| Item 1.01 |
Entry into a Material Definitive Agreement. |
On November 7, 2022, Humana Inc. (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) with BofA Securities, Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and PNC Capital Markets LLC, as representatives of the several underwriters (together, the “Underwriters”), pursuant to which the Company agreed to issue and sell to the Underwriters $500 million aggregate principal amount of its 5.750% Senior Notes due 2028 (the “2028 Senior Notes”) and $750 million aggregate principal amount of its 5.875% Senior Notes due 2033 (the “2033 Senior Notes” and, together with the 2028 Senior Notes, the “Senior Notes”), in accordance with the terms and conditions set forth in the Underwriting Agreement. The 2028 Senior Notes were sold at a public offering price of 99.705% of the aggregate principal amount thereof and the 2033 Senior Notes were sold at a public offering price of 99.508% of the aggregate principal amount thereof.
The sale of the Senior Notes has been registered with the Securities and Exchange Commission (the “Commission”) in a registration statement on Form S-3, File No. 333-254041 (the “Registration Statement”). The terms of the Senior Notes are described in the Company’s Prospectus dated March 9, 2021, as supplemented by a final Prospectus Supplement dated November 7, 2022 as filed with the Commission on November 8, 2022, pursuant to Rule 424(b)(5) under the Securities Act of 1933, as amended (the “Securities Act”).
The Senior Notes are unsecured senior obligations of the Company and rank equally with all of the Company’s other unsecured, unsubordinated indebtedness. The 2028 Senior Notes bear interest at an annual rate of 5.750% and the 2033 Senior Notes bear interest at an annual rate of 5.875%. Interest on the Senior Notes is payable by the Company on March 1 and September 1 of each year, beginning on March 1, 2023. The 2028 Senior Notes mature on March 1, 2028 and the 2033 Senior Notes mature on March 1, 2033. The closing of the sale of the Senior Notes is expected to occur on November 22, 2022, subject to customary closing conditions. The Company estimates that the net proceeds from the sale of the Senior Notes, after deducting the Underwriters’ discounts and commissions and estimated offering expenses, will be approximately $1.232 billion.
The Underwriters and their affiliates have performed commercial banking, investment banking and advisory services for the Company from time to time for which they have received customary fees and expenses. The Underwriters and their affiliates may, from time to time, engage in transactions with and perform services for the Company in the ordinary course of their business. In addition, certain affiliates of the Underwriters are lenders under the Company’s revolving credit facility, 364-day credit facility and term loans, and the Underwriters or their affiliates may hold the Company’s existing senior notes for their own accounts.
The Company intends to use the net proceeds from the Senior Notes offerings to repay its 2.900% Senior Notes due 2022 and its 3.150% Senior Notes due 2022 at maturity during December 2022. The Company intends to use the remainder of the net proceeds from the Senior Notes offerings for general corporate purposes, which may include the repayment of borrowings under the Company’s commercial paper program.
A copy of the Underwriting Agreement is filed as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated by reference herein. The description of the material terms of the Underwriting Agreement is qualified in its entirety by reference to such exhibit.