Good morning. My name is Caitlin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Humana 4Q 2017 Earnings Call. Thank you. Amy Smith, Director of Investor Relations, you may begin your conference.

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 fourth quarter 2017 results and our financial outlook for 2018. Following these prepared remarks, we will open up the line for a question-and-answer session with industry analysts. We encourage the investing public and media to listen to both management's prepared remarks and the related Q&A 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.com, later today. This call is also being simulcast via the Internet, along with a virtual slide presentation. For those of you who have company firewall issues and cannot access the live presentation, an Adobe version of the slides have been posted to the Investor Relations section of Humana's website. Before we begin 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 advised to read the detailed risk factors discussed in our fourth quarter 2017 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 our filings with the SEC are all also available on our Investor Relations site. Call participants should note that today's discussion includes financial measures that are not in accordance with generally accepted accounting principles, or GAAP. Management's 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 EPS, 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 and thank you for joining us. This morning, we reported full-year 2017 adjusted EPS of $11.71 or $16.81 on a GAAP basis, above our previous expectations of $11.60 adjusted EPS. We continue to make strong progress in advancing our integrated care delivery strategy, especially in deepening our clinical capabilities through long-term platform investments in the home and primary care. And our focus on and commitment to improving the member experience continues to pay off as this year, we saw significant improvement in our Stars results as well as our Net Promoter Scores, which increased by 500 basis points. It's through the combination of all our efforts from optimizing our infrastructure and operations to making critical investments in consumer and clinical capabilities that we've been able to achieve strong short-term results while creating long-term sustainability. We entered 2018 with a continued focus on this core strategy, dedicated to providing an integrated healthcare experience, built around the needs of our members and clinical partners, including offering personalized local care with an emphasis on the home and primary care providers. As I said at a recent investor conference, the cornerstone of our strategy is around the integration of primary care, pharmacy, home and behavioral health, while leveraging technology and analytics to create a holistic 360-degree view of the customer, and from that, drive a simplified, personalized experience for members that makes it easy for them to achieve their best health. Our strategy has continued to evolve over the last year and we've been very active in building our primary care model. As I indicated in last quarter's earnings call, in 2017, we launched 15 new clinics in 7 markets. Including our alliance and joint venture relationships and our fully owned clinics, we currently operate 195 clinics across 27 markets, with approximately…

Thank you, Bruce, and good morning, everyone. Today, we reported adjusted EPS of $2.06 for the fourth quarter and $11.71 for the full year 2017, which is ahead of our previous expectations. In addition, we posted strong operating cash flows of over $4 billion for the year. We are proud of our accomplishments in 2017, a year in which we emerged from an extended transaction process with excellent financial results, driven by our clear and focused strategy to improve the health of seniors living with chronic conditions. We continue to exceed our initial adjusted earnings guidance expectations throughout the year, led by the Retail segment and our individual Medicare Advantage offerings. This outperformance, coupled with multiple productivity initiatives, which I will discuss in a moment, allowed us to make important investments in our business to position us well for 2018. Specifically, we were able to maintain stable benefits for our members, which resulted in strong AEP growth for our Medicare franchise in the face of significant headwinds, in particular, the return of the nondeductible health insurance fee in 2018. Our Retail segment significantly outperformed our initial expectations for 2017, with individual Medicare Advantage pre-tax margins finishing the year above the high end of our 4.5% to 5% target. This was largely the result of favorable MA medical utilization trends relative to our pricing assumptions, which in no small measure was the result of our operational focus on driving our trend vendor initiatives. This above-plan annual Retail performance, coupled with fourth quarter Healthcare Services and Group and Specialty pre-tax results that exceeded expectations, provided us with the opportunity in the quarter to enhance our AEP marketing spend, further invest in the building out of our integrated care delivery model, which delivers better care and value to members; and to increase performance-based…

Your first question comes from the line of Ana Gupte with Leerink. Your line is open.

Ana, are you there?

Yeah. Hi, thanks, good morning. Yes. The question was about capital deployment and your decision on the $2 in EPS for 2018. Is that assumed to be on a continuing basis into 2019? And as far as the disposition of that, will it remain the same? Might you consider thinking about deploying it into more physician purchase or towards Star ratings or maybe even to flow through the benefits? And is that going to drive membership gains and/or margins into 2019 from the 2018 expenditure and then going into forward from 2019?

Well, let me take that in two parts. There's really two elements to your question. One is how do we think about the earnings benefit of the tax reform and the other is what do we do with the additional cash that we have. From the earnings benefit, we're really not prepared to talk about 2019. What we've said is that the 4.5% to 5% pre-tax margin is important to us. We've remained committed to that over time. But we'll assess the strategic landscape as we go into the bid season for 2019, including the tax reform, including the rate notice that we just got the preliminary rates on. Obviously, the HIF is a very good thing for beneficiaries and for all of our constituents at Humana not coming back or being waived for 2019. And so we'll take all that into account as we think about our 2019 bid design and what portion we reinvest in benefits versus taking to shareholders. But again, I would just reiterate our 4.5% to 5% pre-tax margin over time as we think about the redeployment of these tax proceeds over time. From a cash perspective, again, I think where Bruce was going and what I talked about in our remarks, we are continually looking for M&A opportunities. This does result in additional cash. We'll invest that in our communities. We'll invest that in our business. We're investing it in our customers. We're looking for opportunities to expand and enhance our integrated care delivery model and really add additional capabilities to our assets. And so we will continually do that with these proceeds.

Got it. Thanks, Brian.

Sure.

Your next question comes from the line of Justin Lake with Wolfe Research. Your line is open.

Hi. This is Steve Baxter on for Justin. I wanted to ask about the outlook for the individual Medicare Advantage business. Guidance for the Retail segment margins, clearly in the low 3% range, which presumably individual Medicare Advantage would need to be around given the size of that business. I guess, first, can you clarify in your discussion about margins and margin targets whether that includes or excludes the reinvestment spend specifically for Medicare Advantage? It would seem to be about a 50 basis point margin headwind if included. And then finally, given that we're now five years out from the introduction of the health insurer fee in 2014, can you give some perspective on how long you think it's going to take to realize target margins? Is this something that's possible in 2019 given the suspension of the health insurer fee? Thanks.

Sure. Good morning. Let me start with the margin question and then talk about the HIF. Without giving specifics on our individual MA margin, I would just remind you some of the commentary that we've made, which is we finished the year slightly above our margin target, so we finished above the 5%. We said on the third quarter call that we would be slightly below our margin target before tax reform came about and that was the result of investing this outperformance into our benefit design for the reasons we've discussed to overcome meaningful headwinds and to ensure that we would really produce a good product that our customers would be excited about, and I think we accomplished that goal. And so the margin then, if you then roll from there, I think you got to think about that the revenue was a little bit higher than we had forecast. And as I mentioned in my remarks, these new members tend not to generate significant profitability until they get into our clinical programs and are documented appropriately. And then from there, I think it's important to think about the tax reform $2 (00:38:00) allocated really primarily to individual Medicare Advantage. Given just the size of the business and also the nature of the investments that we want to make, they're naturally going to fall in the individual MA category, and so that would further impact the margin. And then finally, there is some flu impact that we're assuming. And so taken altogether, I think that gives you a sense of how we're thinking about our individual MA margin for 2018. We're not prepared to comment today on the timing as it relates to getting back to our 4.5% to 5%. Again, as I said in the prior question, it's important to assess where we are from a strategic perspective and how our product is positioned. But we are, as I said, committed to that over time. And therefore that, we believe, provides significant earnings power for the company going forward.

Your next question comes from the line of A.J. Rice with Credit Suisse. Your line is open. A.J. Rice - Credit Suisse Securities (USA) LLC: Thanks, and hi, everybody. Let me ask about M&A for a second. One is you're in the midst, obviously, of the home health joint venture you're setting up. I think in the prepared remarks you said you were at 65% overlap with your MA lives. What is the thought about that going forward? Is that 65% sort of good for you or are you trying to get more overlap? Is that going to grow organically? Are you going to end up putting more capital into that business? And any comment on why that structure? And then also just on M&A, there was a comment in the prepared remarks about evaluating whether it makes sense to have a broader Medicaid platform. What are the pros and cons of that in your mind and what are you guys thinking about there?

A.J., good morning. Let me try to take those two. First, on the home side, we'll continue to build out geographic presence over time. It's not an urgency for us today, but we would do it through the Kindred platform. They, traditionally, as you probably know, have always been in the market of buying smaller agencies and being able to expand their geographic coverage. And so we would do it through the capital that would be coming from the cash flow of the Kindred and use it from that particular capital base. The second part of your question is really around the Medicaid platform. We continue to have a high interest in the dual-eligible population and we've been consistent of that since really the demo project came out in 2011. We find today that we have a great opportunity with the Long-Term Support Service and the D-SNP combination and we're seeing that in the marketplace as being a more direct way to support the dual-eligible and going through the Long-Term Support Service contracting mechanism. What we – and so we'll continue down that road and continue to participate in RFPs and there's a few of them out there right now in the Long-Term Support Service area and then combine that with the D-SNP product. What we don't know is how the procurement process will evolve over time and we've been pretty consistent about this. If the procurement process is going to require us to be in the TANF business in a more comprehensive fashion, then we would look at a Medicaid platform. But in the short run, we're not convinced that's going to be the case. We believe that we have the solid capability from the Long-Term Support Service area, as evidenced between our platform that we have today and the servicing of that in Florida specifically, but in other states and our Medicare Advantage being able to support a very large number of D-SNP. And the combination of those two we think will carry us in the Medicaid program going forward. But if we couldn't, then we would look at a procurement or if it was wrapped into the procurement, we would look at a Medicaid platform. A.J. Rice - Credit Suisse Securities (USA) LLC: Okay. That makes sense. Thanks a lot.

Thank you.

Next question.

Your next question comes from the line of Chris Rigg with Deutsche Bank. Your line is open.

Good morning. Bruce, just wanted to come back to some of your comments early in the call on CONVIVA. I'm trying to better understand, are you trying to signal that the brand, the single brand marks an acceleration in provider consolidation? Or is this just simply done for seniors to help with retention and just overall MA selling? Thanks.

It's actually a combination of both. I would say first, we have had these platforms in the organization for a period of time and they've been performing quite well. But we see the opportunity to leverage the platform into one, both from an administrative point of view, secondarily, really converting it from a staff model to more of a model that is physician-led and a PC model to create and stimulate entrepreneurship in the leadership area of the physicians. And then thirdly, we see it as a platform to continue to grow in the marketplace, both via acquisition and in addition, organically. And this is a continued step in our belief that primary care, with a senior focus, is a differentiation and an active part of how we feel we can continue to increase the member experience and decrease the cost of care. And this is just one of those that is also complemented by a more national approach with our – this is more Florida and Texas orientation, but a more national focus with our primary – partners in primary care platform we have.

Thanks a lot.

You're welcome.

Next question.

Your next question comes from the line of Kevin Fischbeck with Bank of America Merrill Lynch. Your line is open.

Great, thanks. Wanted to go back to the tax reform discussion because I guess what you're saying is you're not changing your long-term pre-tax margin target, but over time, you expect to maintain more than 50% of, I guess, of the tax reform benefit. So I guess I just want to understand a little bit more about how you get back to maintaining more of that benefit. It sounds like, to some degree, you're implementing a 2019 initiative that you would have done anyway now in 2018, so that really wouldn't impact your long-term view about that aspect of the cost. But then anything else like that that you're kind of accelerating into this year that you would've planned to do anyway? And then on top of that, when we think about the investments for growth, how do you think about the returns of those investments? And are those things that you're going to do now and if they generate growth, that helps you leverage margin, great, if not, you'll dial that back over time? How do you think about that?

Sure and good morning, Kevin. So I would say in terms of how we get back to that margin, you are correct in pointing out the acceleration of those performance measures for the broader associate base, which is not an insignificant number in terms of the money that we're investing, and so that is one area. But I think it's important just to step back and really look at our productivity initiatives that we're taking. A lot of the work that we're doing around the trend vendor side, the Kindred acquisition, all the elements that Bruce discussed in terms of deploying our assets on the primary care side, making it easier for our customers, ultimately, that results in better outcomes for our members. They're healthier and that results in lower cost, and that results in higher margins and higher growth. And so it's really a combination of factors that leads us to commit to and believe that, that 4.5% to 5% over time is something that we feel good about. Obviously, it's a year-by-year discussion as it is every year and you take into account a whole list of factors as we did this year in 2018 when, for example, the health insurance fee came back. The rate environment was a little bit less than trend as we know. Going into 2019, we'll see where the final rate environment ends up, but that feels a little better. Obviously the HIF is going away for the year. And so there are a number of elements that you consider as you think about bidding margin. Over time, we are committed, as we've said multiple times, to our EPS target of 11% to 15%. And that's ultimately what we're trying to achieve to grow a very large company at an 11% to 15%, it's something that we're committed to doing and it's something that we believe we can do. And we want to create multiple levers to be able to create that growth. And whether that's top-line growth or increasing margin, every year, it's a different calculus. But ultimately, that's what we're trying to achieve.

Great. Thanks.

Your next question comes from the line of Dave Windley with Jefferies. Your line is open.

Hi. Good morning. Thanks for taking my question. I'm going to try to come at the 4.5% to 5% a little different way. I guess I'm curious what you would – Brian, you've emphasized several times this morning over time, what would management view as a reasonable period of time to achieve that? Or said differently, what would be the amount of time that could pass and you not get there and that would be unreasonable?

Well, again, we're not giving multiyear guidance, specific EPS guidance here on this call. I understand the need to understand that and we're – I think what we're trying to communicate is that we're committed to this margin level. Obviously, we'll evaluate where we are in 2019 and beyond and see what makes sense. It's important that to create sustainability for the enterprise that we have top-line growth. We are, I think, demonstrated that we are back in the markets in a very significant way this year; our intention is to do that again in 2019. And the good news is we have some tailwinds, particularly the HIF. And so those are the types of things that we consider as we think about our long-term margin targets. But again, I think over time, as you think about your modeling and what we want to generate is that that 11% to 15% EPS growth over time. And over the last few years, if you, I think, look at our EPS growth, you've seen that, and that's really our target here.

If I could ask quickly, so in your answer to Kevin, you talked about the investment in incentives for employees being a significant number. Is it possible to give us kind of ballpark how the $2 of reinvestment breaks out in terms of what would seem to be more permanent and what's more discretionary?

Sure. If you take the $2, I would say a little bit less than half of that $2 relates to some of the employee initiatives that we've undertaken here.

Super. Thank you.

You bet.

Your next question comes from the line of Sarah James with Piper Jaffray. Your line is open. Sarah E. James - Piper Jaffray & Co.: Thank you. Can you talk about your view of the group MA market, the long-term or midterm growth profile of that market? And then it seems like several of your competitors are talking about stepping up their effort in the group MA market. So what is Humana's strategy to either maintain or grow market share?

I would say the group market is sort of bumpy. It's more lumpy maybe is a better description that to – we'll get some large employers that will put contracts out for bid and you get a large number. And so when we think about the group business, we think about it, first, it's a very lumpy business. The second is we have seen employers and we don't know what this year's rate notice is going to do, but we've seen employers also begin to move some of their membership to an individual product and create a subsidy there as opposed to just doing a group membership or a large contract. So we see that trend going forward. We – and then the third thing we see is very competitive and we are much more thoughtful on how we price our products and go after those particular groups because they seem to be on the low end of the margin and they seem to also be very aggressive on the renewals and the contracts. And so you invest a significant amount of time. So I would say that we are more cautious than probably our competitors on this for the reasons it's lumpy, it's very price competitive and we also see trends of people moving away from the group to individual product. Sarah E. James - Piper Jaffray & Co.: Got it. So all in, would that mean that you see the market for the group growing slower than the Retail Medicare market?

We see it – in some years, like this year, was a really good year for group, and so you might see it exceed it. But I would say that the individual market, we believe, is a better growing and more consistent growth than what we would see in group.

Next question please.

Your next question comes from the line of Josh Raskin with Nephron Research. Your line is open.

Hi, thanks, good morning. Apologize for harping on this tax benefit, but I just want to understand a little bit more about the decision-making process. So first, if you think about the gross benefit of $4 and I think of that in percentage terms, your screen is a little bit higher than the peers. So I'm just curious if there's any reason why you guys would see a bigger tax benefit than the others. And then more specifically on the reinvestment, as you guys were thinking about the process by which you were going to reinvest that, putting back 50% just to reinvest and that similarly screens is above what your peers have done. And so my question was – is more around the thought process. Was that, hey, things are good, we're going to be able to make our long-term EPS growth rate even with reinvesting 50% of it in, so we might as well take advantage? Or was it a, the competitive environment is really tough. We've got to make sure that we stay competitive, that these investments are really needed to make sure that we can get, hopefully, market-like growth next year?

I think the – Joshua, the orientation really was around how do we – what is the best use of the proceeds from a long-term return to the shareholders. And really, we went through a number of different levels. First is just to ensure we're shored up on the employee side and continue to reward employees to be excited about being part of Humana and that was the first level of discussion. And we looked at that as two ways. First is to pay an adequate wage and there was some of our staff that was not at the levels that I think sort of the labor environment is looking at, so that's why we raised the $15. The second was really to create an alignment and we had been planning for this for some time, alignment of our non-bonus associates to be aligned with the performance of the organization. And we feel that benefits everybody and it creates some transparency to our employees on the performance and gives them a sort of a vested interest into it. And then in addition, I think having 28,000 additional employees working on behalf of the shareholders and our customers is a good thing. And so we felt that as opposed to giving a $1,000 bonus or some other factor, we felt that this bonus and accelerating the bonus was much more valuable to the shareholders. So those two things were around our associates. Around the investment side, we really then led to how do we invest in the areas that are really important for the organization longer term, in technology and analytics and all those aspects that really are on the income statement. There's some capital deployment, but there's a lot of income statement related investments there that we were going to do over a period of time. And what this has allowed us to do is to accelerate those investments and put those in and do it in a more proactive fashion. And that's why Brian continues to reinsure the investors that the 4.5% to 5% margin is an important part for us in the longer term because what we're doing is we are accelerating some things that we have been doing and anticipating to do in the current year and maybe 2019 to allow us to accelerate both the success of the organization, increased productivity, better experience et cetera, but at the same time to focus on getting to those longer-term margins. So I would say that it's an acceleration of investments, not an additional investments outside the $15 an hour investment. So I don't know if that helps you, Josh?

Yeah, let me just answer your first part of your – sorry, go ahead, Josh.

Thanks, Brian. Yeah, no, I was going to say on the first part as well. Thank you.

Yes. So the first part of the question, it's important to remember that because we are Medicare-focused, we bear a disproportionate amount of the health insurance fee. Health insurance fee is a premium tax and it's nondeductible. And so because our per-member per-month premiums are higher, we get a higher amount of the HIF allocated to us relative to other businesses. And so because it's nondeductible, we get a bigger benefit from a lower tax rate. So the impact of the non-deductibility is effectively higher for us because we have more HIF, so we get a bigger benefit when the tax rate goes down. Does that make sense?

Okay. And I'm sorry – yeah, no, that makes a ton of sense. Just on the first part that Bruce was speaking to, I guess I just want to sort of again bring this back to, did you feel as though this was required from a competitive standpoint or was this really Humana's got this long-term plan and now we've got a great opportunity to really accelerate that while still taking care of our employees?

I think it's the latter more than the former. I think we're – I mean, we still – our strategy continues to – we have a high degree of confidence in being able to compete, so I don't think it was a competitive reaction. It was much more around accelerating our capabilities and creating that alignment.

Perfect. Thanks, guys.

Thanks.

Your next question comes from the line of Ralph Giacobbe with Citigroup. Your line is open.

Thanks. Good morning. You talked about allocating all the investment spending in the MA segment. Why would that be the case? I guess at least some if not a healthy portion of the investment spending would be related to the Services segment. And then also wanted to ask on the HIF, obviously back in 2018, but you get reprieve in 2019. Last year, for the holiday, you didn't run it through the adjusted EPS. Just wondering how you're thinking about it or what would trigger your assumption to actually sort of run it through to the adjusted EPS line for next year. Thanks.

Sure, good morning, Ralph. So it is true that the Healthcare Services segment will absolutely get some of the investment dollars. So it's just that the individual MA business, given its relative size and also some of the investments we're making, will fall in individual MA. But Healthcare Services, just by virtue of obviously a number of employees in Healthcare Services and the like, they will get their allocations and other investments as well. So I just want to make that clear that it will be allocated. The Group and Specialty business will get some of it as well. As it relates to excluding or not excluding the tax benefit of the HIF from EPS, our expectation is to include it as part of our normal earnings. In light of the fact that it's now had a holiday twice, I think we'd really not be able to exclude it from earnings. So you should assume it will be included in our earnings guidance in 2019, the tax benefit.

And that was $2.15 that didn't get run through last year? Is that right?

That's right. It was $2.15. If you think about the 2019 benefit more as a sort of north of $1.75 is the way I think about it because of the lower – that's just a tax benefit. But remember, you get non-deductibility at a lower rate. So I would think of $1.75, $1.80-ish for 2019.

Okay, that's helpful. Thank you.

But it's a tax benefit only, yes.

Thanks.

Yes.

Your next question comes from of the line of Steve Tanal with Goldman Sachs. Your line is open. Stephen Tanal - Goldman Sachs & Co. LLC: Good morning, guys. Thanks for taking the question. I actually had two, one on CONVIVA and then maybe one more on just sort of the numbers around tax reform. On CONVIVA, you guys mentioned building out a national footprint for provider assets. And understanding that these are multipayer sort of local businesses, I'd be curious to get some color on which markets you'll focus on first and what kind of local characteristics you're looking at to decide whether that investment is worthwhile. And then on tax reform, is it fair to think about the $2 figure as an after-tax number and then take your consolidated tax rate and say the reinvestment in our pre-tax base is probably closer to $400 million plus, and it sounded like maybe $200 million of that would be recurring in employee wages, suggesting nonrecurring investments are somewhere in that range, $200 million plus? And if I just look at that on the Retail segment, it's maybe about 45 bps of the margin rate compression that's being guided to here. Is that all fair?

Why don't I start with that, then let Bruce answer the CONVIVA question. Without getting into too much detail, I think it's fair to say that the $4 or the $2 is clearly an after-tax number, and so you would gross that up by our effective tax rate excluding the HIF. So we said, call it, the 24-ish percent is what you would effectively gross it up by to get to the pre-tax equivalent, which would then be invested. I'm not going to give allocations of how that fracs out between the segments other than just refer back to my prior commentary on how it will be allocated. All the segments will get some. It's fair to say that Retail will get a good portion of the investment dollars. But broadly, you're thinking about it right. You should gross it up to get it to a pre-tax equivalent level using our tax rate ex the HIF, and that will give you a sense of what the pre-tax dollars of investment are.

On CONVIVA, the short-term strategy today is really focused on the existing markets they're in and operationalize the combined organization and to continue to penetrate that. So that would be South Florida and Texas as being the two primary-oriented markets there. Keep in mind we also have a national opportunity too through our Partners in Primary Care such that today we have opened up a number of those clinics, along with our investments in our affiliated clinics that we have. And so as we think about this, and we've done this over the years, there's really a multi-pronged approach geographically in what we bring to the marketplace. I would say we continue to focus on it being agnostic. And today, all our assets that we have in investments in are agnostic and are taking other payers and so we will continue to do that. And frankly, that's why they're branded as a non-Humana brand. We will – but we will orient in areas where we have either a significant amount of membership that is really oriented – is required to find value-based partners. And if we can't find them in the marketplace, then we'll bring our capabilities. We always start with what is in the market. And if there are strong players in the marketplace that we can create a deeper relationship with, then we'll leverage that relationship. If there is not, then we'll bring our particular capabilities to the marketplace. So I would say it's locally specific. It is highly dependent on the fragmentation and the risk level of the providers in the marketplace. And I would also say that CONVIVA will be more Texas and South Florida-oriented. Stephen Tanal - Goldman Sachs & Co. LLC: Very helpful. Thank you.

Your next question comes from the line of Matt Borsch with BMO Capital Markets. Your line is open.

Maybe I'll just continue on the thread that you were talking to. I've been around long enough to remember when you had wholly-owned centers or what you called WOCs. Can you just talk to what's changed environmentally that makes you comfortable owning providers today where you were divesting them, call it, 20 years ago and maybe how your strategy about owning is different than it was then?

Sure, sure. I think you're referring to the good old days of the physician practice management times and the staff model. A few things. First, 20 years ago, Medicare Advantage wasn't operating at the level it was and it was much more oriented to an employer model or the Medicare Choice Model. So that was probably a large difference than what's today. The second is that these assets, specifically the ones in South Florida and for that matter, our Partners in Primary Care, have matured and you see an operating model today that is much more stable than they have been 20 years ago when the industry just started to formulate. And then the last thing I would say is that this strategy has been with us really since the 2010 area. I mean, we've owned CAC. We've had an investment in MCCI. We bought MetCare back in the early parts of 2010 through 2012. So these assets have been around with us for some time. And as I've mentioned in our call, we've opened up 190-some centers over the last five or six years. And so I would say that this is not a new thing for us. I would also say that we've walked a lot before we've taken any large commitment to capital. And we've done this, I would say, in a very conservative fashion. And all you see and what we're talking about today is just the continuation of that, taking assets that we've owned, bring them together under one brand and be able to mature that and then continued and opened up the clinics. So I wouldn't want the investors to talk away (01:06:38) that this is an acceleration that hasn't – and that we don't have a platform. It actually has just been developed for a number of years and this just continues that.

Thank you.

Welcome.

Next question.

Your next question comes from the line of Gary Taylor with JPMorgan. Your line is open.

Hi. Good morning. I just had a couple clarifications. The first, when you talked about the advance notice comments and looking at Retail MA up about 2.1%, Humana being approximately in line with that, was that inclusive of what you described as kind of the modest star rating headwinds?

Yes.

Okay. And then the second one, Brian, was, I wrote down that you said, and maybe I didn't write this down correctly, but for your 2018 guidance, you're assuming no prior year development?

No, we're assuming no Group and Specialty prior period development. There is, inherent in our Retail forecast, a – what we would term as a normalized level of prior period development. And so the 100 basis points that we reinvested in the product includes some – inherently the 100 basis points includes some prior period development, what I'll call excess prior period development that we don't expect to recur.

Okay, that makes sense. Thank you.

Okay.

Okay, thank you.

Well, we appreciate everyone's support – continuing to invest in the organization and like always, we really appreciate the 50,000 associates that dedicate their every day to advancing both on behalf of our customers and our shareholders. So thank you and have a wonderful day.

This concludes today's conference call. You may now disconnect.