- Reports 3Q24 earnings per share (EPS) of $3.98 on a GAAP basis,
Adjusted EPS of $4.16; reports YTD 2024 EPS of $15.72 on a GAAP
basis, $18.35 on an Adjusted basis
- Updates FY 2024 EPS guidance to 'at least $12.89' on a GAAP
basis, 'at least $16.00' on an Adjusted basis; affirms FY 2024
Insurance segment benefit ratio of approximately 90 percent
- Raises 2024 individual Medicare Advantage annual membership
growth by 40,000 to now anticipate annual growth of approximately
265,000, or approximately 5 percent
- Publishes prepared management remarks to Investor Relations
page of www.humana.com ahead of this morning's 9:00 a.m. ET
question and answer session to discuss its financial results for
the quarter and expectations for future earnings
Humana Inc. (NYSE: HUM) today reported consolidated pretax
results and diluted earnings per share (EPS) for the quarter ended
September 30, 2024 (3Q24) versus the quarter ended September 30,
2023 (3Q23) and for the nine months ended September 30, 2024 (YTD
2024) versus the nine months ended September 30, 2023 (YTD 2023) as
noted in the tables below.
Consolidated income before income taxes
and equity in net earnings (pretax results) In millions
3Q24 (a)
3Q23 (a)
YTD 2024 (a)
YTD 2023 (a)
Generally Accepted Accounting
Principles (GAAP)
$651
$1,098
$2,583
$3,974
Amortization associated with identifiable
intangibles
15
17
46
51
Put/call valuation adjustments associated
with the company's non-consolidating minority interest
investments
(59)
35
141
141
Impact of exit of employer group
commercial medical products business
17
51
77
15
Value creation initiatives
55
52
151
52
Transaction and integration costs
—
—
—
(47)
Accrued charge related to certain
anticipated litigation expenses
—
15
—
105
Change in fair market value of
publicly-traded equity securities
—
—
—
(1)
Adjusted (non-GAAP)
$679
$1,268
$2,998
$4,290
Diluted earnings per share
(EPS)
3Q24 (a)
3Q23 (a)
YTD 2024 (a)
YTD 2023 (a)
GAAP
$3.98
$6.71
$15.72
$24.26
Amortization associated with identifiable
intangibles
0.13
0.14
0.37
0.41
Put/call valuation adjustments associated
with the company's non-consolidating minority interest
investments
(0.49)
0.28
1.17
1.13
Impact of exit of employer group
commercial medical products business
0.14
0.42
0.64
0.12
Value creation initiatives
0.45
0.42
1.25
0.42
Transaction and integration costs
—
—
—
(0.38)
Accrued charge related to certain
anticipated litigation expenses
—
0.12
—
0.84
Change in fair market value of
publicly-traded equity securities
—
—
—
(0.01)
Cumulative net tax impact of non-GAAP
adjustments
(0.05)
(0.31)
(0.80)
(0.69)
Adjusted (non-GAAP)
$4.16
$7.78
$18.35
$26.10
Refer to the "Footnotes" section included
herein for further explanation of disclosures for Adjusted
(non-GAAP) financial measures, as well as additional
reconciliations.
Please refer to the tables above, as well as the consolidated
and segment highlight sections in the detailed earnings release for
additional discussion of the factors impacting the
year-over-comparisons.
In addition, a summary of key consolidated and segment
statistics comparing 3Q24 to 3Q23 and YTD 2024 to YTD 2023
follows.
Humana Inc. Summary of Results ($
in millions, except per share amounts)
3Q24 (a)
3Q23 (a)
YTD 2024 (a)
YTD 2023 (a)
CONSOLIDATED
Revenues
$29,397
$26,423
$88,548
$79,912
Revenues - Adjusted (non-GAAP)
$29,300
$25,526
$88,011
$76,911
Pretax results
$651
$1,098
$2,583
$3,974
Pretax results - Adjusted (non-GAAP)
$679
$1,268
$2,998
$4,290
EPS
$3.98
$6.71
$15.72
$24.26
EPS - Adjusted (non-GAAP)
$4.16
$7.78
$18.35
$26.10
Benefits expense ratio
89.9 %
86.6 %
89.2 %
86.2 %
Benefits expense ratio - Adjusted
(non-GAAP)
89.8 %
86.4 %
89.2 %
86.1 %
Operating cost ratio
11.5 %
12.5 %
10.9 %
11.8 %
Operating cost ratio - Adjusted
(non-GAAP)
11.3 %
12.0 %
10.7 %
11.3 %
Operating cash flows
$3,494
$11,115
Operating cash flows - Adjusted (non-GAAP)
(b)
$3,494
$4,042
Parent company cash and short term
investments
$609
$518
Debt-to-total capitalization
42.3 %
41.1 %
Days in Claims Payable (DCP)
40.7
43.1
INSURANCE SEGMENT
Revenues
$28,370
$25,511
$85,594
$77,289
Revenues - Adjusted (non-GAAP)
$28,273
$24,614
$85,057
$74,289
Benefits expense ratio
90.6 %
87.6 %
89.8 %
86.8 %
Benefits expense ratio - Adjusted
(non-GAAP)
90.5 %
87.4 %
89.8 %
86.8 %
Operating cost ratio
9.2 %
10.4 %
8.6 %
9.9 %
Operating cost ratio - Adjusted
(non-GAAP)
9.1 %
9.9 %
8.6 %
9.4 %
Income from operations
$274
$722
$1,935
$3,080
Income from operations - Adjusted
(non-GAAP)
$329
$794
$2,059
$3,217
CENTERWELL SEGMENT
Revenues
$5,041
$4,660
$14,806
$13,695
Operating cost ratio
91.3 %
90.3 %
92.1 %
91.5 %
Income from operations
$382
$400
$1,002
$1,017
Income from operations - Adjusted
(non-GAAP) (c)
$439
$453
$1,168
$1,169
Refer to the "Footnotes" section included
herein for further explanation of disclosures for Adjusted
(non-GAAP) financial measures, as well as reconciliations.
FY 2024 Earnings
Guidance
Humana updates its GAAP EPS guidance for the year ending
December 31, 2024 (FY 2024) to 'at least $12.89', or 'at least
$16.00' on an Adjusted basis.
Diluted earnings per share
FY 2024
Guidance
GAAP
at least $12.89
Amortization of identifiable
intangibles
0.50
Put/call valuation adjustments associated
with the company's non-consolidating minority interest investments
(d)
1.17
Impact of exit of employer group
commercial medical products business
1.14
Value creation initiatives (d)
1.25
Cumulative net tax impact of non-GAAP
adjustments
(0.95)
Adjusted (non-GAAP) – FY 2024
projected
at least $16.00
Refer to the "Footnotes" section included
herein for further explanation of disclosures for Adjusted
(non-GAAP) financial measures, as well as additional
reconciliations.
Detailed Press Release
Humana’s full earnings press release, including the statistical
pages, has been posted to the company’s Investor Relations site and
may be accessed at https://humana.gcs-web.com/ or via a current
report on Form 8-K filed by the company with the Securities and
Exchange Commission this morning (available at www.sec.gov or on
the company’s website).
Conference Call
Humana will host a live question and answer session for analysts
at 9:00 a.m. Eastern time today to discuss its financial results
for the quarter and the company’s expectations for future earnings.
In advance of the question and answer session, Humana will post
prepared management remarks to the Quarterly Results section of its
Investor Relations page
(https://humana.gcs-web.com/financial-information/quarterly-results).
To participate via phone, please register in advance at this
link -
https://register.vevent.com/register/BI66effa11b1e4494d907df29b87d7d237.
Upon registration, telephone participants will receive a
confirmation email detailing how to join the conference call,
including the dial-in number and a unique registrant ID that can be
used to access the call.
A webcast of the 3Q24 earnings call may also be accessed via
Humana’s Investor Relations page at humana.com. The company
suggests participants for both the conference call and those
listening via the web dial in or sign on at least 15 minutes in
advance of the call.
For those unable to participate in the live event, the archive
will be available in the Historical Webcasts and Presentations
section of the Investor Relations page
(https://humana.gcs-web.com/events-and-presentations),
approximately two hours following the live webcast.
Footnotes
The company has included financial measures throughout this
earnings release that are not in accordance with GAAP. Management
believes that these measures, when presented in conjunction with
the corresponding GAAP measures, provide a comprehensive
perspective to more accurately compare and analyze the company’s
core operating performance over time. Consequently, management uses
these non-GAAP (Adjusted) financial measures as consistent and
uniform indicators of the company’s core business operations from
period to period, as well as for planning and decision-making
purposes and in determination of incentive compensation. Non-GAAP
(Adjusted) financial measures should be considered in addition to,
but not as a substitute for, or superior to, financial measures
prepared in accordance with GAAP. All financial measures in this
earnings release are in accordance with GAAP unless otherwise
indicated. Please refer to the footnotes for a detailed description
of each item adjusted out of GAAP financial measures to arrive at
non-GAAP (Adjusted) financial measures.
(a) For the periods covered in this earnings release, the
following items are excluded from the non-GAAP financial measures
described above, as applicable:
- Amortization associated with identifiable intangibles -
Since amortization varies based on the size and timing of
acquisition activity, management believes this exclusion provides a
more consistent and uniform indicator of performance from period to
period. For all periods shown within this earnings release, GAAP
measures affected include consolidated pretax results, EPS, and
Insurance and CenterWell segments income from operations. The table
below discloses respective period amortization expense for each
segment:
3Q24
3Q23
YTD 2024
YTD 2023
Insurance segment
$4
$6
$13
$17
CenterWell segment
$11
$11
$33
$34
- Put/call valuation adjustments associated with the company’s
non-consolidating minority interest investments - These amounts
are the result of fair value measurements associated with the
company's Primary Care Organization strategic partnership and are
unrelated to the company's core business operations. For all
periods shown within this earnings release, GAAP measures affected
include consolidated pretax results and EPS.
- Impact of exit of employer group commercial medical products
business - These amounts relate to activity from the exit of
the employer group commercial medical products business as
announced by Humana on February 23, 2023. For all periods shown
within this earnings release, GAAP measures affected include
consolidated pretax results, EPS, consolidated revenues,
consolidated benefit ratio, consolidated operating cost ratio,
Insurance segment revenues, Insurance segment benefit ratio,
Insurance segment operating cost ratio, and Insurance segment
income from operations.
- Value creation initiatives - These charges relate to the
company's ongoing initiative to drive additional value for the
enterprise through cost saving, productivity initiatives, and value
creation from previous investments, and primarily consist of asset
impairment and severance charges. For all periods shown within this
earnings release, GAAP measures affected in this release include
consolidated pretax results, EPS, and the consolidated operating
cost ratio.
- Transaction and integration costs - The transaction and
integration costs primarily related to the acquisition of Kindred
at Home in 2021 and the subsequent divestiture of majority
ownership of Gentiva (formerly Kindred) Hospice in 2022. For YTD
2023, GAAP measures affected include consolidated pretax results,
EPS, and the consolidated operating cost ratio.
- Accrued charge related to certain anticipated litigation
expenses - This charge related to certain anticipated expenses
the company accrued in connection with a legal matter. For 3Q23 and
YTD 2023, GAAP measures affected include consolidated pretax
results, EPS, the consolidated and Insurance segment operating cost
ratios, and Insurance segment income from operations.
- Change in fair market value of publicly-traded equity
securities - These gains and losses are a result of market and
economic conditions that are unrelated to the company's core
business operations. For YTD 2023, GAAP measures affected include
consolidated pretax results, EPS, and consolidated revenues
(specifically investment income).
- Cumulative net tax impact of non-GAAP adjustments - This
adjustment represents the cumulative net impact of the
corresponding tax benefit or expense related to the aforementioned
items excluded from the applicable GAAP measures. For all periods
presented in this earnings release, EPS is the sole GAAP measure
affected.
In addition to the reconciliations shown on page 2 of this
release, the following are reconciliations of GAAP to Adjusted
(non-GAAP) measures described above and disclosed within this
earnings release:
Revenues
Revenues - CONSOLIDATED
(in millions)
3Q24
3Q23
YTD 2024
YTD 2023
GAAP
$29,397
$26,423
$88,548
$79,912
Change in fair market value of
publicly-traded equity securities
—
—
—
(1)
Impact of exit of employer group
commercial medical products business
(97)
(897)
(537)
(3,000)
Adjusted (non-GAAP)
$29,300
$25,526
$88,011
$76,911
Revenues - INSURANCE SEGMENT
(in millions)
3Q24
3Q23
YTD 2024
YTD 2023
GAAP
$28,370
$25,511
$85,594
$77,289
Impact of exit of employer group
commercial medical products business
(97)
(897)
(537)
(3,000)
Adjusted (non-GAAP)
$28,273
$24,614
$85,057
$74,289
Benefit Ratio
Benefit ratio - CONSOLIDATED
3Q24
3Q23
YTD 2024
YTD 2023
GAAP
89.9 %
86.6 %
89.2 %
86.2 %
Impact of exit of employer group
commercial medical products business
(0.1) %
(0.2) %
— %
(0.1) %
Adjusted (non-GAAP)
89.8 %
86.4 %
89.2 %
86.1 %
Benefit ratio - INSURANCE
SEGMENT
3Q24
3Q23
YTD 2024
YTD 2023
GAAP
90.6 %
87.6 %
89.8 %
86.8 %
Impact of exit of employer group
commercial medical products business
(0.1) %
(0.2) %
— %
— %
Adjusted (non-GAAP)
90.5 %
87.4 %
89.8 %
86.8 %
Operating Cost Ratio
Operating cost ratio -
CONSOLIDATED
3Q24
3Q23
YTD 2024
YTD 2023
GAAP
11.5 %
12.5 %
10.9 %
11.8 %
Impact of exit of employer group
commercial medical products business
(0.1) %
(0.3) %
(0.1) %
(0.3) %
Value creation initiatives
(0.1) %
(0.2) %
(0.1) %
(0.1) %
Accrued charge related to certain
anticipated litigation expenses
— %
— %
— %
(0.1) %
Adjusted (non-GAAP)
11.3 %
12.0 %
10.7 %
11.3 %
Operating cost ratio - INSURANCE
SEGMENT
3Q24
3Q23
YTD 2024
YTD 2023
GAAP
9.2 %
10.4 %
8.6 %
9.9 %
Impact of exit of employer group
commercial medical products business
(0.1) %
(0.4) %
— %
(0.4) %
Accrued charge related to certain
anticipated litigation expenses
— %
(0.1) %
— %
(0.1) %
Adjusted (non-GAAP)
9.1 %
9.9 %
8.6 %
9.4 %
Income from Operations
Income from operations - INSURANCE
SEGMENT
(in millions)
3Q24
3Q23
YTD 2024
YTD 2023
GAAP
$274
$722
$1,935
$3,080
Amortization associated with identifiable
intangibles
4
6
13
17
Impact of exit of employer group
commercial medical products business
51
51
111
15
Accrued charge related to certain
anticipated litigation expenses
—
15
—
105
Adjusted (non-GAAP)
$329
$794
$2,059
$3,217
(b) Generally, when the first day of a month falls on a weekend
or holiday, with the exception of January 1 (New Year's Day), the
company receives its monthly Medicare premium payment from CMS on
the last business day of the previous month. On a GAAP basis, this
can result in certain quarterly cash flows from operations
including more or less than three monthly payments. Consequently,
when this occurs, the company reports Adjusted cash flows from
operations to reflect three payments in each quarter to match the
related expenses.
Net cash from operating
activities
(in millions)
YTD 2024
YTD 2023
GAAP
$3,494
$11,115
Timing of premium payment from CMS
—
(7,073)
Adjusted (non-GAAP)
$3,494
$4,042
(c) The CenterWell segment Adjusted income from operations
includes an adjustment to add back depreciation and amortization
expense to the segment's GAAP income from operations since such an
adjustment is commonly utilized for valuation purposes within the
healthcare delivery industry.
Income from operations - CENTERWELL
SEGMENT
(in millions)
3Q24
3Q23
YTD 2024
YTD 2023
GAAP
$382
$400
$1,002
$1,017
Depreciation and amortization expense
57
53
166
152
Adjusted (non-GAAP)
$439
$453
$1,168
$1,169
(d) FY 2024 projected Adjusted results exclude the future impact
of items that cannot be estimated at this time; YTD 2024 amounts
shown.
Cautionary Statement
This news release includes forward-looking statements regarding
Humana within the meaning of the Private Securities Litigation
Reform Act of 1995. When used in investor presentations, press
releases, Securities and Exchange Commission (SEC) filings, and in
oral statements made by or with the approval of one of Humana’s
executive officers, the words or phrases like “expects,”
“believes,” “anticipates,” “assumes,” “intends,” “likely will
result,” “estimates,” “projects” or variations of such words and
similar expressions are intended to identify such forward-looking
statements.
These forward-looking statements are not guarantees of future
performance and are subject to risks, uncertainties, and
assumptions, including, among other things, information set forth
in the “Risk Factors” section of the company’s SEC filings, a
summary of which includes but is not limited to the following:
- If Humana does not design and price its products properly and
competitively, if the premiums Humana receives are insufficient to
cover the cost of healthcare services delivered to its members, if
the company is unable to implement clinical initiatives to provide
a better healthcare experience for its members, lower costs and
appropriately document the risk profile of its members, or if its
estimates of benefits expense are inadequate, Humana’s
profitability could be materially adversely affected. Humana
estimates the costs of its benefit expense payments, and designs
and prices its products accordingly, using actuarial methods and
assumptions based upon, among other relevant factors, claim payment
patterns, medical cost inflation, and historical developments such
as claim inventory levels and claim receipt patterns. The company
continually reviews estimates of future payments relating to
benefit expenses for services incurred in the current and prior
periods and makes necessary adjustments to its reserves, including
premium deficiency reserves, where appropriate. These estimates
involve extensive judgment, and have considerable inherent
variability because they are extremely sensitive to changes in
claim payment patterns and medical cost trends. Accordingly,
Humana's reserves may be insufficient.
- If Humana fails to effectively implement its operational and
strategic initiatives, including its Medicare initiatives, which
are of particular importance given the concentration of the
company's revenues in these products, state-based contract
strategy, the growth of its CenterWell business, and its integrated
care delivery model, the company’s business may be materially
adversely affected. In addition, there can be no assurances that
the company will be successful in maintaining or improving its Star
ratings in future years.
- The number of Humana’s Medicare Advantage plans rated 4-star or
higher are expected to significantly decline in 2025. Humana has
filed a lawsuit seeking to set aside and vacate the 2025 Star
Ratings of its Medicare Advantage plans, but there is no assurance
that the company will prevail in this lawsuit. If the company is
not successful the decline in Star Ratings may negatively impact
its 2026 quality bonus payments from CMS and may also significantly
adversely affect the company’s revenues, operating results, and
cash flows.
- If Humana, or the third-party service providers on which it
relies, fails to properly maintain the integrity of its data, to
strategically maintain existing or implement new information
systems, to protect Humana’s proprietary rights to its systems, or
to defend against cyber-security attacks, contain such attacks when
they occur, or prevent other privacy or data security incidents
that result in security breaches that disrupt the company's
operations or in the unintentional dissemination of sensitive
personal information or proprietary or confidential information,
the company’s business may be materially adversely affected.
- Humana is involved in various legal actions, or disputes that
could lead to legal actions (such as, among other things, provider
contract disputes and qui tam litigation brought by individuals on
behalf of the government), governmental and internal
investigations, and routine internal review of business processes
any of which, if resolved unfavorably to the company, could result
in substantial monetary damages or changes in its business
practices. Increased litigation and negative publicity could also
increase the company’s cost of doing business.
- As a government contractor, Humana is exposed to risks that may
materially adversely affect its business or its willingness or
ability to participate in government healthcare programs including,
among other things, loss of material government contracts;
governmental audits and investigations; potential inadequacy of
government determined payment rates; potential restrictions on
profitability, including by comparison of profitability of the
company’s Medicare Advantage business to non-Medicare Advantage
business; or other changes in the governmental programs in which
Humana participates. Changes to the risk-adjustment model utilized
by CMS to adjust premiums paid to Medicare Advantage plans or
retrospective recovery by CMS of previously paid premiums as a
result of the final rule related to the risk adjustment data
validation audit methodology published by CMS on January 30, 2023
(Final RADV Rule), which Humana believes fails to address
adequately the statutory requirement of actuarial equivalence and
violates the Administrative Procedure Act due to its failure to
include a "Fee for Service Adjuster" could have a material adverse
effect on the company's operating results, financial position and
cash flows.
- Humana's business activities are subject to substantial
government regulation. New laws or regulations, or legislative,
judicial, or regulatory changes in existing laws or regulations or
their manner of application could increase the company's cost of
doing business and have a material adverse effect on Humana’s
results of operations (including restricting revenue, enrollment
and premium growth in certain products and market segments,
restricting the company’s ability to expand into new markets,
increasing the company’s medical and operating costs by, among
other things, requiring a minimum benefit ratio on insured
products, lowering the company’s Medicare payment rates and
increasing the company’s expenses associated with a non-deductible
health insurance industry fee and other assessments); the company’s
financial position (including the company’s ability to maintain the
value of its goodwill); and the company’s cash flows.
- Humana’s failure to manage acquisitions, divestitures and other
significant transactions successfully may have a material adverse
effect on the company’s results of operations, financial position,
and cash flows.
- If Humana fails to develop and maintain satisfactory
relationships with the providers of care to its members, the
company’s business may be adversely affected.
- Humana faces significant competition in attracting and
retaining talented employees. Further, managing succession for, and
retention of, key executives is critical to the Company’s success,
and its failure to do so could adversely affect the Company’s
businesses, operating results and/or future performance.
- Humana’s pharmacy business is highly competitive and subjects
it to regulations and supply chain risks in addition to those the
company faces with its core health benefits businesses.
- Changes in the prescription drug industry pricing benchmarks
may adversely affect Humana’s financial performance.
- Humana’s ability to obtain funds from certain of its licensed
subsidiaries is restricted by state insurance regulations.
- Downgrades in Humana’s debt ratings, should they occur, may
adversely affect its business, results of operations, and financial
condition.
- Volatility or disruption in the securities and credit markets
may significantly and adversely affect the value of our investment
portfolio and the investment income that we derive from this
portfolio.
In making forward-looking statements, Humana is not undertaking
to address or update them in future filings or communications
regarding its business or results. In light of these risks,
uncertainties, and assumptions, the forward-looking events
discussed herein may or may not occur. There also may be other
risks that the company is unable to predict at this time. Any of
these risks and uncertainties may cause actual results to differ
materially from the results discussed in the forward-looking
statements.
Humana advises investors to read the following documents as
filed by the company with the SEC for further discussion both of
the risks it faces and its historical performance:
- Form 10-K for the year ended December 31, 2023;
- Form 10-Q for the quarter ended March 31, 2024 and June 30,
2024; and
- Form 8-Ks filed during 2024.
About Humana
Humana Inc. is committed to putting health first – for our
teammates, our customers, and our company. Through our Humana
insurance services, and our CenterWell health care services, we
make it easier for the millions of people we serve to achieve their
best health – delivering the care and service they need, when they
need it. These efforts are leading to a better quality of life for
people with Medicare, Medicaid, families, individuals, military
service personnel, and communities at large. Learn more about what
we offer at Humana.com and at CenterWell.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241030797057/en/
Lisa Stoner Humana Investor Relations (502) 580-2652 e-mail:
LStamper@humana.com
Mark Taylor Humana Corporate Communications (317) 753-0345
e-mail: MTaylor108@humana.com
Humana (NYSE:HUM)
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Humana (NYSE:HUM)
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