Ladies and gentlemen, my name is Lance and I will be your operator for today's conference. At this time, I would like to welcome everyone to the Humana Incorporated 3Q 2018 Earnings Call. All lines have been placed on a listen-only mode to prevent any background noise. Later, there will be a question-and-answer session. I would like to turn the call over to Amy Smith, Vice President 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 third quarter 2018 results and our financial outlook for the year. Following these prepared remarks, we will open up the lines 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. 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 third quarter 2018 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.

Thanks, Amy. Good morning and thank you for joining us. Today, we reported adjusted earnings per share of $4.58 for the third quarter of 2018 and raised our full year 2018 adjusted EPS guidance to approximately $14.40, primarily reflecting favorable Medicare Advantage results. Our continued strong performance reflects the advancement of our strategy, which centers on the consumer with quality, convenience and local presence top of mind throughout the organization. Our success is due to the exemplary efforts of our associates and their focus on quality every step of the way. We're fortunate to have a highly engaged team and are encouraged by a recently completed survey indicating that engagement levels of our associates rank as world-class, above the 90 percentile. This engagement reflects a culture of commitment to our values and strategy, diversity of thought and pride in the services we provide our customers. You see it not only in our recently released Star scores including two 5-star contracts in key markets, but also in higher Net Promoter Scores and improved productivity. It was also recently announced that Humana Pharmacy was ranked number one in customer satisfaction for U.S. mail order pharmacies in the J.D. Power 2018, U.S. Pharmacy Study. Ultimately, all these efforts result in deeper member engagement and improved clinical outcomes. While we are proud of our Star scores, we recognize that there is an inherent volatility in their measurements and healthcare is a dynamic environment. Measures may change, and as the industry as a whole improves performance, measure thresholds also rise substantially. Therefore, this requires a relentless focus on quality in both of the member experience and clinical outcomes throughout the organization. To that end, we continue to invest in people, processes and technology to create a more local, personalized and simplified experience, while proactively managing…

Thank you, Bruce, and good morning, everyone. Today, we reported adjusted EPS of $4.58 for the third quarter, ahead of our previous expectations. We continue to see favorable results, particularly in our Retail segment. And as a consequence, for the third time this year, we are raising our full year adjusted EPS guidance to approximately $14.40 from our previous guidance of approximately $14.15. These strong financial results, coupled with solid non-financial metrics that are also a component of our compensation programs, are driving an increase in estimated incentive-based compensation for our associates across all segments, thereby increasing our consolidated operating cost ratio guidance for the full year. Recall that earlier this year, due to Tax Reform, we were able to significantly expand our annual incentive-based compensation program to include all of our associates. These added approximately 28,000 associates to the annual program, tying a portion of their pay to the company's performance. As a result of their tireless efforts and commitment to our strategy, we are continuing to outperform our expectations. And we are therefore pleased to have the opportunity to further reward all of our associates for their exemplary work. As I mentioned, our Retail segment continues to outperform, led by our individual Medicare Advantage business. We've increased our individual MA membership guidance for 2018 to a range of 200,000 to 210,000, an increase of 15,000 members at the midpoint, partially offset by slightly lower than expected group MA membership. This greater Medicare membership, coupled with higher per member per month premiums, have enabled us to increase our revenue guidance to a range of $47.8 billion to $48.1 billion from our previous range of $47.5 billion to $48 billion. In addition, the trends seen in the first half of the year continued in the third quarter, with inpatient utilization…

Thank you. Your first question comes from the line of A.J. Rice from Credit Suisse. Your line is open. A.J. Rice - Credit Suisse Securities (USA) LLC: Hi, everybody. Maybe following up on those comments just made about Medicare Advantage growth. A quick back-on-the-envelope would suggest that you're thinking your individual business will grow 8% to 10% next year. I wonder if you could put that in perspective with you think that's an in line with the market growth, better than the market growth, if I calculated that, right. And then secondarily on the MA comment, I think a lot of your outperformance this year has been in the MA margin area. And I guess if you're saying you won't quite get to the 4.5% to 5% target next year, is that – are you sort of close to that now, given the outperformance you've seen and expect – whatever you expect for fourth quarter? Or what does the year-to-year trend look like on margin?

Sure. Well, good morning, A.J. As it relates to market growth, let me just provide a little context of how we view the market. This year being 2018, we expect the market to grow in, call it, the 7-plus percent range, maybe 7.5%. We'll see where it ends up. Again, I'm talking on the individual MA side. For 2018, it's conceivable that goes up modestly. We'll see where that ends. The reality is we don't have a lot of market data just yet. We have anecdotal data that suggest that we are taking market share from our competitors. And so the, call it, 8-plus percent to 10% growth that you cited, we do believe that that is a performance above market. We'll see where that goes. And obviously, we'll also see where we end up on our AEP results and our rest-of-year results. It's still very early. We feel very good about the 250,000 to 300,000 member target that we put out. And obviously, we're working hard to drive growth above that range. I would say on the margin side, again, without providing specifics on our margin, we remain, notwithstanding the significant outperformance this year, significantly below our 4.5% to 5% margin target in 2018. I mean, it's important to remember the context of that initial margin guide that we gave. We had a number of headwinds, including the HIF coming back, a difficult flu season, the fact that we actually grew faster than we initially anticipated, and as I said, the significant Tax Reform investments, which we reinvested in our associates and in our communities and in the integrated care delivery model. So we do expect to make nice margin improvement in 2019 off that 2018 base, which, as you indicated, is coming in above our initial guidance, but we still do expect to be below that target for 2019. A.J. Rice - Credit Suisse Securities (USA) LLC: Okay. Thanks.

Next caller, please?

Your next question comes from the line of Ana Gupte from Leerink Partners. Your line is open.

Yeah. Thank you. Good morning. Yeah. Following up on the MA margin question, where would you see the medical loss ratio on a normalized basis? I guess, from the revenue side next year, you're getting – your Star ratings are solid for 2019 and the risk floating rate looks great. Why is it that the loss ratio couldn't go down? Are you coming up against some MLR floor barriers or is it something else that's holding it back?

Look, there's obviously always opportunity to continue to push the MER better. But as we think about the world, we really think about it in pre-tax margin terms because there's a lot of levers that we pull between the medical costs and then the operating costs. And as you know from coming into 2018, we spent a significant amount of effort across the company trying to drive down that admin spend. And we took out many hundreds of millions of dollars this year to fund that benefit design. And so I'd rather not comment specifically on the components between MER and AER. I would just reiterate our long-term margin target, which we're focusing in ultimately getting back to.

And then, again, related to this long-term target, where do you see your operating cost ratio? On a consolidated basis, it's still in the low teens and there should be at least leverage there as you're doing your business. And then, on the – secondly on the value-based care, when you report your employed physicians and this partial risk and full risk, they looks like they're not changing much. So what are the trend benders that you're driving for a lower or improved medical cost structure at this point?

So I'll point you back to the comments I just made on the various ratios. The only thing I would say on the operating cost ratio is that we continue to work on productivity initiatives, on process transformation across the enterprise to drive costs out of the system. It's I think really become part of the DNA of this organization that every year we're going to get better and better and drive productivity. If you look at our administrative costs on an apples-to-apples basis, if you adjust for mix, adjust for the health insurance fee, you'll see a pretty dramatic reduction year-over-year, again, taking into account also Tax Reform. You want to take, yeah.

Good morning, Ana. On the value-based question you had, what you're seeing is as much about the amount of physicians that are in value-based payments versus the quality. And what we've seen over the last few years is really our focus on improving where providers are being in the surplus and they're actually making more money off of the value-based payments. And that has been our orientation versus the volume, Ana. We don't report the surplus, but you would see, if we did a significant improvement in the number of providers that are in surplus payments.

Helpful color. Thanks.

Thanks.

Next question, please?

Your next question comes from the line of Matthew Borsch from BMO Capital. Your line is open.

Thank you. Could you just talk about – I know you stressed stronger broker outreach as a factor driving the results that you're seeing in open enrollment. How much of that has to do with maybe catching up to, if that's the right way to put it, the compensation that maybe some of your competitors have been offering? And where do you see that broker compensation going as a competitive factor?

Hey, Matt. Good morning.

Good morning.

It's less about compensation. I think most of our competitors really pay the CMS max levels, that's typical across the industry. It's really about the support that you provide them. And really, we think about support in two buckets. One is the tools they have to interact with us and how easy is it to engage with us digitally as well as in other forms. So that when they try to understand the nature of their book, how they're doing, enrolling members who might have started an online application and how easy is it to finish, how easy is it to track, how they're doing from a results perspective, how quickly do we respond to requests that they need and support that they need, and then there's also marketing dollars and putting muscle behind that so that when they're out trying to drum up sales and leads, we're there supporting them. And then, there's the intangible element of a relationship where our Medicare leadership has done a wonderful job of driving those relationships. I think there's a personal bond there, which is very important in that business. And so I think when you look across the range of levers we can pull to drive those relationships, they've improved meaningfully. Part of it's a catch-up I would say because I think we were damaged, as we've said, by the Aetna transaction with the brokers, but I think we've more than made up for it.

That's great. If I could just ask one more. I think you alluded to some negative skew in the commercial fully-insured group risk pool that's resulting from healthier groups migrating to self-funding or quasi self-funding options. There is a potential for that to spiral, particularly if there's traction on the association health plans on the low end of the group side. What's your outlook there?

Well, I think what you're saying is right. I mean, if you're particularly a healthy group and you're in a community-rated pool, you may not be getting the best rate. And so, we have seen a material uptick in our sales of what we call our ASO level-funded products, which is effectively self-funding with a stop-loss wrap to give them out-of-the-money protection in the event that the health care costs spike. We've seen that be particularly compelling. It's still too early really to comment on the association health plans. We'll see where those go, but we're actually quite bullish on this level-funded product and we've seen significant growth there. And it also, we think, plays to our strengths, which is our ability to understand risk and price it accordingly. So we're actually pretty bullish on that move.

All right. Thank you.

Next question, please? And as a reminder, please try to limit yourselves to one question.

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

Thanks. Good morning. I'll do my one question in a couple of parts here, I apologize. First, on your membership guidance, do you expect the 80% to 90% of that individual growth to come during open enrollment, similar to what we've seen during the last few years? Or would those 5-star plans skew this a bit? And then, how does your retention rate assumption look for 2019 versus what you saw in 2018? And then just lastly, can you tell us what the HIF benefit is to the earnings number implied in guidance? Thanks.

Yeah. That was impressive. There are three questions.

Way to get in three.

All right. In order. On the AEP/rest-of-year mix, we've generally assumed a similar mix in our budgets here in the forecast we gave. To the extent that the 5-star plan really takes off and with our value prop being pretty strong, hopefully we can exceed that, but I think it's prudent to assume a similar AEP, what we call, ROY, AEP/ROY mix, and we'll see where that ultimately goes. I wouldn't underestimate the importance of the 5-star contract, particularly being in Florida and Tennessee, these are markets where we have important risk relationships with our providers. They're very high-performing markets for us and there's obviously a lot of opportunity in those markets. So we're particularly excited about achieving 5-stars there. We'll see how that manifests itself into higher growth. On the retention rate, broadly, we've assumed a similar retention rate as we did in 2018. There are some tweaks here and there, but I'd say in the ballpark of similar. So as I said in my remarks, it's still pretty early on the retention side because typically, terms lag sales, and you don't really learn about a term until you hear from the other carrier that someone signed up there. So it takes a little longer to process. So we think we've done the appropriate thing and assume a largely consistent retention rate. With regard to the HIF, I'd rather not break out the HIF versus the other components. As we've said in multiple contexts, we really think about all the financial levers as one pool of dollars that we look to allocate out between growing benefits and helping our members in achieving growth as well as driving margin. So I'd rather not piece that out separately.

All right. Thanks.

Your next question comes from the line of Peter Costa from Wells Fargo Securities. Your line is open.

I applaud your goals of spreading the tailwinds between stronger earnings and better member benefits and maybe employee incentive compensation. There's perhaps a fourth bucket of higher spending that's perhaps something you can only do next year that you can get away from in 2020 without some adverse consequence if the HIF comes back in 2020. What is your plan for if the HIF comes back in 2020?

I would say, Peter, that it would be consistent with what we did this year and continue to focus on the improved productivity. I would probably disagree a little bit. We look at our spending in a pretty cautious fashion every year and I wouldn't say next year just because we have headwind – I mean tailwinds that we would be overinvesting. I think we continue to look at how we can improve margin and improve productivity in the company and at the same time, drive a customer value proposition that is competitive in the marketplace. So I recognize that the HIF is always a challenge to predict, but we as an organization look at that as a way to approach that would be continue to drive our productivity up.

So if the HIF comes back in 2020, which of the other buckets then would you squeeze back? Would it be earnings? Would it be member benefits? What exactly would you squeeze?

Yeah. I mean we continue to maintain committed to improving our margin growing at a market rate that is between 11% and 15% level, our earnings per share growth rate, and at the same time continuing to be committed to our value proposition in the marketplace. And every year, we are constantly trying to find that ability to meet all three of those. And I would consider 2020 no different than any other year that we have.

Okay, thanks.

Our next question is from the line of Kevin Fischbeck from Bank of America. Your line is open.

Great, thanks. I just wanted to go to the Part D losses that you're expecting for next year. I guess you've seen kind of an erosion of your market-leading position in the last couple of years. I mean, how important is it to have that position? I guess, A, is there anything that you can do to move back into being a low-cost plan in those markets? And then, B, does that have a secondary effect on your Medicare business, because I guess one of the benefits that you give away in Medicare Advantage is a cheap Part D plan. So to the extent that you no longer have that advantage on Part D, does that hurt your growth outlook?

I'll start and then I'll look to Brian to add commentary. I would say that, first, you just see the organization continuing to focus on pricing discipline here, and we've done this in other times when we see the market getting a little astray. We did it in group a few years ago. You see it now in PDP. You see it in group commercial where we just don't want to follow the market down. And the consequence is that we're going to lose membership. What we do see is both because of our brand and commitment to our service levels that we do see a higher conversion from Part D to Medicare Advantage and the success of that, and we continue to believe that. Now, keep in mind, this is on a 5 million membership base. So as we talk about 500,000, it's large, but it's still an absolute, as a percentage, is not catastrophic by no means. In meeting the future growth rate, we'll continue to be price disciplined in the marketplace. We'll continue to focus on our service levels. And at times, we might add other components to the program. But I would say that you will continue to see us wait this through because we don't think that the market can continue to offer the pricing that's in the marketplace and continue to have a sustainable product. And I think we're just going to wait this through and see what happens at the other end. Brian, do you have any other comment to make?

No, I think that's good.

Great, thanks.

Our next question comes from the line of Sarah James from Piper Jaffray. Your line is open. Sarah E. James - Piper Jaffray & Co.: Thank you. So LabCorp recently talked about their growth strategy being linked to locating their 600 labs and Walgreens expansions in the same locations that has clinical assets or primary care or urgent care. And I know it's early in the Kansas City rollout, but can you talk about any results in increased foot traffic or level of consumer interactions with the information booth that you've seen that could influence your decision to expand the JV realistically? How quickly could that happen? And do you have any data that helps you frame up what an incremental touch point with a potential MA customer could mean to influencing their future buying decisions to buy Humana's MA plan? Thanks.

Yes. I think first thing that we've seen is that the convenience of the store is highly appreciative. We've seen that the traffic that goes into these particular clinics is more – has increased as a result of the location and just the branding of it. And so we find that just in its initial opening. And keep in mind, it's been open only about three weeks now, so we're very early in it. The second thing we do see is that, as a result of that increased interest, we do see Humana being more discussed as both from a health plan point of view, but also from just a primary care clinic point of view. So we are very positive and excited about the exposure it provides. And then in addition, we find that it does offer another opportunity for the Retail side where they've seen increased urgent care visits in the back of the store. The last thing that we've seen in early part is the fact that we are influencing people's health. We've seen similar stories as what I articulated on the call of being able to help people with financial needs and financing and getting support for their prescriptions. We've also seen the area in being able to help them and understand their benefits. And then in addition, in some of health areas, we've been able to influence their health decisions along with prescription management. And so we've seen the other areas of supporting the individual as being very positive. So, to summarize it, great exposure, we see more foot traffic. We see engagement being greater as a result of our health coaches being there. And then in addition, I think the Retail side is seeing some benefit as a result of that, both in the urgent care area, but I think in general part of the store. Sarah E. James - Piper Jaffray & Co.: So it sounds like all positives there in such a short period. How should we think about the framework for your evaluation of deciding to expand it and how long that process could take to make that decision?

Yeah. I think we have a great relationship with both Walmart and Walgreens and we'll continue to build on that relationship. I suspect that we will do some other stores before we conclude on this particular offering as a result of the initial indication and the learnings from this. And I think being able to do a few more stores will also give us the confidence in being able to scale it. Sarah E. James - Piper Jaffray & Co.: Thank you.

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

Thanks. Good morning. Questions around Medicare Advantage and the outlook for next year. Strong growth. It sounds like you're expecting to be slightly above industry. And so I'm curious what you're seeing from the competition. You've gotten to look at sort of competitor plan design, et cetera. So is your expectation – it sounds like retention is the same, that you're taking share from competitors? Has there been a change in that competitive landscape? Or is this still really, no, we're just going to continue to take share as an industry from fee-for-service?

Well, I think what we've seen – again, it's anecdotal and it's really hard to say because we don't have true industry data, but the broker chatter that we hear is that we are taking share from our competitors. So our sales being nicely above – in some cases, meaningfully above our existing market share. But, again, it's way too early to make that this positive because we just don't know where the industry is, and we obviously don't have visibility on all the sales that are occurring. But the early indicators are positive, that we're taking share.

So I guess the follow-up to that is, does that make it sound like you're not seeing a competitive response or a change in the market that you find troublesome? You're not seeing new competition or more aggressive change in benefits from competitors or anything like that. It sounds like it's more manageable in your mind.

Yes, I think so. I mean, I would say it's a local market phenomena. We see in certain markets that there are certain players who tend to be quite aggressive and then there are other markets where it tends to be more rational. Frankly, you see that every year that there are some people who want to make a bet on a particular market for various reasons. And so I wouldn't say we've seen any difference in terms of rationality of pricing this year. Clearly, there's a lot of additional money coming from the health insurance fee being on holiday and some of the Rate Notice and other things. And so I think as an industry, benefits have improved. And I think it goes to the importance of the health insurance fee for our beneficiaries. And so from that perspective we have seen increased benefits, but I wouldn't say there's been anything irrational with some exceptions in certain markets. But that's really par for the course.

Got it. Thanks.

Your next question comes from the line of Steve Tanal from Goldman Sachs. Your line is open. Stephen Tanal - Goldman Sachs & Co. LLC: Good morning, guys. Thanks for all the helpful color. One question I guess on just cost trend. I guess it's probably fair to assume it's been decelerating and maybe even more recently. Hoping to kind of get some color there, maybe confirm that. And the other part of that is really just understanding what was assumed for trend in your bids for next year and kind of baked into the initial earnings outlook.

Yes. I would say on the trend side, it's really consistent with what we've talked about the last few quarters in terms of this shift from inpatient to outpatient, that hasn't let up. We continue to see that. I would just say on 2019 trend, we try to be very prudent about the numbers we put in our bids, and so – but I'd rather not comment beyond that. We've obviously reflected what we've seen this year into the 2019 experience. Stephen Tanal - Goldman Sachs & Co. LLC: Okay. Thank you.

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

Hi, there. Good morning. It's Dave Styblo in for Dave Windley. I had a question about 2020 looking ahead. We estimate that the Stars there will increase your bonus of those – in the bonus by about 10 points to 84%. Obviously, knowing rates is going to be important part of your view on 2020, but curious if the increased visibility on Stars there helps provide confidence that you could return to your target margin of 4.5% to 5% by that point.

Well, I think the Stars results obviously are very positive and I think indicative, as Bruce said in his remarks, of the quality focus that our organization has. And I think really, the great effort of the Stars team and working again across businesses and across silos and departments to drive a great result for our members, which manifest itself in better Stars. I think what you said is really important, obviously, in terms of where the Rate Notice ultimately shakes out and what happens with the health insurance fee. Those are really important factors as we think about what our 2020 ultimate bidding strategy will be and what that means for margin. So we're not prepared today to give 2020 guidance. We're just giving indicators of 2019, so we'll have to stay tuned for that. But I would just say, as Bruce said earlier in the call, that we're obviously very mindful of all the commitments that we have and goals that we have to drive both growth and margin.

Thanks.

Your next question comes from the line of Steven Valiquette from Barclays. Your line is open.

Thanks. Good morning, Bruce and Brian. Thanks for taking the question. Bruce the color on all of Humana's enhanced benefit design for individual MA for 2019 was definitely helpful when you provided that earlier. This was kind of touched on a little bit, but I guess I had somewhat of a similar question around, do you think you're unique among individual MA players in moving the needle as much as you did with the enhanced MA benefits for 2019? I guess, what I'm really trying to get at is maybe just to phrase it slightly differently. I mean, would you characterize 2019 as more of a go for the gold type year for Humana regarding attempted individual MA membership growth? Or do you view 2019 as more business as usual with the levers that you're pulling to drive membership growth for next year?

Yeah. I would characterize it as more business as usual. I think one of the reasons why you see such improvement in benefits is because we, I think as an industry, have invested back into the benefits both to be competitive but a number of things like HIF that should be included in the benefits. So I think you've just seen the continued belief that the areas that we can improve in whether it's our medical costs trend or in addition, the rate increases, or for that matter, the tax benefits that we've received. We'll be mindful about margin, but at the same time be mindful of being competitive in the marketplace. I think if you were to compare our benefits on a (00:52:56) value, you will see us be fairly competitive, but not be the cheapest. We've always tried to maintain to be at a level in the industry where we are in the tier to be selected, but not to be the cheapest in the marketplace. We feel our brand, our service and our longevity of stable benefits has always served us well over time, and we continue to see that being the case. The last thing I think is, over the last two years, we've invested in the benefits to overcome some of the deterioration that was taking place in the 2015, 2016 timeframe, especially during the Aetna transaction, and I think a little bit of last year was catch-up. This year put us in a competitive area, but I really would emphasize its competitiveness, but not overzealous.

Okay. I appreciate the extra color. Thanks.

Your next question comes from the line of Michael Newshel from Evercore ISI. Your line is open.

Thanks. I have a question on the recent proposal on MA policy changes for 2020. So if CMS finalizes its decision to extrapolate the RADV Audits without a fee-for-service adjuster, would there be any impact on what you've already reserved for to settle past audits? And also, would there be any noticeable impact on booking of revenues on an ongoing basis?

Yes. I would just say that we're still reviewing the proposed rule, but we believe the proposal does not satisfy actuarial equivalence as required under the Medicare statute. And again, it's a proposed rule and we certainly plan to comment. But as we've said before, we feel very confident around our practices in this area. And I would just leave it at that.

All right. Thank you.

Your next question comes from the line of Charles Rhyee from Cowen. Your line is open. Charles Rhyee - Cowen & Co. LLC: Yeah. Thanks for taking the question. You mentioned before that, starting next year, a number of your members will have reduced premiums or $0 policies. And I think in one spot, you talked about a number of your members will have $0 pharmacy deductibles. Can you talk about when you go to that kind of a structure, what kind of changes do you make in formulary to control costs? And are any of those things able to help maybe stem the tide in your PDP book? And is there sort of a steady state in terms of membership there we should be thinking about as you model out to the future? Or should we continue to think about maybe a slow gradual decline and think of it more as a maybe some shift into your MA products as that. Thanks.

Sure. Well, I'd sort of differentiate as two separate questions, one on formulary. I would say, we're very thoughtful on formulary. And obviously, there are a number of drugs that are protected and therefore they have to be covered. Others where we have the ability to incent one drug over the other, we use that as a way to what we call drive a trend bender and effectively get a better rate from the manufacturer, which we can pass back in the form of better benefits. And so I would say we're very thoughtful around our formulary approach. And we spend a lot of time on, obviously, ensuring that our members get the coverage that they need and us doing it in the most efficient and costly way possible. As it relates to PDP formulary is obviously a part of that. There's a whole host of things that go into PDP. As Bruce said, what we've seen is some aggressive pricing on the PDP side that we haven't been willing to chase. We think there is some cross-subsidization going on potentially, with we think, with some of the retailers there to drive people into the store that perhaps gives them a different perspective than we might have. We do view PDP as a pipeline into MA. That was a percentage of our MA sales. It's still relatively small, but it's still an opportunity that we see as potentially exciting. And I would say, going forward, we're certainly not surrendering the PDP market by any means. We're going to have to be innovative and differentiated. I think if you look back several years, we basically pioneered the low-price product through the Walmart plan. And that was really a revolutionary product in the industry that allowed us to get a number one market share, and our relationship with Walmart has been very strong. And so we got to continue to innovate and provide perhaps different kinds of benefits to our members and think through what will appeal to them going forward. But we're just going to be thoughtful going forward. We're not going to chase price, but we also want to grow the PDP business ultimately.

And similar to all our plans or all our plans, we're very conscious about having a balanced customer base that is from a condition point of view. And so when we think about it, we also think about it just from the type of customers we would attract to ensure that it has its proper pricing there. So in this particular case, we're not concerned about adverse selection. Charles Rhyee - Cowen & Co. LLC: Great. Thank you.

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

Hi, good morning. You guys had previously cited the 2018 Budget Act as a possible catalyst to potentially seek a Medicaid platform, basically given your desire to participate in SNP growth and the requirement to have long term – or capitated Medicaid contracts in order to participate in SNP beyond 2021. Do you think the final rule still requires that? There was this sort of provision about if you didn't have state-capitated contracts on the Medicaid side is you could do some notification around high-risk populations, so basically sort of implying providing data to the state would satisfy the integration requirement. Does that change your view on contemplating a deeper move into Medicaid?

I think just in general, just to reconfirm our interest and continued growth in Medicaid, and it continues to be high as we believe and have continue to believe over the years that the dual population being highly chronic in the senior population and disability is a great market for us to serve with our clinical programs. We continue to believe that our organic capabilities, as proven by Florida and some other states that we've won, is very, very competitive and we will continue to do that. At the same time, we will continue to add our capabilities, and specifically in the procurement process, in areas and states that we feel is complementary to the existing membership we have and continue to be on the look out there. Specific to your question on the proposed rules that are being made, we do feel it provides more clarity around what the rules are and specifically that the state does not dictate of what a D-SNP plan is required that we would have more flexibility in offering D-SNP or related planning. And I think that clarity gives us more confidence that in certain states that we'll continue to be offering a D-SNP plan without having that procurement of the Medicaid side. But that doesn't deter us from still focusing on the Medicaid and continuing to focus on winning contracts both organically and when necessary and if – in the appropriate time be acquiring a Medicaid platform.

Okay. Thank you.

There are no further questions at the moment. Mr. Bruce Broussard, please continue for your closing remarks.

Well, like always, we thank everyone's support and investing and the confidence in the company. So thank you very much. And on behalf of the management team, we want to thank our 60,000 people that every day go to work to help support our members and the great job that they do. So thank you very much. And everyone have a wonderful day.

Thank you for joining. This concludes today's conference call. You may now disconnect.