[Business Overview](index=4&type=section&id=Item%201.%20Business) Humana Inc. operates as a health and well-being company through its insurance and healthcare services segments, primarily serving Medicare members and deriving significant revenue from federal government contracts [Company Profile](index=4&type=section&id=General) Humana Inc. is a health and well-being company operating through insurance and healthcare services segments, serving approximately 16 million medical members and 5 million specialty product members as of December 31, 2024 - As of December 31, 2024, Humana had approximately **16 million medical members** and **5 million specialty product members**[14](index=14&type=chunk) - In 2024, **85% of total premiums and services revenue** was derived from federal government contracts, with individual Medicare Advantage contracts in Florida representing **14%** of this revenue, covering about **924,800 members**[14](index=14&type=chunk) [Business Segments](index=4&type=section&id=Business%20Segments) Humana operates through its Insurance segment, providing health insurance products primarily focused on Medicare, and its CenterWell segment, delivering integrated healthcare services including pharmacy, primary care, and home solutions [Insurance Segment](index=6&type=section&id=Insurance%20Segment) The Insurance segment is Humana's largest, generating 97% of consolidated premiums and services revenue in 2024, primarily from Individual Medicare Advantage, and is exiting the Employer Group Commercial Medical Products business Insurance Segment Premiums and Services Revenue (FY 2024) | Product | Revenue (in millions) | % of Consolidated Revenue | | :--- | :--- | :--- | | Individual Medicare Advantage | $88,019 | 75.6% | | Group Medicare Advantage | $7,731 | 6.6% | | Medicare stand-alone PDP | $3,137 | 2.7% | | State-based contracts and other | $10,915 | 9.4% | | **Total Insurance Segment** | **$113,070** | **97.0%** | - The company is exiting the Employer Group Commercial Medical Products business, with the process expected to be finalized in the first half of 2025[41](index=41&type=chunk) - Humana was awarded the new T-5 TRICARE East Region contract, which commenced on January 1, 2025, covering approximately **4.6 million beneficiaries** across 24 states and Washington D.C[45](index=45&type=chunk) [CenterWell Segment](index=10&type=section&id=CenterWell%20Segment) The CenterWell segment provides pharmacy, primary care, and home solutions, generating $3.47 billion in external services revenue in 2024 and operating 344 primary care clinics CenterWell Segment Services Revenue (FY 2024) | Line of Business | External Revenue (in millions) | Intersegment Revenue (in millions) | | :--- | :--- | :--- | | Home solutions | $1,313 | $2,050 | | Pharmacy solutions | $904 | $10,724 | | Primary care | $1,248 | $3,697 | | **Total** | **$3,465** | **$16,471** | - The Primary Care Organization (PCO) operates **344 primary care clinics** with approximately **1,000 providers**, serving **390,500 patients**[50](index=50&type=chunk) - Humana sold a **60% interest** in Gentiva Hospice in August 2022 and continues to hold approximately a **35% minority ownership stake**[56](index=56&type=chunk) [Medical Membership](index=12&type=section&id=Insurance%20Medical%20Membership) As of December 31, 2024, Humana's total insurance medical membership was approximately 16.3 million, with Military services (TRICARE) and Individual Medicare Advantage being the largest components Medical Membership by Product (as of Dec 31, 2024) | Product | Membership (in thousands) | % of Total | | :--- | :--- | :--- | | Military services (TRICARE) | 6,009.1 | 36.8% | | Individual Medicare Advantage | 5,661.8 | 34.6% | | Medicare stand-alone PDP | 2,288.2 | 14.0% | | State-based contracts and other | 1,459.9 | 8.9% | | Group Medicare Advantage | 545.7 | 3.3% | | Medicare Supplement | 377.3 | 2.3% | | **Total** | **16,347.1** | **100.0%** | [Provider Arrangements and Care Management](index=12&type=section&id=Provider%20Arrangements) Humana manages healthcare services through contracted and employed providers, utilizing various reimbursement models including value-based arrangements where providers share financial risk - As of December 31, 2024, approximately **2.4 million members** (**14.4% of total medical membership**) were covered under shared risk value-based arrangements[66](index=66&type=chunk) - Within the individual Medicare Advantage population, **2.1 million members** (**38.0%**) were in shared risk arrangements[66](index=66&type=chunk) [Human Capital Management](index=16&type=section&id=Human%20Capital%20Management) As of December 31, 2024, Humana employed approximately 65,680 associates, focusing on well-being and engagement, though voluntary turnover increased to 14.4% in 2024 - The company had approximately **65,680 associates** as of December 31, 2024[84](index=84&type=chunk) - Voluntary turnover rate (VTR) increased to **14.4% in 2024** from **13.4% in 2023**[85](index=85&type=chunk) [Risk Factors](index=20&type=page&id=Item%201A.%20Risk%20Factors) Humana faces significant risks related to business operations, regulatory changes, and cybersecurity threats, which could materially impact its financial performance and reputation [Business and Operational Risks](index=20&type=section&id=Business%20and%20Operational%20Risks) Humana faces risks from product pricing, medical cost estimation, intense competition, and a significant decline in Medicare Advantage Star Ratings for 2025, which will negatively impact future bonus payments - Profitability may be adversely affected if premiums are insufficient to cover healthcare costs, which are sensitive to utilization, new technologies, and prescription drug costs[96](index=96&type=chunk)[97](index=97&type=chunk) - The company faces intense competition, with price being a significant factor; failure to compete effectively or manage membership mix could harm financial results[102](index=102&type=chunk)[105](index=105&type=chunk) - A significant decline in Medicare Advantage Star Ratings for 2025 will negatively impact 2026 quality bonus payments, with approximately **25% of MA members** in plans rated 4-star or higher for 2025, compared to **94% for 2024**[109](index=109&type=chunk)[110](index=110&type=chunk) [Regulatory and Legal Risks](index=21&type=section&id=Regulatory%20and%20Legal%20Risks) As a major government contractor, Humana is exposed to substantial regulatory and legal risks, including changes in government programs, audit challenges, and ongoing litigation - Approximately **94% of total premiums and services revenue for 2024** came from government programs, making the company highly sensitive to legislative and regulatory changes[124](index=124&type=chunk) - The company is challenging the CMS Final RADV Rule, which eliminates the FFS Adjuster for audits starting in PY 2018; an unfavorable outcome could materially impact results[129](index=129&type=chunk)[130](index=130&type=chunk)[563](index=563&type=chunk) - Humana is subject to various legal proceedings, including a putative stockholder class action alleging false or misleading statements about financial performance and Medicare Advantage Star Ratings[118](index=118&type=chunk)[119](index=119&type=chunk)[573](index=573&type=chunk) [Cybersecurity and Technology Risks](index=22&type=section&id=Cybersecurity%20and%20Technology%20Risks) Humana's operations heavily rely on information systems and data integrity, exposing it to risks from system failures and cybersecurity attacks that could lead to data breaches and reputational damage - Business operations depend significantly on information systems for pricing, service delivery, and financial reporting; failure to maintain or implement new systems could have a material adverse effect[111](index=111&type=chunk)[112](index=112&type=chunk) - The company is a regular target of cybersecurity attacks; a successful attack could result in misappropriation of data, system shutdowns, regulatory fines, and reputational damage[115](index=115&type=chunk)[116](index=116&type=chunk) [Management's Discussion and Analysis (MD&A)](index=41&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Humana's financial condition and results of operations, highlighting key performance drivers, strategic initiatives, and significant financial impacts [Executive Overview](index=41&type=section&id=Executive%20Overview) Management's overview emphasizes Humana's integrated care delivery strategy, the planned exit from the Employer Group Commercial Medical business, and the significant impact of special charges on 2024 net income - As of December 31, 2024, **71% of individual Medicare Advantage members** (**4.0 million**) were in value-based care relationships[216](index=216&type=chunk) - The company is exiting the Employer Group Commercial Medical Products business, with the process expected to be finalized in the first half of 2025[199](index=199&type=chunk) Impact of Special Items on Pre-Tax Income (in millions) | Item | 2024 | 2023 | | :--- | :--- | :--- | | Put/call valuation adjustments | $296 | $320 | | Value creation initiatives | $281 | $436 | | Impairment charges | $200 | $91 | | Accrued litigation charge | — | $105 | | Transaction and integration costs | — | $(48) | | **Total Impact** | **$777** | **$904** | [Results of Operations (2024 vs. 2023)](index=46&type=section&id=Results%20of%20Operations) Humana's consolidated revenues increased 10.7% to $117.8 billion in 2024, driven by Medicare Advantage growth, but net income fell 51.1% to $1.2 billion due to a worsened benefit ratio Consolidated Financial Results (FY 2024 vs. FY 2023) | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $117,761M | $106,374M | +10.7% | | Net Income | $1,214M | $2,484M | -51.1% | | Diluted EPS | $9.98 | $20.00 | -50.1% | | Benefit Ratio | 89.8% | 87.3% | +250 bps | | Operating Cost Ratio | 11.8% | 12.5% | -70 bps | - The increase in the benefit ratio was primarily due to elevated Medicare Advantage and state-based contracts medical cost trends and lower favorable prior period medical claims reserve development (**$701 million in 2024** vs. **$872 million in 2023**)[230](index=230&type=chunk)[231](index=231&type=chunk) - The operating cost ratio improved due to scale efficiencies from MA membership growth, cost-saving initiatives, and lower broker commission expenses compared to the prior year[233](index=233&type=chunk) [Insurance Segment Results](index=49&type=section&id=Insurance%20Segment%20Results) The Insurance segment's income from operations decreased 51.4% to $1.3 billion in 2024, despite revenue growth, due to a higher benefit ratio driven by elevated medical cost trends Insurance Segment Key Metrics (FY 2024 vs. FY 2023) | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Total External Revenues | $113,070M | $102,272M | +10.6% | | Income from Operations | $1,289M | $2,654M | -51.4% | | Benefit Ratio | 90.4% | 88.0% | +240 bps | | Operating Cost Ratio | 9.2% | 10.2% | -100 bps | - Individual Medicare Advantage membership grew by **252,900** (**4.7%**), while stand-alone PDP membership declined by **560,900** (**19.7%**)[238](index=238&type=chunk)[240](index=240&type=chunk)[242](index=242&type=chunk) - For 2025, the company anticipates a net membership decline of approximately **550,000** in its individual Medicare Advantage offerings[240](index=240&type=chunk) [CenterWell Segment Results](index=53&type=section&id=CenterWell%20Segment%20Results) The CenterWell segment's income from operations decreased 5.3% to $1.3 billion in 2024, despite revenue growth, primarily due to an increased operating cost ratio influenced by risk model revisions and compensation accruals CenterWell Segment Key Metrics (FY 2024 vs. FY 2023) | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $19,936M | $18,405M | +8.3% | | Income from Operations | $1,329M | $1,404M | -5.3% | | Operating Cost Ratio | 92.2% | 91.2% | +100 bps | - The increase in the operating cost ratio was driven by the v28 risk model revision's impact on primary care and reduced compensation accruals in 2023, partially offset by value creation initiatives[255](index=255&type=chunk) [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) Humana's cash and cash equivalents decreased by $2.5 billion in 2024, with cash from operations at $3.0 billion, and the company utilized cash for investing and financing activities Summary of Cash Flows (FY 2024, in billions) | Cash Flow Category | Amount | | :--- | :--- | | Net cash from operating activities | $3.0 | | Net cash used in investing activities | $(3.0) | | Net cash used in financing activities | $(2.5) | | **Net (decrease) in cash** | **$(2.5)** | - The company repurchased **$0.8 billion** of common stock and paid **$431 million** in dividends during 2024[280](index=280&type=chunk)[281](index=281&type=chunk) - As of December 31, 2024, the parent company had **$0.6 billion** in cash and equivalents, and state-regulated subsidiaries held aggregate statutory capital of **$13.2 billion**, exceeding the minimum requirement of **$11.4 billion**[288](index=288&type=chunk)[551](index=551&type=chunk) [Critical Accounting Policies and Estimates](index=59&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Humana's critical accounting estimates include benefits expense recognition (IBNR), revenue recognition (Medicare risk-adjustment), and impairment testing for investments, goodwill, and intangible assets - Benefits Payable (IBNR) is a critical estimate; the company recorded **$701 million** in favorable prior-period medical claims reserve development in 2024, compared to **$872 million in 2023**[297](index=297&type=chunk)[299](index=299&type=chunk) - Goodwill stood at **$9.6 billion** and indefinite-lived intangible assets at **$1.2 billion** at year-end; an impairment charge of **$200 million** was recorded in 2024 related to indefinite-lived intangible assets[315](index=315&type=chunk)[319](index=319&type=chunk) - The investment portfolio had **$1.4 billion** in gross unrealized losses at year-end, primarily attributed to increased market interest rates[309](index=309&type=chunk)[324](index=324&type=chunk) [Financial Statements and Supplementary Data](index=67&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Humana's consolidated financial statements, including balance sheets, income statements, and cash flow statements, along with detailed notes on accounting policies and financial disclosures [Consolidated Financial Statements](index=67&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements provide Humana's financial position as of December 31, 2024 and 2023, and its results of operations and cash flows for the three years ended December 31, 2024 Consolidated Balance Sheet Highlights (as of Dec 31, 2024) | Account | Amount (in millions) | | :--- | :--- | | Cash and cash equivalents | $2,221 | | Investment securities | $18,635 | | Goodwill | $9,631 | | **Total Assets** | **$46,479** | | Benefits payable | $10,440 | | Total debt (Short & Long-term) | $11,721 | | **Total Liabilities** | **$30,034** | | **Total Stockholders' Equity** | **$16,375** | Consolidated Income Statement Highlights (FY 2024) | Account | Amount (in millions) | | :--- | :--- | | Premiums Revenue | $112,104 | | Services Revenue | $4,431 | | **Total Revenues** | **$117,761** | | Benefits Expense | $100,664 | | Operating Costs | $13,696 | | **Income from Operations** | **$2,562** | | **Net Income Attributable to Humana** | **$1,207** | [Notes to Consolidated Financial Statements](index=73&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on Humana's significant accounting policies, segment information, debt, and legal contingencies, including critical audit matters identified by the independent auditor - Benefits payable totaled **$10.4 billion** at year-end, including an IBNR estimate of **$7.3 billion**; the company recognized **$701 million** in favorable development from prior years' reserves in 2024[492](index=492&type=chunk)[495](index=495&type=chunk) - Total debt outstanding was **$11.7 billion**; the company maintains **$4.7 billion** in revolving credit facilities, with no borrowings outstanding at year-end[509](index=509&type=chunk)[523](index=523&type=chunk) - The company is involved in significant legal proceedings, including a stockholder class action related to financial performance disclosures and a lawsuit filed against HHS to vacate its 2025 Star Ratings[573](index=573&type=chunk)[574](index=574&type=chunk) - The independent auditor's report identified two Critical Audit Matters: (1) Valuation of Incurred but not yet Reported Benefits Payable, and (2) Impairment Assessments of Home Solutions Reporting Unit Goodwill and Certificates of Need Intangible Assets[608](index=608&type=chunk)[609](index=609&type=chunk)[613](index=613&type=chunk) [Controls and Procedures](index=118&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that Humana's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2024, with no material changes during the fourth quarter - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2024[622](index=622&type=chunk) - Based on the COSO framework, management determined that the company's internal control over financial reporting was effective as of December 31, 2024[625](index=625&type=chunk) - There were no material changes to the company's internal control over financial reporting during the fourth quarter of 2024[627](index=627&type=chunk)

Humana TodayHUMHumana$265.54 +8.30 (+3.23%) 52-Week Range$213.31▼$406.46Dividend Yield1.33%P/E Ratio26.69Price Target$285.68Add to WatchlistHealth insurance giant Humana Inc. NYSE: HUM stock initially rose in reaction to its fourth quarter of 2024 earnings report despite posting losses. The medical sector giant was one of the first carriers to sound the alarm of rising inpatient utilization costs, notably with its Medicare Advantage (MA) plan members in Q4 2023. Since then, many other MA plan providers lik ...

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Humana Inc. (HUM) incurred a fourth-quarter 2024 adjusted net loss of $2.16 per share, narrower than the Zacks Consensus Estimate of a loss of $2.26 per share but wider than the prior-year quarter’s loss of 11 cents per share.See the Zacks Earnings Calendar to stay ahead of market-making news.Adjusted revenues of $29.2 billion advanced 13.5% year over year. The top line surpassed the consensus mark by 1.1%. The quarterly results were hurt by a decline in medical membership, which in turn, resulted from a ye ...

Financial Data and Key Metrics Changes - 2024 adjusted EPS is in line with initial guidance, reaffirming the 2025 outlook with a commitment to achieving at least a 3% margin in individual MA [10][11] - Operating expense ratio improved by 40 basis points in 2024, indicating progress in operational efficiency [19] Business Line Data and Key Metrics Changes - Nearly 5% membership growth in 2024, despite repricing products to reflect elevated medical cost trends [14] - Significant improvement in STAR's performance with 650,000 care gaps closed in Q4 2024, aiming for an industry-leading position by 2027 [17][18] Market Data and Key Metrics Changes - The company is experiencing a shift in membership mix towards higher lifetime value segments, particularly in states like Florida, Illinois, and Texas [84] - Medicaid is expected to grow by approximately 175,000 to 150,000 members in 2025, with modest improvements in margin anticipated [112] Company Strategy and Development Direction - Focus on four levers: product experience, clinical excellence, operational efficiency, and capital allocation for growth [13][22] - Emphasis on improving clinical outcomes and reducing system costs to enhance product profitability [16] - Plans to balance margin recovery with prudent balance sheet management while pursuing organic growth and acquisitions [23][24] Management's Comments on Operating Environment and Future Outlook - The healthcare system remains complicated and expensive, with a need for high-quality, affordable care [25][26] - Management acknowledges the challenges posed by regulatory headwinds but remains optimistic about the long-term potential of Medicare Advantage [32][34] Other Important Information - New management team members introduced, including a new CFO with experience in navigating difficult external headwinds [11][12] - The company is committed to evolving its service delivery to be more nimble and responsive to market changes [34] Q&A Session Summary Question: 2025 MLR guidance breakdown - The majority of improvement in the MLR ratio is driven by MA plan exits with high benefit ratios, alongside adjustments in remaining plans [43][44] Question: 2026 outlook and core business growth - The company does not typically provide guidance for 2026 due to uncertainties, focusing instead on improving operating performance [50][52] Question: Path to 3% margins - Achieving a 3% margin requires a competitive stars position, normalized rate environment, and optimal operating performance [55][56] Question: Investments impacting earnings growth - Incremental investments are aimed at improving operating performance, particularly in STARS and clinical excellence [65] Question: D SNP attrition and guidance impact - The company experienced higher than expected D SNP attrition but is learning from this to inform future strategies [86][88] Question: Part D seasonality expectations - The company expects growth in Part D membership due to competitive dynamics and pricing strategies [92][94] Question: Medicaid margin trajectory - Medicaid margins are expected to improve modestly in 2025, with ongoing maturation in states with less experience [113][115] Question: Specialty RX trends - Specialty drug spend remains elevated but stable, aligning with pricing expectations [117] Question: Group MA margin pressure - The group product is experiencing margin pressure due to evolving industry dynamics, with expectations for improvement in 2026 [136]

Key TakeawaysHumana expects Medicare Advantage members to decline in 2025, following a downgrade to the quality rating of one of its biggest plans.The health insurer reported fourth-quarter revenue that exceeded expectations and a narrower-than-expected adjusted loss.Humana shares have lost more than a quarter of their value over the past 12 months. Humana (HUM) shares slid after the health insurer said it expects Medicare Advantage memberships to decline in 2025. The health insurer reported fourth-quarter ...

Humana (HUM) reported $29.12 billion in revenue for the quarter ended December 2024, representing a year-over-year increase of 13.2%. EPS of -$2.16 for the same period compares to -$0.11 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $28.82 billion, representing a surprise of +1.05%. The company delivered an EPS surprise of +4.42%, with the consensus EPS estimate being -$2.26.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall St ...

SAN DIEGO, Feb. 11, 2025 /PRNewswire/ -- The Shareholders Foundation, Inc. announced an update in the lawsuit that is pending for certain investors in shares of Humana Inc. (NYSE: HUM).Investors who purchased shares of Humana Inc. (NYSE: HUM) prior to July 2022 and continue to hold any of thoseNYSE: HUM shares have also certain options and should contact the Shareholders Foundation at [email protected] or call +1(858) 779 - 1554.In June 2024, an investor inNYSE: HUM shares filed a lawsuit against Humana Inc ...

Humana Tuesday reported $1.2 billion in 2024 profits that included a $693 million fourth quarter ... [+] loss as the health insurer exits unprofitable Medicare Advantage markets for 2025, the company disclosed Feb. 11, 2025. In this photo is a Humana office in Louisville, Kentucky, US, on Monday, July 31, 2023. (Photographer: Jon Cherry/Bloomberg)© 2023 Bloomberg Finance LPHumana Tuesday reported $1.2 billion in 2024 profits that included a $693 million fourth quarter loss as the health insurer exits unprof ...

Health insurance company Humana HUM is set to release its fourth-quarter 2024 earnings report on Feb. 11, before market hours. The stock has dropped 2.37% from the previous close, as of writing, on Feb.10, according to Benzinga Pro. The stock is up 5.58% year-to-date but has fallen 27.73% in the past year.In the previous quarter, Humana reported revenues of $29.4 billion — a 15.2% year-over-year increase. It surpassed analysts’ expectations by 2.6%. The company also achieved a solid beat on earnings per sha ...