Humana Inc. (NYSE:HUM) Q3 2023 Earnings Call Transcript

Humana Inc. (NYSE:HUM) Q3 2023 Earnings Call Transcript November 1, 2023

Humana Inc. beats earnings expectations. Reported EPS is $7.78, expectations were $7.15.

Operator: Good day and thank you for standing by. Welcome to the Humana Third Quarter 2023 Earnings Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Lisa Stoner, Vice President of Investor Relations. Please go ahead.

Lisa Stoner: Thank you and good morning. In a moment, Bruce Broussard, Humana’s President and Chief Executive Officer; and Susan Diamond, Chief Financial Officer, will discuss our third quarter 2023 results and our financial outlook for 2023. 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.

A smiling customer with a health insurance plan, a customer that was successfully acquired thanks to the company’s efforts.

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 latest Form 10-K, our other filings with the Securities and Exchange Commission and our third quarter 2023 earnings press release as they relate to the forward-looking statements, along with other risks discussed in our SEC filings. We undertake no obligation to publicly address or update any forward-looking statements in future filings or communications regarding our business or results. 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.

Bruce Broussard: Thank you, Lisa. Good morning, everyone. Today, Humana reported financial results for the third quarter of 2023 with adjusted earnings per share of $7.78, slightly above our expectations. Results for the quarter include outperformance in our Medicaid and primary care businesses. and a continued focus on driving sustainable operating efficiencies, offset by the impact of a modest higher-than-anticipated utilization in our Medicare Advantage business. We reaffirmed our full year 2023 adjusted EPS guidance of $28.25 reflecting a 12% increase over 2022. In addition, we are pleased to raise our guidance for full year individual MA membership growth by an additional 35,000 members to $860,000 driven by continued higher-than-expected new sales.

Our full year membership growth estimate now reflects a 19% growth rate significantly outpacing the industry. As we’ve shared previously, our ability to deliver on our targeted earnings growth rate in 2023, while also achieving this impressive membership growth is supported by the strength and scale of our organization. underpinned by a continued focus on disciplined investments, driving sustainable productivity improvements and delivering consistent fundamentals, including industry-leading Stars results and higher customer satisfaction as reflected in our net promote receivers. Further, our strong membership growth creates significant momentum as we advance towards our 2025 adjusted EPS target of $37. Susan will provide additional details on our third quarter performance and our full year expectations in a moment.

I’ll now provide an update on our operations and outlook, including a view of the 2024 Medicare advantage landscape and exciting growth we’ve seen in our primary care business before turning to an update on our ongoing productivity initiatives. Beginning with Medicare Advantage, we took a thoughtful approach to 2024 bids, recognizing the need to balance the rate environment with our commitment to achieve industry average or better membership growth. Our 2024 strategy was informed by extensive consumer and broker research and in-depth analytics regarding Medicare and eligible consumers prefer. We preserved or enhanced key benefits across our portfolio that were identified as the most important consumers and continue to differentiating offerings that focus on improving health outcomes and member experience.

More specifically, we continue to prioritize zero premium offerings, low cost share for highly utilized services, including primary care and Part D [ph] and maintain highly valued supplemental methods like dental and Part B [ph] givebacks. From a dual-eligible special needs plan or SNET perspective, all plans include zero co-pays uncovered Part D [ph] prescriptions and offer healthy option allowance with a rollover feature, a key differentiator in the marketplace. Our product enhancements are coupled with Humana’s leading position in quality and experience. Mana continues to deliver exceptional quality to our members as levered by our CMS star ratings. For 6 consecutive years, Humana has maintained the highest percentage of members in 4 stars or higher-rated contracts among national health lines.

In 2024, 94% of our members will be enrolled and plant rated 4 stars or higher and 61% from plans rated 4.5 stars or higher. For [indiscernible] contracts covering approximately 790,000 members nationwide received a perfect 5-star rated, more than doubling our 5-star membership from 2023, enabling year-round enrollment in these plans. In addition, for the third year in a row, Humana has been ranked number one among health insurance for customer quality and Forrester’s proprietary 2023 U.S. customer experience benchmark serving. Humana also ranked number one in customer satisfaction with [indiscernible] in Florida based on a comprehensive 2023 study by JD Bauer. And we’re proud that Humana once again has been named the best overall Medicare Advantage insurance company by U.S. News and World Report which created an honor based on CMS’ newly released star ratings for MA plans.

Additionally, Humana ranked as the best company for member experience and was declared the best company for low premium plant availability. Collectively, these results are a testament to our commitment to putting the health and wellness of our customers first. From a distribution and sales perspective, we are building upon our omnichannel strategy in 2023, where we’ve seen a 50% increase in our internal sales year-to-date which is our highest lifetime value channel. Our goal is to deliver best-in-class agent and customer experience and have made investments in AI power tools and tallied infrastructure to reduce consumer hold times and transfers. Finally, we are excited about the strong growth of our internal payer agnostic channel which is expected to double its sales production year-over-year this AAAP [ph].

All in, we expect our balanced approach to our 2024 product strategy positions us well and we anticipate 2024 individual MA membership growth to be at or above the overall industry growth rate. We look forward to sharing more in the coming months. Within our center well segment, our primary care platform experienced significant growth in the quarter now operating 296 centers, serving nearly 285,000 patients, representing a year-over-year growth of 33% and 17%, respectively. This includes the impact of the 24 centers recently acquired from Kanav Health, approximately 12 of which are expected to be consolidated into existing centers are closed as we integrate the business by year-end. As a result of the 2023 De Novo Bills and M&A activity, we expect to end the year with net growth of 60 to 65 above our previously communicated annual center growth target of 30 to 50.

Susan will provide additional detail on our center primary care performance in a moment. Turning to our ongoing productivity efforts which span the organization. Our focus on productivity continues to drive sustainable value for the enterprise, while creating more streamlined processes better experiences for our members, patients and provider partners and driving best-in-class quality and customer service results. Let me share a few examples of this important work. Our primary care organization is executing on a multipronged plan to mitigate the ultimate impact of the risk model changes that will be phased in over the next 3 years. including numerous operational efficiencies such as centralizing and streamlining administrative functions, standardizing the clinic operating model and improving clinician productivity.

As an example, we are enhancing our use of prospective risk stratification of our patient base, offering new and enhanced clinical programs and care team interventions to our highest risk patients. which we expect to further reduce avoidable hospitalizations and readmissions, while we optimize our preventative touch points with lower risk patients to increase connection capacity. In the home, as a complement to developing value-based home health payments, we’ve launched a comprehensive initiative to reimagine our scale on health operations. These efforts will be deployed across our more than 350 branches that will include automation, consolidation and implementation technology and AI solutions. This will minimize administrative cash while improving clinician productivity, including optimizing their schedule.

We believe these initiatives, some of which require incremental investment will ultimately streamline our operations and lead to increased clinical — clinician productivity and satisfaction. As an example, CenterWell Home Health has introduced an innovative AI-enabled digital wound management solution which allows our clinicians to effectively capture vital details with a simple picture. We are pleased to report a notable 18% improvement in visit efficiency, thus enhancing the experience, both clinicians and patients. This has been instrumental in clinical decision-making contributing to an accelerated wound healing time by 35%. Finally, within CenterWell Pharmacy, we’ve been focused on investments in digital channels and have seen greater than 800 basis point [indiscernible] scripts received through our digital channels year-to-date, now representing approximately 38% of our total scripts.

Increased use of digital channels provides an efficient and user-friendly experience for patients. Allowing for real-time pulmonary and function of the ability to offer cost-saving alternatives in real time. In addition to our ongoing productivity initiatives, we remain committed to identifying additional sources of value for the enterprise through cost savings and value acceleration from previous investments. Alien drivers include areas such as streamlining our real estate portfolio as we continue to refine new ways of working post COVID. We’ve also identified operations to rationalize our IT portfolio as we focus and building and leveraging enterprise capabilities, providing the opportunity to move away from and/or consolidate certain stand-alone business specific systems and applications that will meet the business needs of the future.

In addition, there were certain initiatives kicked off as a part of our ongoing hard value creation plan in 2022 required implementation of technology to improve processes and drive efficiencies and would therefore take time to realize the full benefit. As we’ve continued to focus on and advance these initiatives, we’ve identified additional value to be extracted [ph]. We anticipate activities related to the additional value creation initiatives to continue throughout 2024. Result in certain onetime charges that will be adjusted for non-GAAP purposes. Collectively, our ongoing productivity and value creation initiatives are driving sustainable value for the enterprise. We expect this work will create now beyond the 20 basis points of annual operating leverage business mix adjusted basis that we committed to at our 2022 Investor Day.

Aiding in our efforts to offset the near-term utilization and reimbursement headwinds currently impacting the industry. Before turning it over to Susan, I’d like to touch on our recently announced leadership transition plan. We are pleased to announce that the health care industry veteran, Jim Richon [ph], was joined Humana as a President and Chief Operating Officer on January 8, 2024, as part of a long-planned CEO transition. Jim will report to me until the latter half of 2024, at which time, after leading Humana for over a decade, I’ll step down and Jim will assume the CEO role. As we work to make this seamless transition in the coming months, I look forward to partnering with Jim brings a collaborative, thoughtful and innovative leadership style to our organization.

Making him a natural fit for the culture of today and the future. Jim brings a strong combination of operational industry and CEO expertise. His first-hand experience leading true challenge is an opportunity to change in health care services continue while helping them accelerate our integrated care strategy. We look forward to introducing Jim to our stakeholders when he joins the team in early 2024. With that, I’ll turn the call over to Susan.

Susan Diamond: Thank you, Bruce and good morning, everyone. Today we recorded adjusted EPS of $7.78 for the third quarter. Results in the quarter were slightly positive — slightly above initial expectations driven by outperformance in our Medicaid and primary care businesses and continued focus on driving sustainable productivity gains, offset by modestly higher-than-anticipated utilization in our Medicare Advantage business. I will provide additional detail on recent utilization trends in a moment. Our performance to date continues to reflect the strength and agility of the enterprise, demonstrating our ability to successfully navigate the higher-than-anticipated utilization while delivering on our earnings commitment and driving individual Medicare Advantage membership growth that significantly outpaces the industry.

We now expect to add approximately 850,000 members in 2023 and reflecting a 19% growth rate. Further, for the full year, we have reaffirmed our adjusted EPS guidance of at least $28.25 which reflects a 12% increase over 2022. We I will now provide additional details on our third quarter performance and full year outlook by segment, beginning with insurance. This morning, we reported that our insurance segment benefit ratio exceeded expectations by 40 basis points due to higher medical costs in our Medicare Advantage business. We continue to experience an increase in COVID admissions in the third quarter, whereas our forecast previously assumed that this would occur in the fourth quarter. To date, we have not seen an offset in non-COVID utilization which diverges from the consistent patterns seen previously.

As it respects non-inpatient trends, we previously communicated that we expected the higher PMPMs [ph] reported in the second quarter to continue throughout the back half of the year, reflecting a moderating year-over-year trend percentage. The most recent paid claims data suggested a modest uptick in TTMs [ph] for the third quarter versus the stable levels we anticipate. Considering the most recent trends, we are planning for the higher level of utilization seen in the third quarter to continue for the remainder of the year. As a result, we are increasing our full year insurance segment benefit ratio guidance to approximately 87.5% which implies a fourth quarter ratio of 89.5%. This guidance also reflects the increased individual MA membership growth which continues to include a higher-than-expected proportion of agents.

As we have previously discussed, agents initially run a higher benefit expense ratio than the average new member which negatively impacts the current year benefit ratio but result in a larger margin expansion opportunity on these members over time. We anticipate that the higher 2023 insurance segment benefit ratio will be offset by additional administrative expense reductions, driven in part by the sustainable productivity initiatives group discussed, improved net investment income and other business outperformance. Turning to Medicaid; the business exceeded expectations in the quarter, primarily driven by favorable membership due to redetermination timing which continue to track slightly favorable to our expectations, combined with disciplined medical cost management initiatives and lower-than-expected utilization.

Moving now to CenterWell; the segment continued its solid performance seen throughout the year, outperforming expectations in the quarter. Our primary care organization results exceeded expectations, driven by better-than-expected patient volume and revenue combined with lower-than-anticipated utilization, resulting in improved medical margin in our fully own centers. We continue to see better-than-expected patient growth, adding over 17,000 patients or nearly 89% growth in our de novo centers since December 31, plus 15,000 patients in our wholly owned centers, representing 9% growth year-to-date. We now anticipate full year patient annual growth of approximately 34,000 to 36,000 as compared to our original estimate of 20,000 to 25,000 patients more than doubling the patient growth achieved in 2022.

Our primary care organization also continues to improve the operating information performance of our wholly owned centers. We continue to positively impact patient outcomes with hospitalization levels trending down year-over-year. In addition, due to our continued efforts to engage our patients Retention has now improved 270 basis points year-over-year, up from a 220 basis point improvement as of the second quarter. Patient satisfaction scores continue to reflect the quality of care delivered with Net Promoter Scores averaging 82 nationally. And we are proud of our quality scores which are tracking ahead of last year’s trajectory with a 4.5 star performance year-to-date on provider influence measures for engaged patients. We now expect to increase the number of centers that are contribution margin positive from 110 at the end of 2022 and to approximately 130 at year-end 2023, an increase from our previous expectation of 125 and representing an 18% increase year-over-year.

In addition, we expect to increase the number of centers that have reached our $3 million contribution margin target from 31 in 2022 to approximately 44 at the end of 2023, an increase from our previous expectation of 40 — and representing a compelling 42% increase year-over-year. The better-than-expected primary care earnings in the quarter in our consolidated benefit expense ratio being 100 basis points lower than our insurance segment benefit expense ratio as compared to our previous expectation of a 40 to 50 basis point reduction. As a reminder, on a consolidated basis, we report from the perspective of the health plan and as such, intercompany earnings from these services are eliminated against benefit expense. At this time, we do not anticipate that the primary care outperformance will run rate into the fourth quarter.

Therefore, we continue to point you to a 40 to 50 basis point reduction between our insurance and consolidated benefit expense ratios for the fourth quarter with a reduction of approximately 60 basis points for the full year. Turning to the home. In our core fee-for-service business, year-to-date episodic admissions are up 8.6%, while total admissions are up 5.1% and tracking in line with our full year expectations of a mid-single-digit year-over-year increase. As Bruce discussed, we are working diligently to identify clinical and operating efficiencies to offset industry headwinds, including rate reductions, declining original Medicare admissions due to increasing MA penetration and ongoing labor pressures. From a capital deployment perspective, we have completed approximately $1 billion in repurchases to date and continue to anticipate share repurchases of approximately $1.5 billion in 2023.

Before commenting on 2024, I would like to take a moment to highlight the significant progress we have made towards the midterm targets we shared at our Investor Day 1 year ago. As a reminder, our 2025 adjusted EPS target of $37 represents a 40% CAGR from 2022 and is expected to be comprised of 10% enterprise earnings growth largely driven by the contribution from our Medicare membership, 20 basis points of improved operating leverage and a 2% contribution from capital deployment on an annual basis. While allowing for continued growth and investment in our Medicaid and CenterWell businesses as these high-quality assets are expected to meaningfully contribute to our long-term earnings growth as it continues to scale and mature. Over the last year, we have outperformed virtually all of the goals, including above-industry average membership growth in our Medicare managed business, significant outperformance of our productivity goals and increased share buybacks as we saw stock price dislocation earlier this year.

We continue to invest in and grow our Medicaid and CenterWell businesses, performing top line growth goals across these businesses as well. At the same time, we’ve experienced higher-than-expected medical cost trend within our Medicare managed business and have worked hard to mitigate the impact of these trends in order to deliver on our enterprise earnings and EPS commitments. All in, we are proud of the significant progress we have made and remain committed to the targets we shared last year, including our 2025 adjusted EPS target of $37 I’ll now take a few moments to provide additional color on our early outlook for 2024, starting with membership. As Bruce shared, while it’s still early in ’18 [ph], we expect that our balanced approach to our 2024 bids positions us to grow individual Medicare Advantage membership at or above the overall industry growth rate while planning for a modestly higher attrition rate, given the benefit design changes we implemented in response to the rate environment.

As we always caution this time of year, it is early in the AEP selling season, the atlas we provide today could change depending on how sales and voluntary disenrollment ultimately come in. Broadly speaking, 2024 competitor plan design reflect less benefit degradation than anticipated which will likely lead to fewer consumers shopping and therefore, less opportunity for Humana to meaningfully outpace the industry growth rate. Specifically Humana’s performance relative to the market, initial feedback from brokers is positive, supporting our expectation of at or above industry average growth. Finally, recall that we have limited visibility into member disenrollment data this early in the AEP season as those results take longer to complete and we look forward to providing further commentary on our fourth quarter call.

In our Group Medicare Advantage business, we expect membership growth of approximately 45,000 in 2024, driven by small and midsized account wins and remain committed to disciplined pricing and a competitive group Medicare Advantage market. With respect to seeing along PDP, the overall PDP market continues to decline as Medicare beneficiaries select Medicare Advantage over original Medicare and PDP — in addition, we remain disciplined in the pricing of our PDP products as cost trends continue to rise. As a result, our Walmart Value plan will not be as competitively priced as it has been historically and our basic plan will exceed the low income benchmark in 16 regions in 2024. We currently expect a net decline of approximately 750,000 TEP members in 2024, including a loss of approximately 220,000 members as a result of exceeding the low income benchmark.

As we look beyond 2024, we will evaluate the impact of the various proposed regulatory changes which are likely to result in higher PDP claim premiums broadly and could lead to further industry-wide movement from stand-alone Part D claims to Medicare Advantage plans given the strong Medicare Advantage value proposition. Our focus remains on creating enterprise value from our PDP plan by driving increased mail order penetration and conversions to make your advantage. Finally, in our Medicaid business, Humana continues to demonstrate the ability to deliver unique value to communities by building on a strong operating model that integrates physical and behavioral health and develop meaningful partnerships and innovations to address health and equities and social deterrence to health.

After successfully implementing the Ohio and releasing our contract in early ’23, we look forward to beginning to serve members in both Indiana and Oklahoma in 2024 and continue to expect to bring our total Medicaid footprint to United States and approximately 1.5 million members by year-end 2024. Turning now to our expected 2024 financial performance. I reiterate expected to grow 2024 adjusted EPS within our targeted long-term range of 11% to 15%. We Recognizing the increased utilization we have now seen in 2023 and prudently assuming this level of utilization continues into 2024, we currently anticipate growth at the low end of this range. We look forward to providing a more specific 2024 guidance on our fourth quarter earnings call in February.

Looking ahead to 2025, as previously mentioned, we remain admitted to our 2025 adjusted EPS target of $37, reflecting a 14% CAGR from 2022 to 2025. It is important to note that our 2025 adjusted earnings growth will benefit from the maturation of our robust individual MA membership growth expected in 2023 and 2024. Advancement of the mitigation activities, our primary care and home organizations are implementing to offset the impact of their revenue headwind. Capital deployment activity as well as the sustainable productivity and value creation initiatives discussed today. In addition, we anticipate certain discrete pricing actions to be taken across our individual and group Medicare books in response to the higher utilization and trends experienced.

In closing, I want to say thank you to our over 65,000 teammates. Our success is enabled by a dedication to putting our members and patients at the center of everything we do. I would also like to thank our shareholders for their continued support. Finally, I’ll reiterate that Humana fundamentals are strong and we remain well positioned to drive compelling earnings growth in the mid and longer term. With that, we will open the line for your questions. In fairness to those waiting in the queue, we ask that you limit yourself to one question. Operator, please introduce the first caller.

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Q&A Session

Operator: Our first question comes from the line of Kevin Fischbeck with Bank of America.

Kevin Fischbeck: Great. I guess maybe my question would be on the outperformance in the physician business which is just a little bit counter to, I guess, what some of your competitors have done in a higher MA trend environment. It’s surprising that the physicians are seeing better medical performance. So can you talk a little bit about why there’s that disconnect there wise not flowing more through that side of the equation. And I guess the fact that you keep growing membership faster on the clinics, why isn’t that the same kind of MLR pressure there that you see in the MA business when that grows faster than expected?

Susan Diamond: Sure. Kevin. So yes, you are correct. We did see outperformance in the primary care business. The first thing I would point out is we’ve been consistently saying all year that some of the higher trends we are seeing on health plan side has been disproportionately impacting our non-risk plans versus risk providers. And some of that is a reflection of from the product mix. We’re seeing more pressure in our LTPO offerings versus our HMO. And our CenterWell primary care business, particularly the whole center are going to disproportionately indexed to HMO plans and then geographically, obviously, in Florida in some of our higher performing markets as well. With respect to the specific outperformance we’re seeing in Primary Care this year, there’s a variety of factors contributing to that.

They’ve been positive prior year development. As well as positive current year development in the quarter and both seeing outperformance across revenue and medical costs. So really a variety of factors. The last thing I would say is some of the information that they rely on comes from the agnostic provider. And then you get some of that information on a bit of a lag. So you tend to see a little bit more later in the year sort of PPD and CPD as they receive updated information I would say, from the agnostic book, it’s mostly, I would say, revenue related where they’ve seen some positive pickups in risk towards an MRA reimbursement relative to our internal expectations.

Operator: Our next question will come from the line of Stephen Baxter with Wells Fargo.

Stephen Baxter: Yes. So in terms of the higher insurance company guidance, the 20 basis points higher than the high end of the range you previously pointed to. Is any of that increase related to COVID? Or is COVID is indeed purely a timing shift from Q4 into Q3? And then just in terms of the modest step-up in non-COVID cost PMPM [ph] that you talked about in Q2, Q3. Can you just spike that out a little bit in terms of what categories are driving that and many categories moving in the other direction as well, that would be helpful to know.

Susan Diamond: Sure. Steve, yes, so as to rates we called out the momentary and we disclosed this in some of our public commentary during the quarter. We have seen an uptick in COVID within the quarter. As we mentioned, our internal forecast for the year initially anticipated an uptick in the fourth quarter versus third. So initially, we said, well, that sold be just the timing of a pull-forward of that. We have started to see COVID start to decline is coming down. But as we mentioned, we have to date not seen an offset. And so it resulted in just net incremental utilization within the quarter versus what we might have otherwise expected based on historical trends. As we thought about the year, what we decided to do and an attempt to just be somewhat conservative to assume that the cover that we anticipate in the fourth quarter from an addition standpoint would remain.

So we did not take that out of the forecast. And may eventually show up as non-COVID ultimately. But we did keep that in the forecast such that our ATT expectations are consistent with what we would have expected previously and didn’t take that out. On the non-inpatient side, I would say the drivers of that are consistent with what we’ve been saying since the term developed on our second quarter call in the discretionary sort of orthopedic and surgical procedures some of the ER and observations that we’ve seen those have continued. And I would say the drivers remain consistent. There wasn’t any new that came up that’s driving that sequential increase.

Operator: Our next question comes from the line of Scott Fidel with Stephens.

Scott Fidel: Would be interested if you could give us some of your initial observations on the 2024 AEP as it relates to your marketing and distribution strategies and where you feel that things may be resonating the most definitely seeing the Humana guide, for example, on plenty of ads recently. But more broadly, just in your distribution strategies, what you think seems to be working the best in. And then any areas where you may even be making some adjustments to the strategy here sort of inside of the AEP as you continue to look to drive new sales.

Bruce Broussard: Yes, a few things there. One is we are getting is that positive feedback to just where our positioning is in the channels in the various broker channels, so both the call center and in addition to the field. So I would just say, in general, people seem to be very content with how we’re positioned, both from a benefit point of view but also just from our quality scores that we obviously received both in stars but also our customer service side. The second thing is that we do have — continue to have a balanced approach in how we are going to market with our distribution from continuing to support and build our relationships with our call centers, our external call centers and in addition, our field representatives that are external field representatives.

So we do continue to see good engagement with them. We continue to see working with them not only from a sales point of view but also from our attention point there which is consistent from last year as we continue to make proper investments with our partners there. We do see good results coming out of our field, external field channel. We continue to see really strong results there and probably they’re overachieving from our budget. And in addition, we continue to see good results from our agnostic channel. As I mentioned, we’re predicting to almost — to double our sales there. We’re not making much adjustment today. I mean we continue we’re only 2.5 weeks into AEP and we feel like we’re consistent with what our expectations are. And so we’re going to continue to execute.

But maybe in a few weeks, we might adjust accordingly. But today, I think it’s what we’ve set out to do last year.

Operator: Our next question will come from the line of A.J. Rice with UBS.