running a little better than expectations, but our core will be called concurred members are running really exceptionally well, which is what's driving.
Driving the outperformance.
As it relates to membership guidance. This is obviously a difficult number to predict because you're.
Trying to understand what what competitors are done with the broker channels doing and what we've seen this year really are several things first off in the.
Optional election period or open enrollment period effectively members one time option to change plans early in the here that was something new this year and we outgrew our expectations there really as a consequence of the fact that our benefit design and our I think our broker relationships will really positive and so that was one of the the list that we got.
Obviously coming out the ATP, it's always unpredictable where are you ultimately finished because there's so little data when we first give guidance, but obviously the first upside was around the OCP.
I would just say throughout the year, we've been pleasantly surprised about how our.
Our membership has been resonating with in our benefit design has been resonating with new new potential members again, the broker channel is really outperforming I would say there that the channel. That's that's producing most of the outperformance currently and that's just a function of vik the relationship that we developed the tools that we provide them.
And the brand in the marketplace that we've been able to establish because of the really service we provide in the provider relationships that we've had and so we've just seen continued residents in the marketplace that have been above our expectations just thanks.
I think we also expanded our specialty.
These plans than the ability to market them all year long has also contributed to the.
Overperformance I think we continue to see us being strong in that marketplace.
Both in the current year and in subsequent years.
Great. Thank you.
Next question please.
Our next question comes from the line of Peter Costa from Rob Sparkle. Your line is open.
Good morning, Thanks for that discussion about the for next year and its impact.
Hopefully somebody here is that.
From my question, though is looking at your guidance.
For 2020.
Consensus of 18 75 for next year, that's sort of 8.5% growth.
What's sort of matches, what what you talked about before.
Early in the year about growth you expected.
For 2020, having said that your performance. This year has pretty dramatically outperformed the where you. Originally thought you would be and your growth has been faster can you tell us has that number come up in your mind over since you first discuss the reasonable or are good growth for next year or has.
That number stayed about the same and if it has stayed about the same why hasn't not got higher.
Okay. It's a fair question I really.
I would prefer not to give all the specific play by play as to how our guidance points. Ultimately develop obviously there are a lot of factors that go into our guidance on the outperformance that we've seen this year has been a positive with respect to that we incorporated a lot of that outperformance into our benefit design, which is really important we talk.
About that the last quarter.
Actually the more you outperform you feel you feel better about the guidance that you're giving but beyond that I wouldn't want to comment we feel good about the the guidance the number that we're given today and we'll provide more details on the on the fourth quarter call.
If I could just a follow up is there a concern about the group business being underperforming and that's that's become holding you back or is it a concern about the part D business, although that's you're talking about that down only a couple of 100000 lives, which seems really good given the price increases. So many of those members are facing.
Yes look we we are still a ways away from understanding the membership that we've attracted in a p.. We're just starting the process.
PDP matters to just in terms of the member movement, and who moves in and how that occurs and so there's always lots of uncertainty at this time of year and providing guidance, which is why we hesitatingly do so but I know it's important for investors that we do and so we try to give you a broad context of how we're seeing things and I would just say there.
Lots of uncertainty at this point in the year and.
I think the guidance, we've given as appropriate and reflects our best thinking.
Thank you very much.
Next question please.
Your next question comes from the line of Charles Rhyee from Cowen Your line is open.
Hey, thanks.
Just wanted to ask about lease which over to Medicaid here, obviously, the the when wheezy Ana.
It is positive.
But you Didnt get anything necessarily in Texas for the Star plus program.
Just a question is have you seen the scoring yet and to give you sense of sort of where you think you might have missed out here.
Something that you might want to consider appealing for and the more broadly with some of the RFP opportunities coming up like Pennsylvania entity, or possibly Ohio as well.
You're thinking about your organic efforts to grow the business going forward.
Let me let me take that question, obviously were very.
Excited about the Louisiana opportunity coming in second and and really the top.
For profit organization and the scores, which I think also supports how we did in Florida and what we see is in the states that are looking for progressive view on Medicaid and looking for a comprehensive program that really isn't.
Taken some of the historical programs and carrying them forward, but really dealing with things like social determinants doing things.
In areas of value based payment models.
Using predictive models to allow much more clinical interaction.
We've seen as being a very responsive to our capabilities I think Texas. We we continue to be engaged in Texas, we're not going to comment on on how we approach the both this current.
Award and then in addition, there award that will be coming out and subsequent months, but we do believe that Texas, probably aired a little bit on the area of staying a little bit true to what has been the traditional players as opposed to looking a little broader.
In market and where other states have gone and being a little more oriented to some of the programs that we offer that being said we continued to be very oriented to market sets are complementary to our medic care platform as a and you'll see us participate in other states that where we have a have a.
Good position in the marketplace, both in our relationships with providers around value base.
Capability, where we have social programs to help support the communities that we have there and in addition, where we have.
Strong relationships with the states so you'll see us our respond to our phase I don't think we're giving out where were where we're responding to but I think if you look at the overlap of where we have deep capabilities and and it with our M&A that will give you guys. Some inside of what we.
Where we would prioritize our state.
But then it will just to clarify and Kentucky. There was no actual official date that those states over.
The state of or notified that they would make a decision but is it just sort of that we've been expecting a decision around this time.
Thats correct were that we expect to decision relatively short order.
Okay, great. Thank you.
Next question please.
Your next question comes from the line of Kevin Fischbeck from Bank of America. Your line is open.
Great. Thanks.
I appreciate the fact that throughout the year, you guys have outperformed and repeat.
We invested some of the outperformance into the bids for 2020, but we're getting later into the year into the the May outperformance in Q3 feels like it's probably difficult to say that that's been kind of built back into the bid. So just trying to think about how.
That flows through into your thinking about nextshares.
Margin targets.
Thanks.
Hi, Good morning, Kevin I think Thats fair I mean look we've outperformed in the third quarter that obviously does flow through to next year, we're mindful that and it's incorporated in the 2020 perspective that that we've given today, but you're correct I mean, obviously that better.
The Medicare business performs in the back after the year that the better we're set up for stronger 2020.
Thanks, Kevin.
Our next question please.
Your next question comes from the line of Scott.
Your line is open.
Hey, thanks.
Just about.
The group and specialty business and sort of thinking about this I guess over the next sort of multi year framework. So if you look at the updated revenue and segment profit guidance. It implies only a little bit more than a 3% pre tax margin for 2019, obviously I know, there's some investments in there but also.
Some of these mix shifts.
We talk about what you think the longer term sort of margin range for that business conceptually should be and.
If the margins stayed at these levels, let's call it 3% or so a little bit north of that how do you think about sort of returns in this business in terms of the risk based capital in and the resources that you provide into this as compared to sort of other options that you would have for deploying still meaningful capital that you have or.
For the group business. Thanks.
Yes. Good morning, we haven't we haven't given specific margin guidance targets for the commercial business.
What I would say as though that we are committed to growing it and really appealing to an employer base that is really crying out for a different offerings and we believe we have the opportunity to leverage our clinical chassis from our retail business some of the partnerships that Bruce outlay.
Line frankly, some of the innovative DNA that we have within Humana too. We believe offer a product that is compelling to the group space. We view. This space is having a lot of optionality, it's something that we want to continue to invested in something we will investing as you indicated we have invested this year, you'll you'll continue to see us invest in it.
The margins on the specialty product, meaning the dental and vision product are very attractive and so it's important to get that right. So we set ourselves up for a strong growth path over the coming years and I would say also we have an opportunity to leverage really the pipeline that group provides into the retail segment for the.
Going from under 65 over 65, both for our individual business as well as for our group I may business and I think that's something we haven't really capitalized as much as we can do and you'll see us continue to focus there and so as Bruce.
Mentioned in his remarks, we're continuing to look up market.
So we're very focused on the small group customer and it's something we've done quite well and particularly on the.
DSO level funded side and the traditional underwritten product, where where we've done quite well, but we think there's the opportunity to to move a little bit up market really build out key markets, where some of the infrastructure hasn't been is geared to some of these larger account customers and I think offering innovative product, it's going to fix several years, but we're committed to.
The.
Brian is highlighted we've we realize that we need.
Improve the the group performance and we look at it in a few different ways first I I think you'll continue to see as focus on how can we improve that productivity of the of the business and do it in a way that has longterm sustainability as a there's one I think second is is that you're going to see us oriented markets that we.
Feel are complementary to Medicare and be much more oriented to what markets were in as opposed to being in a number of different markets. We find our products are more regional base. They are they serve a customer base that has a large employment base. That's in that region. So school districts wouldn't be a good example that.
Municipalities and other governmental agencies that we we serve.
Third thing I think you'll see is is that we accolade is a great example of that that you'll well that will continue to focus on how we differentiate ourselves through experience and also health offerings, which is that the core of what are the company's about if you look at our Medicare success aren't clinical capabilities. In in addition, our customer service sorta ranks as being.
You know best and breed I think you'll see us continue to do that so we realize this year's performance in group is not something that we're proud of we we are very active to both improving it in the short run, but as Brian says it as as I think.
And ER, Chris Hunters leadership that we are very oriented to improving the the the business in a way that complements the existing platforms that we have and and the both markets and and specific capabilities.
Thanks.
Question.
The next question capture the line of fire change from Piper Jaffray. Yeah line is something.
Oh, Yeah, Oh, we got a file home health, great with a little over 4% behavior assumption. They <unk>. Some of your peers has site that not enough get margin pressure for 2020.
How do you think about this rate structure impacting humana's compelled my agenda is it impactful at all to the.
2020 guide that you alluded to as it had when we should consider there and I realize that there's a a big strategic importance of some health beyond the unit itself. So it was wondering if this impacts at all your vision for growing up potentially exercising the call option in the future. Thanks.
Oh I'll take it I I think there's multiple layers of of.
Points to the to the reimbursement and let me sorted talk a little bigger picture and then we'll get down to the specifics of the eight versus 4% of behavioral adjustment I think in general we when we went into the kindred investment we went into it with the view that there would be reimbursement changes in there and those reimbursement changes would not only be right.
Impacted but also just the way the business was going to the drivers of the business and we are very excited about the changes of the of the reimbursement motto moving to a model that is going to reward a more for nursing and reward more for chronic conditions as opposed to just therapy.
And and be more oriented to less chronic conditions.
The first just the structural changes there. We find are are very helpful for our member base and and and advancing downstream costs, such as admissions and read admissions. In addition, you know complications of a particular <unk> conditions in total.
The the second thing is when we constructed the deal and did our forecasts reconstructing to deal with knowing that there would be a transition both that would require operational transition and in addition require us.
From a financial point of view and so when we did the deal and and and based our evaluations. We also assumed a this particular transition there.
That is one of the reasons why you saw the organization invest in technology and in 19 to be able to prepare for these changes and I think if you were sitting in the boardroom of Kindred you would also see a number of other changes both from competencies critical programs and so on and preparing for it. So so I I think the boat Kindran and Humana.
Are very active in that that evolution.
The third thing is on the just the financial side and I would say that it is incorporated in our in our outlook for 2020, and and you know the years yeah. The years beyond that but I I do also want to highlight that in when we were to exercise the put her call. It is on.
The operating performance post that reimbursement change so it does reflect in the other 60 per cent that we purchased on so.
Memory, we're very excited about the changes in it structurally changes the economics to <unk> to to take on the the conditions that we feel are most important for our members secondarily, we have incorporated that into transaction. Both in the operating results that we see over the coming years, but then most importantly as our.
But as we move to exercise in the protocol is it will be reflected in the purchase price accordingly.
That's very helpful. Thank you.
Next question please.
Okay next question cash from the line up <unk> from that fund research Carolina's hopping.
Hi, Thanks, a good morning question around retail partnerships, and specifically, but Walmart and just you know as you guys went through the big changes in P.D.P. This year and got to learn a little bit more about the retail side of things maybe any lessons learned about the importance of having you know local sort of community based care and then.
Sort of as an aside with bigger gross in the low cost product and some bigger declines in premiere or their differences in profitability by product in the P.D. being.
Well I take the first part I'll, let Brian take the second part in in our relationships with retailers <unk>, we feel though the combination of local convenience of of both the pharmacy itself, but also the pharmacist is a very important part of the the delivery both in part D. and also.
And M.A. and and total because we find the pharmacist as an important conversation to have not only about the the drug but also about just conditions in general.
And so we we are relationships, whether it's a walmart or walgreens or or other drug drug stores.
Are very important for that in the delivery of that we've had a long standing at a very positive relationship with Walmart over the years and you know they're drive a being low cost in the marketplace in our our preference to be low cost in the marketplace is sort of a a an important synergy that we'd drive towards and and we feel that it continues to be.
That going forward. This year is obviously, an exceptional year for us in the conversion as a result of moving having to combine two plans to create capacity for a low cost plan and the the confusion that that takes and but Walmart was very excited about our opportunity to bring a low cost plan out.
The the leader in the low cost plan, which really fits what what there.
One of their missions in both locally and nationally.
I'll turn it over now to Brian the maybe talk a little bit about the profitability between the different products and without providing too much color. Because we we took we don't give a lot of detail on individual products. The obviously the premium being much lower in the low price Walmart plan. The the dollar margins going to be less per per unit.
So the question then becomes <unk> what is the impact on the health care service aside and we'll see what the the mail order up Chick weight is isn't that that will be important element of the profitability. So obviously as we went into this year. We set guides. We're aware of those dynamic says there's shifting between between the plans and.
That some of that questioned around <unk>, how many people migrate from one plans to the other obviously isn't important assumption in in our ultimate guidance range that we gave today.
Thanks.
Question. Please.
So next question comes from the line up stuff into an awesome Goldman Sachs Carolina's cell phone.
20, guys things are taking the question.
The the results here to date, and then the commentary as well, which suggests the new members. This year seemed to be somewhat more profitable. Then then you typically see in the first year and so I I guess I have two questions in the back of that person is there any reason to think that the ramp up in underwriting margins and 2020 would be less helpful. Then typical here.
<unk> comment I want you assumed in your initial view on that front and then second is it reasonable to view the I've taken D.C.P. is kind of display favorable commentary on costs trend salad M.B. ours reported year to date.
Be a bit of a hedge against the risk of adverse selection or just hire M.L.R. into next year. She's given how fast you guys have grown in the business.
And with respect to 2020, new members and I, just trying to provide commentary that that the new members are are running well and so the one of the biggest concerns you have when you go 530000 members that you could get adversely selected in you.
Have problems, there and what the message we're communicate today is actually the the members are running well, we're not going to make any change in our assumptions, we always assumed the members or break even because again. These are largely on the margin, but we we want to make sure that that we appropriately reflect the fact that our experience has been that these new members are break even.
So that'll be the assumption certainly the assumption in our guys today.
With respect to D.C.P. is I I wouldn't I wouldn't read you know too much into D.C.P. <unk>, we feel that we are properly reserve. This this.
It can vary meaningfully quarter to quarter.
Overtime.
<unk> you know several days.
<unk> <unk> or your view or whatever that may be Oh, just say, we feel good about how were reserved and we think where wizard appropriately.
<unk>.
Thank you next question please.
X. question kept trying to line of 18 rise from carrots Fancy Carolina's something.
Hi, everybody I may have missed this so I just want to ask is a technical clarification. Then asks you about the health care Services Division did you put a savings number on the productivity initiative, you're rolling out a an annualized savings number the joke to get at some point in the future.
From that and then on the P.B.M. I guess, we have an <expletive> on this type of calling them while about your thinking there.
Any any update on thought about investments there, whether you would love to potentially a add capabilities. You're also in a situation where there. The other major P.B.M.'s are now align with a commercial.
Sure.
Give you any interest in potentially getting in the market, maybe helping other health plans or even smaller P.B.M.'s with some of the capabilities that you have a expanding your reach.
Yeah, It's Friday morning, A.J.. So so on the savings numbers, we we haven't given a specific number.
Terms of what the 2020, a savings are going to be but they're they're very meaningful we mentioned that there are 2000 positions that that we we're we're really impacted by this and so that that's a meaningful number and there were a number of non sort of personnel related decisions that we made that will result in signal.
Begun savings I would just say also going forward. The intention is to continue the productivity initiatives into the future. We believe it's essential to be efficient with our resources not only to drive down cause but also we believe it creates a better experience and outcome for our members and also frankly from a compliance perspective. So we'll see his continue to leverage automation and.
Hi, and other elements of looking really crawl across prophecies rather than within a vertical silos just on that just add to the do I Brian's, saying and then I think you remember when the tax reform came out 24 months ago or so we committed to our shareholders that we were going to invest in technology that would.
Give us.
Longerterm savings, what you're seeing and and see in 2019 that will show up in 2020 is leveraging of that investment to come back and provide value to the shareholders in a year that's needed considering the f. and and the need to continue to remain competitive in the marketplace. So I wanted to.
Go back in history to connect the dots there.
Maybe yeah sure.
On the P.B.M. side. Obviously this is a critical business for us we're going to continue to invest there's really several elements of it there's the traditional P.B.M. side and and how do we become best in class and sort of our claims processing in our formulary management in our I.T. capabilities et cetera. So we're very focused their on investing.
On that side of the business. There's then sure the troop traditional male or a pharmacy. Both in terms of driving penetration is walls actually creating a much better customer experience is Bruce has mentioned we've been given awards on that front, we continue to invest in that I want to continue to lead the space there with regard to customer experience, we will look for opportunities too.
Grower specialty franchise, and so you'll you'll see that as we look to to grow that business, obviously more and more of of the pharmaceuticals fill today's in his specialty space and that's something that we want to continue to grow we want to figure out ways to grow our traditional male or penetration and so you'll see us invest their.
So and it with you know with regard to third parties, we actually have a small third party business, we would be open to continue to grow that depending on the opportunity and so then we're always looking for opportunistic opportunities out there to stick to grow the business and so I think we're thinking broadly about the P.B.M.. It's a business that we want to continue to grow.
I'm just the C.M.A.P.D.P. membership growth in in our in our retail segment. So we're very focused there.
Thank you okay.
Next question please.
The next question comes on the line of my calling you <unk> I, if I feel line or something.
Thanks, I wanted to help on the dental re contracted upgrade can you just size how big of an impact that was and is that holy at one quarter issue or is there a like a longer have windows premiums catch up to lower reimbursement rates and renewals over the next three quarters.
There there was definitely a a number of once on costs about not qualified.
If it weren't meaningful we wouldn't have called it out obviously, but I just round not give that level of granularity.
I would say that this is gonna be several quarter investment in dental and and and getting a central growth path, we've actually done quite well in that business. We just think it's an opportunity to grow much faster not only leveraging our individual I may growth, which we think is meaningful to to to cross shell and in in terms of <unk> Oh is fees are optional.
<unk> benefits that we can we can cross l., but also in the group side as well and and so we we we continue to to look to how to grow the group dental business and so we want to ensure that we have platforms systems and and provider relationships that allow us to to achieve that growth and so we're going to continue to invest in it.
I think you're going to start seeing a payoff overtime and.
We're we're we're committed to that.
Thank you.
<unk>.
Okay. Next question comes from the line of Freaky called lesser from Oakland Funny, Yeah line is open.
Yeah. Good morning, so <unk> focusing that relationship with Walmart, obviously, you had a long term relationship that focused on the pharmacy in the pharmacist in parts of the Walmart recently launched there health care Hot strategy in some markets do you see opportunities to extend it.
Partnership with low Martin crossed over to the medical side as well.
Yeah I I mean, we we are you know always in discussions of how we can expand our partnership with Wal Mart that we've we find as I mentioned on the previous question that we find our culture and our goals, our our our lines, especially in the healthcare area.
What we've found in in in in there quest to expand their their platform and healthcare within someplace like Rome, Georgia is that it is very catered to the commercial and their associate bayes as opposed to be more senior focused.
As what are our products and services are so we are a little more narrow or in our approach.
So if you take our relationship with Wal Greens.
In both in Kansas City area, and expanding into the South Carolina area that is a senior oriented.
Delivery model that is very much oriented around chronic conditions and value based payment models that so that's a different operating a approach and then what Walmart is doing and then some of their stores, where that's very commercial oriented and very fee for service oriented low price then nature or not.
I think they're really trying to help the healthcare system and bring it <unk> used to it but in a in a much different model. We're we're much more oriented to seniors much more oriented rotter health conditions that we are managing over a longer period of time as opposed to maybe a little more volume and fee for service orientation.
And then just one thought under Medicaid side, all the field growing Medicaid nicely. When we think about future opportunities are you open to pursuing and emanate to accelerate gross or you primarily still focused on going through a winning contract.
I I think we we look at it as a as a combination we we believe that you know our capabilities that we've built over the last number of years afford us the opportunity to Interstate organically, what you've seen but in addition, we find that the if there are regional areas, where we can expand in a quicker and more capital.
Efficient way through acquisitions, and we will be more than open to to to go go that approach to.
Thank you next question please.
The next question comes from the line of my March <unk>, telemarketing he'll line or something.
Oh, Yeah, sorry, if I Miss this and you covered yet but on the fourth quarter earnings implied projection it seems.
Significantly conservative given how much you beat.
By this quarter is there anything else to read into it.
<unk> well I would just say a number of a investments are gonna take place in the fourth quarter as they typically do.
Reflecting the annual enrollment period, and and also the significant P.D.P. sort of flux that we've seen because of the number of members are impacted by or changes and so we're investing significantly is to ensure that that transition goes this movie as possible. So I wouldn't read anything.
<unk>.
And and just just.
If I could on the.
Helping sure if he is he looked ahead to 2021.
<unk>. He gives you a reasonable hoping <unk> sorry at this point given it's an election year Kate.
We're going to try to get this done.
Get another suspension.
Yeah, but we would how would love to be able to us speculate on this and give you.
The specifics on it I I think what what we do believe is that there is a bi partisan support for this I I think if you were to talk to anybody I.
I would say it just doesn't make sense the way it's constructed a taxes the underprivileged kids and it's just not appropriate.
Well, we're I think the industry is wrestling with not support is wrestling with how does it get through the through the a legislative process and all the.
I don't Wanna say dysfunction by the confusion that's in Washington, right now, it's just hard to predict how this will get going through and there's some things I need to pass there's some how long do they pass it as it sort of do they give a 30 day extension on certain things and get it through to January do they do six months I mean, there's just.
So many ways.
Could get navigated through that were just sort of sitting there and believing that it it shouldn't be done we believe that their support we're just trying to find the avenue to do it and I think that's a little bit out of our control are influencing it as much as possible, but we are finding trying to find that right opportunity. Okay. Thank you for taking that.
Thanks.
Question. Please.
Yeah next question comes from the line of P. five cats from bark. They feel line is helping.
Great. Thanks, a good morning, Bruce and Brian . So you guys mentioned in the prepared remarks, a new group membership contract when from a competitor in for 2020, Yeah, I'm guessing that new when is the Alabama public education employees contract you know unless there was a different large when separate from Alabama, but either way just in Alabama, specifically, we calculated.
Previously this contract along could add up to 20 to 25 cents a V.P.S. for next year, depending on the margin profile.
To get down to discussing that level of granularity, but the question is I guess I'm just wondering at a high level do you typically assume a d. some level of profitability in March in in your one for new group contracts of this nature or does profitability get overwhelmed by Onboarding costs and you're one like it does an individual M.A. that you've talked about historically thanks.
Without coming on the specifics of of the actual contract I think it's fair to say that in the initial year profitability is significantly less in that profitability ramps up over over the time of the contract. We we bid to ensure that were contribution margin positive that's important for us to drive turns on Capitol, but there's.
In a proven to those results overtime largely for similar reasons. These members get an r. clinical programs, which we find out of a meaningful impact on their medical costs and their health and then also the their conditions get document and more purposely. So for the same reasons that in fact individual may there's also a similar dynamic in in group and then.
Okay.
<unk> Yep next question.
And next question comes from the line of carried Taylor from J.P. Morgan you May ask a question.
Take a morning, just had a clarification and then a question on a clarification, Brian with respect to the 2020.
Okay. The last couple of years, you've given a range of 40 to 50 cents in the initial annual guide is there any reason why we should expect that range to be wider this year.
I think that's probably reasonable.
And then the real question what as I know this has been discuss a little bit but just on the retail and may enrollment guidance for 2020, the seven to have to 9.2% you mentioned some benefit reductions in your plans to us it looked like your benefit reductions are more conservative.
Then others, yet you're still guiding for above market growth in your in a business. So is that optimism just purely.
You know the broker relationships the marketing the overall value added that you think your plans represented in the marketplace or is there something more specifically you give them. We're almost halfway through open enrollment that it's just perhaps trending better than you might have thought a a couple of months ago.
Well I think you know, it's a combination of things where we are still early and open a role in terms of the data termination date as a really important element here and that's something that we just I really don't have a lot of data on it's it's very incomplete I think you better view of sales, but still quite early in sales a lot of the sales happen towards the end of the A.P. period. So.
Guides is based in part on that but but also we evaluate on a market by market basis how're position competitively.
<unk>, obviously, all the plans that are out there. So we <unk>. We can we can see how we're how we stack up versus others would you think that our relationships with the broker community are very important and our external channel and internal rear forces very focused on on on driving growth and so obviously, that's a part of the the the calculation as well and.
You know, we'll see we'll we'll see where it goes I mean, it's it's very hard to predict it this part.
This part of the cycle dispersed said, we did have to reduce benefits for certain of our numbers, we were very thoughtful and prudent about that and that's entirely on account of the health insurance fee. We've taken a balanced approaches we always do to to growth in some margin.
But we think we've been been baffled and how we've done that so the guides we put out today is really our our best estimate of where where we think will be and as we get further into the A.P. period and.
After well more clarity around.
Thanks Scary I.
I believe this will be our last question. So next question. Please.
X. question comes from the line athletes mail from U.B.S., Yeah line is open.
Hey, Thanks for squeezing me and you guys have really scaled up your special needs. These snip resident this year would anything change your expectation on scene growth in those special need plans next year, just curious how you're thinking about you know the strategy around snip plans and 2020, and then with 2021, you know around the corner in E.S.R.D. eligibility.
<unk> update on conversations with C.M.S. would be helpful thing.
<unk>.
So on the on the decent upside where is it <unk> said earlier, we are committed to growing or dish that you've seen significant increasing growth.
You're on on the dealership side, we've expanded our DCIP offering I think you'll continue to see as expand our d. snip offering we believe that these members play right to Humana strengths, which is managing difficult conditions in in clinical challenges and so it really is right in our strike zone. So you'll see as continue to expand that.
We'll see where it goes with with this year and and obviously, it's a it's a competitive space, but we're committed to to growing it.
On the S.R.D. I mean, we are very actively engage with C.M.S. on on the details of that particular program. Realizing that those members are both in great need of of assistance than we see the Medicare advantage program of being able to slow the disease progression down for.
Or members in at the same time, finding cost effective treatment for for their for their complex disease.
I would say that over the coming month, we'll probably see more details I come out of how that program over allowed all the way from you know as they are going to be an adjustment and benchmark to things like network adequacy two areas of how the thumb.
Yes, our d. will evolve so there's a lot of I. We believe there's a lot of changes that are needed in that we've communicated those changes to ensure that are both those members and members of that do not have A.S.R.D., but would would have adjustments made if the at the proper rates are not adjusted accordingly.
So.
But that I think we'll call it that's it right.
And we've we've again like every quarter, we really appreciate both our shareholders support and in addition.
Analysts support and and helping us can communicate the the story. In addition, we couldn't do this without 50000 associates that everyday get up and to help our members and and help us to be successful like we have over the last number of years. So we appreciate everyone support and have a wonderful day.
Hey, Disenchanted <unk> conference call think if I, if I guess, if you may not.
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