J.P Morgan Medicare Advantage Increasing 2014-2017 Med Adv Enrollment Estimates Across the Managed Care Sector With 2015 Medicare Advantage (MA) plan bids submitted earlier this month, we review 2014 open enrollment results through the lens of our proprietary county- by-county benefit database and update our Medicare Advantage model for 2014- 2017. It has become increasingly clear that seniors find the Medicare Advantage value proposition compelling and thus are willing to accept more benefit disruption than was previously appreciated. The 2014 open enrollment period saw MA penetration rates increase broadly across all levels of value-add, including 100+ bps increases at the lowest levels (<$20 benefits PMPM). This was very much a positive surprise vs. our previously conservative estimates and is crucial to our increasingly constructive outlook for MA membership growth over the next several years. Post our deep-dive on 2014 enrollment results, we take up our 2015-2017 enrollment growth #s to 7.2%/8.1%/7.9% from 4.0%/7.1%/7.1% respectively, now reflecting an updated view of lower senior sensitivity to downward changes in Medicare Advantage benefit levels. In addition, we now reflect a modest level of share shift based on plan-specific Star ratings, with HUM expected to again take share in 2015 from UNH/WLP. Overall this analysis provides increased confidence in our positive MA thesis, and we increase EPS estimates by 3%/7%/1% for 2014-2016 for HUM to $7.80/$9.12/$10.43 respectively, as 2014 moves in-line with consensus and 2015-2016 moves ahead of consensus by 3-5%. We reiterate our Overweight rating and $150 price target on HUM. « We are hosting a conference call today at 11a ET to discuss our analysis. Dial in is 1-800-857-2942 (US), 1-517-623-4820 (outside US), Passcode: HEALTHCARE. To view our detailed analysis, see accompanying slides: link. « Increasing our industry Med Adv enrollment estimates. We are increasing our 2015 industry enrollment growth est by 350 bps to 7.2% and our 2016/2017 estimates by ~100 bps each to 8.1% and 7.9%, respectively, reflecting greater- than-anticipated senior interest in products with more moderate benefit levels. Our analysis indicates that geographies with average plan benefits less than $20, or 2% better than traditional Medicare, still saw penetration increase of 100+ bps during 2014 OEP, with moderately higher-than-anticipated increases in penetration across all benefit levels. In addition, we updated our estimates for MA rates going forward (-320 bps for the industry in 2015, followed by flat to slightly down in 2015-16). Equity Ratings and Price Targets North America Equity Research 18 June 2014 Managed Care / Health Care Services Justin Lake ““ Bloomberg JPMA LAKE <GO> Michael Newshel Neal Miniyar ; Andrew Tom J.P. Morgan Securities LLC Mkt Cap Rating Price Target Company Ticker {$ mn) Price ($) Cur Prev Cur Prev Aetna AET US 29,408.05 60.57 ow nic 82.00 81.00 Cigna clus 24,702.03 90.00 ow nic 95.00 nlc Health Net HNT US 3,240.12 40.04 N nic 40.00 nlc Humana HUM US 19,256.62 122.93 ow nic 150.00 nic UnitedHealth UNH US 77,857.32 76.17 ow nic 90.00 nic WellPoint WLP US 31,033.16 106.06 N nic 114.00 nic Source: Company data, Bloomberg, [ Morgan estimates. nic = no change. All prioas as of 17 Jun 14. See page 16 for analyst certification and important disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. www.jpmorganmarkets.com EFTA00301317

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J North America Equity Research 18 June 2014 J.P Morgan e We expect market share to shift modestly again in 2015, benefitting HUM. While UNH and WLP saw slight Star improvement for 2015, both are still disadvantaged here vs. peers (UNH 3.5 & WLP 3.3 vs. for-profit peers in 3.8-4.0 range), adding to competitive pressure when the bonus demo ends next year. Suboptimal Star ratings will likely drive a combination of above-average benefits reductions, physician network culling and plan exits (as well as potentially forcing UNH to add premiums to some zero-premium products). As a result, we conservatively estimate enrollment growth for 2015 to be flat for both UNH and WLP, with market share losses offsetting underlying market growth. Dissecting our county-by-county benefit database, we find that in 90% of those counties where UNH and WLP would see steepest cuts in 2015, HUM offers a competing product within the county. As a result, we are increasing our 2015 HUM MA enrollment growth forecast to 10% from 4% previously, assuming HUM can pick up 25% of UNH’s and WLP’s assumed market share losses. « Raising HUM 2015 EPS by 7% with de minimis updates to rest of coverage universe. We are raising our HUM 2015/216 EPS estimates by 7%/1% for 2015/2016 respectively, reflecting our increased market model projections coupled with updates to our MA margin progression based on mgmt’s latest commentary. With de minimis changes to the rest of our coverage universe and our UNH MA update already incorporated into published #s (updated in our May 2014 note, 20/4 Medicare Advantage Review and Thoughts on the Road Ahead), our MCO PTs are largely left intact. « We reiterate our long-term thesis on MA and reiterate our $150 HUM PT. Following our analysis, we reiterate our long-term constructive thesis on MA and our Overweight rating / $150 PT on HUM, increasing 2015 estimates by 7%, owing to our higher estimates for MA enrollment growth (both higher est industry growth plus market share gains) and earnings. We continue to see a path to $10+ of EPS by 2016 for Humana with another $1+ of potential upside from additional capital deployment and PBM outsourcing optionality. e Our analysis is driven by proprietary actuarial database that translates publicly posted benefit information into the estimated “value-add” of each MA plan vs. traditional fee-for-service — a key driver of enrollment. Combining this with county/plan specific CMS enrollment data allows us to estimate current and future rebates down to the county/plan/member level and roll up to membership-weighted averages for each company and the industry. This data fills a key gap for investors in understanding how the MA program can absorb the next few years of reimbursement cuts toward FFS parity without threatening long-term viability. Since our initial report in May 2013, we have released over 15 reports surrounding our MA value-add work. EFTA00301318

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Justin Lake North America Equity Research | 18 June 2014 J.P.Morgan Aetna Overweight Aetna Inc (AET;AET US) Company Data FYE Dec 2011A 2012A 20134 2014E 2015E 2015E Price ($) 80.57 (Prev) (Curr) Date Of Price 17 Jun 14 —_ EPS Reported ($) 52-week Range ($) 81.25-60.32 Q1 (Mar) 1.48 1.41 1.56 1.98A . . Market Cap ($ mn) 29,408.05 Q2 (Jun) 1.39 1.38 1.62 1.64 . . Fiscal Year End Dec 3 (Sep) 1.46 1.61 1.61 1.62 . . Shares O/S (mn) 365 Q4 (Dec) 1.03 1.00 1.45 1.26 - - Price Target ($) 82.00 FY 5.36 §.39 6.24 6.50 6.77 6.80 Price Target End Date 31-Dec-14 Bloomberg EPS FY (S$) 5.16 5.13 5.88 6.54 - 7.21 Source: Company data, Bloomberg, i i Morgan estimates. Investment Thesis, Valuation and Risks Aetna (Overweight; Price Target: $82.00) Investment Thesis Our Overweight rating on AET reflects below-average reform exposure and most importantly an increasing recognition of the company’s ACO positioning. We see the Coventry acquisition as providing increased visibility on earnings for 2014/2015, with likely upside to synergies and the accretion estimates going into reform implementation uncertainty. Valuation We have an Overweight rating on Aetna. Our year-end 2014 price target of $82 is based on a P/E of 12x our 2015 cash EPS estimate, below the peer group average and slightly above its current relative valuation. Risks to Rating and Price Target Risks to our rating and price target for Aetna include the potential for medical cost trends to accelerate faster than expected, potential for commercial membership pressure to persist, and changes to the commercial pricing landscape and Medicare / Medicaid reimbursement. With an estimated third of earnings coming from the large group commercially insured segment, should larger full-risk employers choose to exit the health benefits market and instead offer employees a stipend to buy coverage in exchanges (a risk we see as fairly low), we believe Aetna would likely be the most negatively impacted plan in our coverage universe. EFTA00301319

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North America Equity Research 18 June 2014 Aetna: Summary of Financials J.P Morgan Income Statement - Annual FYI3A_ FY14E = FY15E = FY16E Income Statement - Quarterly 1Q14A 2014E 3Q14E 4Q14E Operating revenue 47,195 56,841 61,842 67,587 Operating revenue 13,9664 14,249 14.278 14,349 SG&A (8.373) (10,363) (11,413) (12,372) SGBA (2490) (2,547) (2,582) (2,745) Operating income 3,729 «4,302 «94479 = 4,761 Operating income 1,322A 1,089 1,046 846 Nat interest (income) / expense (313) (296) (309) (329) Nat interest (income) / expense (B6)A (86) (62) (62) Other income / (expense) (215) (155) (145) (140) Other income / (expense) (40)A (38) (38) (38) Pretax income 3,202 3,851 4,026 4,292 Pretax income 1,196A 964 M46 745 Income taxes (1,102) (1,658) (1,784) (1,850) Income taxes (510)A (414) (405) (332) Net income - GAAP 2241 2344 2386 2,582 Netincome -GAAP 724A = (891 579 451 Diluted shares outstanding 369 360 31 $2 Diluted shares outstanding 365A 360 368 357 EPS 6.24 6.50 6.80 7.56 EPS 198A 164 «6162 1.26 EPS - Recurring 6.24 6.50 6.80 7.56 EPS - Recurring 198A 164 162 1.26 Balance Sheet and Cash Flow Data FYI3A FY14E FY1SE — FY16E Ratio Analysis FY13A FY14E FY15E FY16E Cash and cash equivalents 1412 2127 1,974 1,919 Revenue growth 32.8% 204% 88% 9.3% Investments 21,115 «21,537 21,968 22,407 EBIT growth 20.1% 154% 4.1% 63% Accounts receivable 1,522 1,552 1,583 1,615 EPS growth 15.7% 42% 46% 111% Current assets 30,654 34695 37408 40,644 PP&E 722 704 718 742 SG&A ratio 17.7% 18.2% 18.5% 18.3% Goodwill 9.248 9,118 9,197 9,286 Operating margin 7.9% 7.6% 7.2% 7.0% Total assets 49,872 53,634 56,520 59,958 Tax rate MA 43.1% 44.3% 43.1% Net margin 47% 41% 39% 3.8% Total debt 8,253 6.114 8451 6,998 Total liabilities 35,846 38,573 40.217 42,264 Debt/ Capital (book) 37.0% 35.0% BWA% 33.7% Shareholders’ equity 14,026 15,061 16.303 17,695 Ratum on assets (ROA) 49% 45% 43% 4.4% Ratum on equity (ROE) 18.3% 16.1% 15.2% 15.2% Source: Company reports and J.P. Morgan estimates. Note: $ in millions (excapt per-share data).Fiscal year ends Dec EFTA00301320

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North America Equity Research J.P. Morgan 18 June 2014 Cigna Overweight Cigna Corporation (C1;Cl US) Company Data FYE Dec 2012A 2013A 2014E 2015E Price ($) 90.00 EPS Reported ($) Date Of Price 17 Jun 14 Q1 (Mar) 1.24 1.72 1.834 - 52-week Range ($) 91.63-67.87 Q2 (Jun) 1.49 1.78 1.79 - Market Cap ($ mn) 24,702.03 3 (Sep) 1.69 1.89 1.91 - Fiscal Year End Dec Q4 (Dec) 1.60 1.39 1.73 - Shares O/S (mn) 274 FY 6.02 6.79 7.26 7.91 Price Target ($) 95.00 Bloomberg EPS FY (S$) 5.91 6.87 7.31 8.04 Price Target End Date 31-Dec-14 Source: Company data, Bloomberg, I. Morgan estimates. Investment Thesis, Valuation and Risks Cigna (Overweight; Price Target: $95.00) Investment Thesis We believe Cigna’s solid business momentum and strong Medicare Advantage and International segment positioning continue to leave a positive risk/reward with the stock trading at ~12x our 2014 EPS estimate, particularly given Cigna’s below- average exposure to the 2014 healthcare reform uncertainty. Valuation We rate Cigna Overweight. Our YE 2014 price target of $95 is based on a target P/E of 12x our 2015 EPS estimate. Cigna has historically traded at a discount to the group, but now that it has successfully executed on its PBM option, exited the VADBe reinsurance business, and carries less exposure to reform risk in the initial years, we think a narrow gap is warranted. Risks to Rating and Price Target As with Cigna’s peers, medical cost trends could accelerate faster than expected and also, the pricing environment could get more competitive, although Cigna does have below-average exposure to the commercial risk segment. Enrollment growth in the Medicare Advantage segment may be more modest than expected with the potential for rate pressure and 2014 minimum MLR floors to compress margins. Cigna has above-average balance sheet exposure relative to its peers, and run-off books may require future capital infusions should future reserve studies show a need for more capital. EFTA00301321

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Justin Lake North America Equity Research 18 June 2014 Cigna: Summary of Financials J.P Morgan Income Statement - Annual FY13A_FY14E FY15E FY16E Income Statement - Quarterly 1Q14A 2014E 3Q14E 4Q14E Operating revenue 32,380 33,766 36,345 38,563 Operating revenue B496A 8307 8411 8,553 SG&A (7.725) (8,140) (8,844) (9,369) SG&A (1,973)A (1,981) (2,053) (2,133) Operating income 3,083 «3,150 3.304 3,584 Operating income 852A 765 807 726 Nat interest (income) / expense 1,164 1,202 1.281 1,323 Net interest (income) / expense 277A 306 310 308 Other income / (expense) - - - - Other income / (expense) - - - - Pretax income 3,083 «3,150 3304 3,584 Pretax income 852A 765 807 726 Income taxes (1,010) (1,173) (1,230) (1,319) Income taxes (324)A (282) (297) (270) Net income - GAAP 1,932 1951 2074 2,266 Net income -GAAP 501A 483 510 456 Diluted shares outstanding 285 269 262 256 Diluted shares outstanding 2744 2 267 263 EPS 6.79 7.26 791 8.86 EPS 1.834 1.79 1.91 1.73 EPS - Recurring 6.79 7.26 7.91 8.86 EPS - Recurring 1.834 1.79 1.91 1.73 Balance Sheet and Cash Flow Data FY13A_FY14E FY15E FY1GE Ratio Analysis FYI3A FY14E FY15E FY16E Cash and cash equivalents 2,795 2559 3628 4,746 Revenue growth 10.8% 43% 7.6% 61% Investments - - - - EBIT growth 14.1% 22% 49% 85% Accounts receivable - - - - EPS growth 12.7% 6.9% 9.0% 121% Current assets 24.478 25591 27,966 30,569 PP&E 1464 14639 1471 1474 SG&A ratio 23.9% 24.1% 24.3% 24.3% Goodwill - - - - Operating margin 95% 9.3% 91% 9.3% Total assets §4.336 56,339 58,922 61,729 Tax rate 32.8% 37.2% 37.2% 36.8% Net margin 6.0% 58% 5.7% 5.9% Total debt 5.247 5232 6232 6,232 Total liabilities 43,659 45424 46,776 48,254 Debt/ Capital (book) 33.0% 324% 30.1% 28.0% Shareholders’ equity 10,677 10,915 12,145 13475 Return on assets (ROA) 36% 35% 3.6% 38% Return on equity (ROE) 18.8% 18.1% 18.0% 17.7% Source: Company reports and J.P. Morgan estimates. Note: $ in millions (excapt per-share data).Fiscal year ends Dec EFTA00301322

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Justin Lake North America Equity Research J.P. Morgan 18 June 2014 Health Net Neutral Health Net Inc (HNT;HNT US) Company Data FYE Dec 20114 2012A 2013A 2014E 2015E Price ($) 40.04 EPS Reported ($) Date Of Price 17 Jun 14 Q1 (Mar) 0.61 0.10 0.62 0.394 - 52-week Range ($) 40.58-25.40 Q2 (Jun) 0.76 0.19 0.52 0.53 - Market Cap ($ mn) 3,240.12 Q3 (Sep) 0.85 0.38 0.83 0.69 . Fiscal Year End Dec Q4 (Dec) 0.90 0.36 0.24 0.68 - Shares O/S (mn) 81 FY 3.09 1.03 2.21 2.27 3.05 Price Target ($) 40.00 Source: Company data, Bloomberg, If Morgan estimates. Price Target End Date 31-Dec-14 Investment Thesis, Valuation and Risks Health Net (Neutral; Price Target: $40.00) Investment Thesis Health Net is the last essentially single state based publicly traded health plan, with nearly 90% of the company’s current membership located in California. Although the state is a mixed bag (onerous regulatory environment represents a negative, while positives include substantial population including dual eligibles opportunity), in our view, Health Net remains an interesting asset of potential strategic interest. To the downside, the 1H’12 earnings shortfall on a variety of medical cost / execution issues highlights the heightened underwriting and earnings volatility that accompanies single-state focused health insurers. Valuation We have a Neutral rating on Health Net. Our YE 2014 price target of $40 is based on a P/E of 13x our 2015 EPS estimate, in line with the peer group. Risks to Rating and Price Target With Health Net one of the most-levered plans to the Dual Eligible opportunity, there could be downside risk should the demonstration programs be delayed or should results be pressured; there is also risk to the upside should Dual Eligible margins prove to be better than expected. Medical cost trends could accelerate or decelerate faster than expected, leaving downside / upside to our estimates. EFTA00301323

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Justin Lake North America Equity Research 18 June 2014 Health Net: Summary of Financials J.P Morgan Income Statement - Annual FY13A_ FY14E FY15E FY16E Income Statement - Quarterly 1Q14A 2014E 3Q14E 4Q14E Operating revenue 10,984 14,047 18.091 19,062 Operating revenue 30284 3516 3670 3834 SG&A (1,317) (1,560) (1,857) (1,967) SG&A (386)A (379) (390) (406) Operating income 245 352 497 522 Operating income 634 87 103 99 Nat interest (income) / expense a7 1 12 14 Net interest (income) / expense oA 2 3 3 Other income / (expense) - - - = Other income | (expense) - - - - Pretax income 282 362 509 535 Pretax income 664 89 106 102 Income taxes (104) = (187) = (280) = (298) Income taxes (35)A (47) (53) (52) Net income - GAAP 177 176 230 238 Net income - GAAP HA 42 53 50 Diluted shares outstanding 80 7 75 73 Diluted shares outstanding aia 79 76 73 EPS 2.21 227 3.05 3.28 EPS 039A 4053 069 860.68 EPS - Recurring 2.21 227 3.05 3.28 EPS- Recurring 039A 0.53 0.69 0.68 Balance Sheet and Cash Flow Data FY13A_FY14E FY15E FY16E Ratio Analysis FY13A FY14E FY15E FY16E Cash and cash equivalents 433 2m 147 166 Revenue growth (15%) 27.9% 28.8% 54% Investments - - - - EBIT growth 243.6% 43.7% 41.3% 5.0% Accounts receivable - - - - EPS growth 1142% 31% BMA® 7.2% Current assets 2920 3,751 4627 4,886 PP&E 201 231 264 300 SGaA ratio 12.0% 11.1% 10.3% 10.3% Goodwill . : : = Operating margin 22% 25% 27% 27% Total assets 3,929 4,765 5679 5980 Taxrate 37.1% «51.5% 54.9% 55.6% Net margin 16% 13% 1.3% 12% Total debt 499 499 499 499 Total liabilities 2,300 3342 4,139 4,371 Debt/ Capital (book) 23.5% 26.0% 24.5% 23.7% Shareholders’ equity 1,629 1423 1541 1,609 Retum on assets (ROA) 45% 40% 44% 4.1% Return on equity (ROE) 11.1% 11.5% 15.5% 15.1% Source: Company reports and J.P. Morgan estimates. Note: $ in millions (excapt per-share data).Fiscal year ends Dec EFTA00301324

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Justin Lake North America Equity Research 18 June 2014 ay J.P Morgan Humana Overweight Humana Inc (HUM;HUM US) Company Data FYE Dec 2012A 2013A 2014E 2014E 2015E 2015E 2016E 2016E Price ($) 122.93 (Prev) (Curr) (Prev) (Curr) (Prev) (Curr) Date Of Price 17 Jun 14 —_ EPS Reported ($) 52-week Range ($) 127.17-81.15 Q1 (Mar) 149 295 235A 235A - . - . Market Cap ($ mn) 19,256.62 Q2 (Jun) 216 263 213 2418 - . - . Fiscal Year End Dec 3 (Sep) 262 232 196 2.03 - . - . Shares O/S (mn) 157 Q4 (Dec) 119 0.80 1.15 1.23 - - - - Price Target ($) 150.00 FY 748 873 758 780 853 912 10.36 1043 Price Target End Date 31-Dec-14 Bloomberg EPS FY (S$) 7.51 8.72 - 7.81 - 8.78 - 9.89 Source: Company data, Bloomberg, J.P. Morgan estimates. Investment Thesis, Valuation and Risks Humana (Overweight; Price Target: $150.00) Investment Thesis Humana’s unique earnings profile is the closest thing in the space to a Medicare Advantage pure play with ~60% of operating earnings levered to this segment and a strong market position. Future growth should come from a combination of baby boomer age-ins (turning 65 at the rate of 8,000 per day for the next 18 years), continued market share gains and potential shifts from employers to Medicare Advantage from self-funded employer retiree plans. Based on our proprietary county-level projections of Medicare Advantage plan benefits, we have increased confidence the industry in general and also HUM in particular will be able to continue to profitably grow Medicare Advantage business despite several more years of reimbursement cuts related to the Affordable Care Act. Finally, the capital deployment opportunity continues to be one of the more interesting areas of optionality for Humana, in our view. Valuation Our 2014 year-end price target of $150 is based on a P/E multiple of ~14.5x our 2016 earnings estimate, a premium to where the broader MCO group is trading. We see potential for the stock’s P/E multiple to migrate toward a higher premium as focus shifts from execution to above average secular top-line growth rates in the high single digits with margin improvement potential from scale advantages post 2015 cuts. Risks to Rating and Price Target For Medicare, meaningful risks are associated with health reform regulations coming in more severe than anticipated, including Medicare Advantage cuts, MLR floor implementation and the ability for plans to price through the industry fee. Finally, Medical cost trend could accelerate/decelerate faster than expected. Much of the past few years has been characterized by low medical utilization across the sector, which has driven sizable earnings upside for the Managed Care group. Humana has benefited from a declining trend environment in all of its segments and there could be downside risk should the trend reverse. EFTA00301325

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Justin Lake North America Equity Research J.P. Morgan |) esa Humana: Summary of Financials Income Statement - Annual FY13A_ FY14E FY15E FY16E Income Statement - Quarterly 1Q14A 2014E 3Q14E 4Q14E Operating revenue 41,313 47,456 55.230 69,625 Operating revenue V1712A 11,691 11,910 12,142 SG&A (6,355) (7,201) (7,968) (8,495) SG&A (1,666)A (1,697) (1,782) (2,056) Operating income 2304 2367 2,775 3,039 Operating income 721A 640 602 404 Nat interest (income) / expense (140) (140) = (140) (140) Net interest (income) / expense (35) (36) (35) (35) Other income / (expense) - - - ~ Other income / (expense) - - - - Pretax income 2164 2227 2635 2,899 Pretax income 6864. 605 567 369 Income taxes (779) (1,011) (1,235) (1,322) Income taxes (318)A (264) (250) (178) Net income - GAAP 1385 1216 1,399 1,576 Net income - GAAP 368A 340 M6 191 Diluted shares outstanding 159 156 153 151 Diluted shares outstanding 157A 156 156 155 EPS 8.73 780 912 1043 EPS 2.354 218 8203 «1.23 EPS - Recurring 8.73 7.80 912 10.43 EPS- Recurring 2.354 218 203 1.23 Balance Sheet and Cash Flow Data FY13A_ FY14E FY15E FY16E Ratio Analysis FY13AFY14E FY15E FY16E Cash and cash equivalents 1138 1421 1,505 2,097 Revenue growth 56% 149% 164% 83% Investments 7889 Q9ATT 11,103 12,059 EBIT growth 14.3% 27% 17.2% 95% Accounts receivable 1280 1,538 1802 1,957 EPS growth 16.8% (10.6%) 16.9% 14.4% Current assets 12,300 14,242 16427 18,261 PP&E 1218 1446 1652 1,854 SG&Aratio 15.4% 152% 144% 14.2% Goodwill 3,641 3,641 3,641 3,641 Operating margin 5.6% 5.0% 5.0% 5.1% Total assets 20,735 23,594 25,798 27,643 Tax rate 36.0% 45.4% 46.9% 45.6% Net margin 3.4% 26% 25% 2.6% Total debt 2600 2598 2598 2,598 Total liabilities 11,419 13,384 14,763 15,657 Debt/ Capital (book) 21.8% 20.3% 19.1% 17.8% Shareholders’ equity 9.316 10,209 11,035 11,987 Return on assets (ROA) 6.8% 55% 5.7% 5.9% Return on equity (ROE) 15.3% 125% 13.2% 13.7% Source: Company reports and J.P. Morgan estimates. Note: $ in millions (excapt per-share data).Fiscal year ends Dec EFTA00301326

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Justin Lake North America Equity Research 18 June 2014 ay J.P Morgan UnitedHealth Overweight UnitedHealth Group Inc (UNH;UNH US) Company Data FYE Dec 20114 2012A 2013A 2014E 2015E Price ($) 78.17 EPS - Recurring ($) Date Of Price 17 Jun 14 Q1 (Mar) 1.22 1.31 1.16 1.104 - 52-week Range ($) 83.32-63.43 Q2 (Jun) 1.16 1.27 1.40 1.23 . Market Cap ($ bn) 77.86 3 (Sep) 1.17 1.50 1.53 1.61 . Fiscal Year End Dec Q4 (Dec) 1.17 1.20 1.41 1.51 - Shares O/S (mn) 996 EY 4.73 5.28 5.50 5.45 5.82 Price Target ($) 90.00 Source: Company data, Bloomberg, I. Morgan estimates. Price Target End Date 31-Dec-14 Investment Thesis, Valuation and Risks UnitedHealth (Overweight; Price Target: $90.00) Investment Thesis While retrenching of Med Adv margins has slowed overall earnings momentum in 2014/2015, we estimate that by 2015 more than two-thirds of earnings will be in higher growth businesses of Optum, Medicaid, and Med Adv. When coupled with best-in-class business momentum, diversification, and assets, we expect the stock to migrate toward an S&P multiple in the ~15x range. Valuation Our Dec 2014 price target of $90 is based on a multiple of ~15x our 2015E EPS, in line with the premium valuation vs. its peers it has historically maintained and reflecting its relatively high exposure to Medicare Advantage, which we think will benefit from long-term secular growth. Risks to Rating and Price Target Healthcare reform represents a pivot point for Managed Care. Considerable uncertainty remains around the 2014 healthcare reform implementation given the multiple moving parts such as exchanges, guaranteed issue, employer dumping, etc. Additionally, the potential for Optum earnings ramp may be slower than expected. Were the earnings ramp here to be more modest than expected (or extend beyond the 2015 target), then that would represent potential downside risk to our numbers and investor sentiment. Finally, UNH faces pressures around medical cost trend acceleration, the potential for increased commercial pricing aggression, and multiple uncertainties in the Medicare Advantage market. EFTA00301327

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Justin Lake 18 June 2014 UnitedHealth: Summary of Financials North America Equity Research J.P Morgan Income Statement - Annual FY13A_ FY14E = FY1SE = FY16E Income Statement - Quarterly 1Q14A 2Q14E 3Q14E 4Q14E Operating revenue 122,489 127,088 130,732 138,219 Operating revenue 34,7084 31,565 31,740 32,075 SG&A (19,362) (21,099) (22254) (23,271) SG&A (5,194)A (5,322) (5,115) (5,468) Operating income 9623 9896 10,216 11,080 Operating income 20544 2290 2862 2,691 Nat interest (income) / expense v (27) (12) & Net interest (income) / expense A (18) (20) (20) Other income / (expense) (708) (649) (649) (651) Other income / (expense) (160)A (162) (164) (164) Pretax income 8915 9248 9567 10,429 Pretax income 186A 2128 2699 2,527 Income taxes (3,242) (3,893) (4,055) (4,304) Income taxes (795) = (910) (1,126) (1,061) Net income - GAAP 5673 5355 5513 6.125 Netincome-GAAP 10994 1217 1,573 1,466 Diluted shares outstanding 1,023 983 947 912 Diluted shares outstanding 996A, 987 978 970 EPS 5.54 5.45 5.82 6.72 EPS 110A -1.2300«1461 (1.51 EPS - Recurring 5.50 6.45 5.82 6.72 EPS - Recurring 110A 1.23) 1.61 1.51 Balance Sheet and Cash Flow Data FY13A_FY14E FY1SE —FY16E Ratio Analysis FY13A FY14E FY15E FY16E Cash and cash equivalents 7.276 9513 10,070 10,666 Revenue growth 10.7% 38% 29% 5.7% Investments 2,681 2735 2,789 2845 EBIT growth 4.0% 28% 32% B4% Accounts receivable 2387) «2434-2483 2.833 EPS growth 5.0% (1.7%) 6.8% 15.4% Current assets 20,380 24,706 25699 27,190 PP&E 395 4236 4639 5073 SG&Arato 15.8% 16.6% 17.0% 16.8% Goodwill 28,779 28,739 29,348 = 30,126 Operating margin 7.9% 7.8% 7.8% 6.0% Total assets 81,882 86,419 89,034 92,516 Tax rate BA 421% 424% 41.3% Net margin 4.6% 4.2% 4.2% 4.4% Total debt 16,860 16,765 16,765 16,765 Total liabilities 49,733 62,165 53,267 55,123 Debt / Capital (book) MA% 32.9% 31.9% 31.0% Shareholders’ equity 32,149 34,255 935,768 = 37,393 Return on assets (ROA) 69% 64% 63% 67% Return on equity (ROE} 17.8% 16.1% 15.7% 16.7% Source: Company reports and J.P. Morgan estimates. Note: $ in millions (excapt per-share data).Fiscal year ends Dec EFTA00301328

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North America Equity Ri h a... oor J.PMorgan WellPoint Neutral WellPoint Inc (WLP;WLP US) Company Data FYE Dec 2011A 2012A 2013A 2014E 2015E 2015E Price ($) 106.06 (Prev) (Curr) Date Of Price 17 Jun 14 —_ EPS Reported ($) 52-week Range ($) 110.03-77.40 Q1 (Mar) 2.35 2.34 294 230A . . Market Cap ($ bn) 31.03 Q2 (Jun) 1.83 2.04 2.60 2.25 . . Fiscal Year End Dec Q3 (Sep) 1.77 2.09 2.10 2.09 - - Shares O/S (mn) 293 Q4 (Dec) 0.99 1.03 0.87 1.84 - - Price Target ($) 114.00 EY 7.00 7.56 8.52 8.51 9.54 9.53 Price Target End Date 31-Dec-14 Source: Company data, Bloomberg, J.P. Morgan estimates. Investment Thesis, Valuation and Risks WellPoint (Neutral; Price Target: $114.00) Investment Thesis WellPoint’s strong brand and significant size provide meaningful competitive advantages. At over 33 million medical members nationwide, WellPoint is the largest health insurer from an enrollment perspective with its significant scale and broad reach providing the company with unique competitive advantages with regard to provider network discounts and breadth, SG&A leverage, and investment spend capacity. Furthermore, WellPoint holds a Blue Cross and/or Blue Shield license in 14 states, providing the company with the strength of the Blues brand name as well as decreased competition from Not-for-Profit Blues, which are typically the most difficult competitor in any state. While execution in the Consumer business has been an issue, margins lag peers, leaving potential for improvement moving forward. The acquisition of Amerigroup adds not only significant growth potential in the Medicaid Managed Care and Dual Eligibles space but also a strong management team with a history of solid execution, in our view. Valuation Our Dee 2014 price target of $114 is based on a multiple of ~12x our 2015 earnings estimate, in line with the stock’s historical average discount vs. the group. Risks to Rating and Price Target Individual and Small Group exposure leaves uncertainty around exchanges. We estimate that WellPoint derives nearly 30% of its 2012 earnings from the Individual and Small Group markets, which are the most likely to see meaningful disruption with the advent of exchanges in 2014. Improved execution presents upside risk after years of significant missteps with WellPoint’s performance in recent years headlined by various self-inflicted missteps, most recently by its challenges in the California Medicare Advantage market. Integration and execution risk also may be heightened following the acquisition of Amerigroup, which should be accretive in its first year (2013). The potential for increased Commercial pricing aggression persists as pricing yields have outpaced commercial cost trends in recent years with publicly traded plan commentary and J.P. Morgan channel checks indicating that the pricing environment 13 EFTA00301329

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Justin Lake North America Equity Research remains largely rational outside of pockets of increased pricing aggression related to minimum medical loss ratio floors. Finally, medical cost trends could accelerate or decelerate faster than expected leaving downside/upside to our estimates. EFTA00301330

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Justin Lake North America Equity Research 18 June 2014 WellPoint: Summary of Financials J.P Morgan Income Statement - Annual FY13A_ FY14E FY1SE FY16E Income Statement - Quarterly 1Q14A 2014E 3Q14E 4Q14E Operating revenue 70,522 73,220 79,005 - Operating revenue 17,6454 18,233 18.569 18,773 SG&A (10,061) (10,554) (10,963) - SG&A (2,632)A (2,631) (2,644) (2,648) Operating income 4860 5,041 §,421 0 Operating income 1,333A 1,329 1,249 = 1,129 Nat interest (income) / expense 56 6 64 ~ Net interest (income) / expense BA 16 16 16 Other income / (expense) - - - ~ Other income / (expanse) - - - - Pretax income 3850 4229 4617 - Pretax income 119A 1,127 1,046 = 926 Income taxes (1,200) (1,765) (2,014) - Income taxes (439)A (475) (447) (405) Nat income - GAAP 2650 2464 2,603 - Net income - GAAP 691A 652 600 521 Diluted shares outstanding 304 287 273° = 265 Diluted shares outstanding 2934 290 287 284 EPS 8.72 8.57 9.53 - EPS 2364 225 209 1.84 EPS - Recurring 8.52 851 9.53 10.62 EPS - Recurring 230A 225 209 1.84 Balance Sheet and Cash Flow Data FY13A_ FY14E —FY15E FY16E Ratio Analysis FY13A FY14E FY15E FY16E Cash and cash equivalents 1,582 1,105 232 - Revenue growth 16.1% 38% 7.9% . Investments 19,543 21,942 27,034 - EBIT growth 5.1% 3.7% 7.6% Accounts receivable 5465 5675 6,123 - EPS growth 6.7% (1.7%) 11.1% Current assets 29,746 31,876 33,388 - PP&E 1802 1,747) 1,675 - SG&A ratio 14.3% 14.4% 13.9% Goodwill 21,632 21,632 29,307 - Operating margin 6.9% 6.9% 6.9% Total assets 59,575 62,552 64,371 - Taxrate 31.2% 41.7% 43.6% Net margin 37% 3.3% 3.3% Total debt 14492 15,041 15,041 - Total liabilities 34,809 «37,634 39,099 - Debt / Capital (book) 36.9% 37.6% 37.3% Shareholders’ equity 24,765 24,918 25,271 - Return on assets (ROA) 44% 4.0% 41% B7% Return on equity (ROE) 10.7% 9.8% 104% 22.3% Source: Company reports and J.P. Morgan estimates. Note: $ in millions (excapt per-share data).Fiscal year ends Dec 15 EFTA00301331

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Justin Lake North America Equity Research 18 June 2014 J.P Morgan Analyst Certification: The research analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an “AC” on the cover or within the document individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. For all Korea-based research analysts listed on the front cover, they also certify, as per KOFIA requirements, that their analysis was made in good faith and that the views reflect their own opinion, without undue influence or intervention. Important Disclosures @ Market Maker: JPMS makes a market in the stock of UnitedHealth. © Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Aetna, Humana, UnitedHealth, WellPoint within the past 12 months. © Beneficial Ownership (1% or more): J.P. Morgan beneficially owns 1% or more of a class of common equity securities of WellPoint. © Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Aetna, Cigna, Health Net, Humana, UnitedHealth, WellPoint. © Client/Investment Banking: JP. Morgan currently has, or had within the past 12 months, the following company/(ies) as investment banking clients: Aetna, Cigna, Humana, UnitedHealth, WellPoint. © Client/Non-Inyestment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company/(ies) as clients, and the services provided were non-investment-banking, securities-related: Aetna, Cigna, Health Net, Humana, UnitedHealth, WellPoint. © Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company/(ies) as clients, and the services provided were non-securities-related: Aetna, Cigna, Health Net, Humana, UnitedHealth, WellPoint. © Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation from investment banking Aetna, Cigna, Humana, UnitedHealth, WellPoint. © Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking services in the next three months from Aetna, Cigna, Health Net, Humana, UnitedHealth, WellPoint. © Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services other than investment banking from Aetna, Cigna, Health Net, Humana, UnitedHealth, WellPoint. Company-Specific Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgan archy > Score cori e-mailing with your request. J.P. Morgan’s Strategy, Technical, and itative Research teams may a : For important disclosures for these companies, please call lor e-mail Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the average total return of the stocks in the analyst’s (or the analyst's team’s) coverage universe.] Neutral [Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst's (or the analyst’s team’s) coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analyst's (or the analyst's team’s) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a recommendation or a rating. In our Asia (ex-Australia) and U.K. small- and mid-cap equity research, each stock’s expected total return is compared to the expected total return of a benchmark country market index, not to those analysts’ coverage universe. If it does not appear in the Important Disclosures section of this report, the certifying analyst's coverage universe can be found on J.P. Morgan’s research website, www_jpmorganmarkets.com. Coverage Universe: Lake, Justin: Aetna (AET), Centene (CNC), Cigna (C1), Community Health Systems (CYH), DaVita HealthCare Partners Inc (DVA), HCA (HCA), Health Net (HNT), Humana (HUM), LifePoint (LPNT), Molina (MOH), Surgical Care Affiliates (SCAI), Tenet (THC), UnitedHealth (UNH), Universal Health Services Inc. (UHS), WellPoint (WLP) EFTA00301332

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