HUMANA INC

Group 8:
Diksha Miglani 19P080
Mayank Arora 19P094
Puneet Garg 19P101
Punyaja Swaroop 19P102
Rashi Jain 19P105
Sunkara Vamsi Krishna 19P117
 ABOUT COMPANY

• Humana is the nation’s largest integrated health care provider

• Operated 81 acute-care hospitals in 19 U.S. states, England, and Switzerland.
• Offered abroad range of managed health care plans to approximately 1.7 million
individuals, through health maintenance and preferred provider organizations, or
HMOs and PPOs)
• Started as operator of nursing home and ventured into hospitals and heath care
plans and is now considering abandoning the integrated business strategy
 BUSINESS TIMELINE

1972 1980s 1992

company embarked Decided on
Shed its original on its current abandoning the
business to focus integrated integrated strategy
exclusively on strategy of and separate
hospital managing both businesses by
management. hospitals and health corporate spin off
plans

1978 1991
1960s
American Evaluating
Humana began Medicorp Inc. of restructuring
in the early Pennsylvania for options.
1960’s as an $304.5 million in Considering the
operator of a hostile takeover, possibility of
nursing homes in the process modifying or
almost doubling abandoning its
the number of its integrated
hospitals from 59 strategy..
to 114
 RESTRUCTURING ALTERNATIVES

Somehow effect a division between Allowing the company’s health plan

the hospital and health plan enrollees to seek treatment in non-
operations, while keeping the basic Humana hospitals, and diversifying
company structure intact. into new (albeit related) lines of
business..

Selling off some or all of the By spinning off one of the two
company’s hospitals businesses as a free-standing
public company

“Targeted stock.”
Under this proposal, Humana would Another option considered was to
dividend a new class of common stock take the company private in a
to shareholders that would represent a leveraged buyout
claim only on the cash flows generated
by its hospital or health plan operations
.
 Hospital Health Plans
Consolidated Enterprise Value EBITDA 801.9624579 43.03754211
Share Price 21.625 Less: Depreciation 226.6863069 29.31369314
EBIT 575.276151 13.72384897
Shares O/S 158206059 Less: Interest 91.82258065 -57.82258065
PBT 483.4535704 71.54642962
Equity Value 3421.206026 Less: Tax @ 36% 174.0432853 25.75671466
Debt 846 Net income 309.410285 45.78971496
No of O/S Shares 158206059 158206059
Enterprise Value 4267.21 EPS 1.955742321 0.2894308552
Industry P/E 15.13333333 15.26666667
Share Price 29.59690046 4.41864439
Equity Value 4682.40898 699.056315
Enterprise Value 5387.59 715.8790976
6103.47
EV/EBITDA 9.242672653 9.373923567
Enterprise Value 7412.276478 403.4306303
7815.71