SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: May 27, 1998
(Date of Earliest Event Reported)
HUMANA INC.
(Exact name of Registrant as specified in its Charter)
Delaware 1-5975 61-0647538
(State of (Commission (I.R.S. Employer
Incorporation) File Number) Tax Identification
No.)
500 West Main Street
Louisville, KY 40202
(Address of principal executive offices)
(502) 580-1000
(Registrant's telephone number, including area code)
Item 5. Other Events
On May 28, 1998, Humana Inc. (the
"Company" or ?Registrant") issued a press
release, a copy of which is attached hereto
as Exhibit 99 and is incorporated herein by
reference.
Item 7. Financial Statements and Exhibits.
Exhibit 99. Copy of the Company's Press Release dated May 28, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
HUMANA INC.
_________________________________
By: Arthur P. Hipwell
Senior Vice President
and General Counsel
Dated: May 28, 1998
<PAGE>
Exhibit Index
Exhibit 99. Copy of the Company's Press Release dated May 28, 1998.
Press Release
CONTACT:
UNITED HEALTHCARE HUMANA
Bernie McDonagh Kristi Drablos
Vice President, Investor Relations Director, Investor Relations
(612) 936-7214 (502) 580-3644
Susan Busch Tom Noland
Director, Media Relations Vice President, Corporate
& Public Relations Communications
(612) 936-1932 (502) 580-3674
UNITED HEALTHCARE AND HUMANA TO MERGE
Merger Creates a Strategic Business Combination Dedicated to
Improving the Health and Well-Being of People Through all Stages of Life
MINNEAPOLIS, Minn. And Louisville, Ky. (May 28, 1998) - United HealthCare
Corporation (NYSE:UNH) and Humana Inc. (NYSE:HUM) today announced they have
reached a definitive agreement to merge in a transaction approved by the boards
of directors of both companies. The combination will bring together two
organizations who have long been devoted to serving customers with high
quality, most accessible and most affordable health care services. The
combined enterprise will operate under the United HealthCare name and will
be based in Minneapolis, with a significant workforce and
business presence in Louisville.
The proposed merger will be accounted for as a pooling of interests in which
one United HealthCare share will be exchanged for every two Humana shares
in a tax-free transaction. The total consideration of the proposed
transaction is approximately $5.5 billion. The transaction will require
shareholder and regulatory approvals and is expected
to close in the third quarter of 1998.
William W. McGuire, M.D., United HealthCare's chairman, president and chief
executive officer, said, "The most successful health care companies in the
next decade will be those whose products and services align with the needs
and desires of consumers - in other words, companies that offer people what
they want. United HealthCare has led the industry in meeting consumer
demands for greater access and flexibility. By year-end,
our open access plans will enable nearly 4 million health plan members
in 38 markets to see network doctors and specialists without a referral."
(more)
Dr. McGuire continued, "Consumers want flexibility in choice of doctors
and hospitals, broader access to services, a wide spectrum of products and
services tailored to specific consumer market segments and needs, and
greater affordability. To achieve these objectives and create a powerful
platform for growth, it is critical to create an enterprise
that, in an increasingly competitive marketplace, possesses the size,
scale and operating efficiencies needed to accelerate investments in
high quality health and well-being services. The combination of United
HealthCare and Humana is driven by this vision."
Greg Wolf, Humana's chief executive officer, said, "The merged company will
be able to respond, better than any other, to what people want from a
health care company today. With millions of members in all 50 states and
Puerto Rico, the new enterprise will realize tremendous economies of scale,
unmatched administrative efficiency and an industry-leading service
platform. The result will be more affordable products, for more people,
delivered more efficiently.
In addition, the merged company will offer greater choice of doctors and
hospitals, consumer-focused, high quality products and the ability to
measurably improve our members' health. A proprietary information system
with the capacity to collect and analyze enormous reservoirs of the most
current data will be of tremendous value to physicians as they seek the
best clinical pathways for patient care.
Finally, the merged entity offers consumers and investors a company with
financial strength, earning power and favorable prospects for substantial
growth," Mr. Wolf added.
David A. Jones, Humana's chairman and co-founder, said, "As the health
care industry grapples with issues of access, affordability, quality and
choice, the size, scope and proven operational competence of the new
company will enable us to address these concerns. We are creating a
company whose leadership and innovation can help people of all ages
realize the best of our health care assets. And through these efforts,
this merger holds great promise for outstanding shareholder return."
The companies expect the merger to be neutral to earnings in 1998 and
accretive to earnings in 1999 (exclusive of transaction costs) and have
identified significant annual operating synergies that will be realized
following the completion of the transaction. These synergies come from
consolidation of corporate overhead and administration, merging
overlapping operations, integrating and improving medical care programs and
cross-selling products and services.
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"We are targeting improvements in operating costs of 3 percent to 5 percent,
and medical costs of 0.75 percent to 1 percent while maintaining our
commitment to providing our customers with high quality health and
well-being services they need, when they need them," said Dr. McGuire.
"We will move quickly to eliminate basic functional redundancies and,
as a result, improve how we work for our customers. The integration
of each company's best network and medical management systems will help
us to optimize our medical care effectiveness. Longer term, we will
integrate the underlying systems and service processes of both companies
to evolve into the industry-leading service and support platform that
will provide customers and care providers with leading edge service. We
also expect to achieve a sustainable unit cost advantage in the key
operational areas."
Mr. Wolf added, "Most importantly, we believe the merger increases our
ability to introduce new product and service offerings in our local markets,
giving consumers more value and greater choice while enhancing their
health and well-being. As consumers embrace these new offerings, we expect
the already remarkable growth rate of these companies to continue.
Dr. McGuire stated that the merger with Humana fits exceptionally well
within the framework of United HealthCare's six strategic business
segments, which will facilitate a rapid and efficient integration of
the combined operations. Humana's health plans, small group insurance
services and specialized businesses that include dental, life, workers'
compensation and disability, are strong units that complement or add
new services to those currently offered by United HealthCare.
On a pro forma combined basis, United HealthCare would be among the most
prominent health care concerns, with annual revenues approximating
$27 billion. The company will operate in 50 states, Puerto Rico and
internationally, including Hong Kong, Singapore and South Africa. United
HealthCare will be supported by a dedicated 50,000-member workforce, as
well as an exceptionally strong financial position with more than $13
billion in total assets, and more than $6 billion in shareholder equity.
The combined company will be led by Dr. McGuire, who will remain as
chairman, president and chief executive officer. Greg Wolf will have a
prominent leadership role and will serve on United HealthCare's executive
council. David Jones will join the United HealthCare Board of Directors.
Dr. McGuire said, "I am delighted that David Jones will be joining our
board of directors. He has been a key figure in advancing the quality of
health care services in a career that has spanned a period of unprecedented
industry transformation. He has played a central role not only in the
creation and enduring success of Humana, but also in the direction of
the entire industry. We are extremely pleased that David will continue
as a member of our board, and that Greg Wolf and his outstanding
management team will be joining us to help lead the company in the future."
(more)
United HealthCare (www.unitedhealthcare.com) is a diversified health
service company that provides a broad spectrum of resources of resources
and services to help people achieve improved health and well-being through
all stages of life. United HealthCare is organized into six business
segments: Health Plans, Retiree and Senior Services, Strategic Business
Services, Insurance Services, Specialized Care Services, and Knowledge
and Information Services.
Humana Inc. (www.humana.com), with headquarters in Louisville, Ky., is
one of the nation's largest publicly traded managed health care companies
with approximately 6.2 million customers in its health care programs
located primarily in 16 states and Puerto Rico. Humana offers coordinated
health care through a variety of health plans - health maintenance
organizations, preferred provider organizations, point-of-service plans,
and administrative services products - to employers groups, government-
sponsored plans and individuals.
Forward-Looking Statements
Statements that United HealthCare or Humana may publish, including those
in this announcement, that are not strictly historical are "forward-looking"
statements under the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements involve known
and unknown risks which may cause actual results and corporate
developments to differ materially from those expected. Factors that
could cause results and developments to differ materially from
expectations include, without limitation, the ability of the combined
company to execute the anticipated integration and realize the expected
synergies, the effects of the state and federal regulations, including
those that impact the formation of the combined companies, the effects of
related or other acquisitions and divestitures, and other risks described
from time to time in each of United HealthCare's and Humana's SEC
reports including quarterly reports on Form 10-Q, annual reports on
Form 10-K and reports on Form 8-K.