- Under pressure from an activist hedge fund, Humana has agreed to add two directors to its board, reaching a deal with Starboard Value.
- Humana and Starboard will appoint one director before the company's annual shareholder meeting and one after.
- As part of the deal, one incumbent director, yet to be named, will not be included in the slate of recommended directors at the upcoming 2022 meeting followed by another incumbent not standing for reelection in 2023, according to a statement released Tuesday.
Humana is the latest insurer facing pressure from an activist investor.
Last year, Centene reached a similar deal with activist investor group Politan Capital Management that resulted in a series of upcoming changes, including the retirement of longtime CEO Michael Neidorff and a board shakeup.
For Humana, the board refresh comes as the Louisville, Kentucky-based firm is reevaluating its operations as part of a "value creation plan."
Humana previously said it plans to cut costs in various areas in order to funnel $1 billion back into its core business, Medicare Advantage.
To find those dollars, Humana is taking a critical review of its operations to ensure its resources are targeted in the areas of greatest value, executives said during a call with investors earlier this year. At the same time, Humana is "optimizing" its workforce and significantly rationalizing its real estate portfolio.
News of the value creation plan followed a $14 million loss in the fourth quarter, when the highly contagious omicron variant surged across much of the U.S.
And Humana slashed its expectations for Medicare Advantage enrollment for 2022, expecting far fewer enrollees. Executives said members were much more active shoppers this year, switched to new plans and as a result created churn in the widely popular Medicare Advantage market.
Smaller Medicare Advantage rivals were able to attract more members during the annual enrollment period, according to initial enrollment data from the federal government.