49071--2/19/2010--HUMANA

related topics

{regulation, government, change}

{condition, economic, financial}

{capital, credit, financial}

{system, service, information}

{acquisition, growth, future}

{financial, litigation, operation}

{customer, product, revenue}

{debt, indebtedness, cash}

{cost, operation, labor}

If we fail to effectively implement our operational and strategic initiatives, including our Medicare initiatives, our business may be materially adversely affected, which is of particular importance given the concentration of our revenues in the Medicare business. If we fail to properly maintain the integrity of our data, to strategically implement new information systems, or to protect our proprietary rights to our systems, our business may be materially adversely affected. We are involved in various legal actions, which, if resolved unfavorably to us, could result in substantial monetary damages. Increased litigation and negative publicity could increase our cost of doing business. Our business activities are subject to substantial government regulation. New laws or regulations, or changes in existing laws or regulations or their manner of application, could increase our cost of doing business and may adversely affect our business, profitability and financial condition. In addition, as a government contractor, we are exposed to additional risks that may adversely affect our business or our willingness to participate in government health care programs. Any failure to manage administrative costs could hamper profitability. Any failure by us to manage acquisitions and other significant transactions successfully may have a material adverse effect on our results of operations, financial position, and cash flows. If we fail to develop and maintain satisfactory relationships with the providers of care to our members, our business may be adversely affected. Our pharmacy business is highly competitive and subjects us to regulations in addition to those we face with our core health benefits businesses. Changes in the prescription drug industry pricing benchmarks may adversely affect our financial performance. If we do not continue to earn and retain purchase discounts and volume rebates from pharmaceutical manufacturers at current levels, our gross margins may decline. Our ability to obtain funds from our subsidiaries is restricted. Downgrades in our debt ratings, should they occur, may adversely affect our business, results of operations, and financial condition. Changes in economic conditions may adversely affect our results of operations, financial position, and cash flows. The securities and credit markets may experience volatility and disruption, which may adversely affect our business. Given the current economic climate, our stock and the stocks of other companies in the insurance industry may be increasingly subject to stock price and trading volume volatility.

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49071--2/19/2010--HUMANA_INC