Humana(US:HUM)2025-07-30 19:37Financial Performance - For the three months ended June 30, 2025, net income attributable to Humana was $545 million, or $4.51 per diluted common share, compared to $679 million, or $5.62 per diluted common share for the same period in 2024[136]. - The consolidated income before income taxes for the three months ended June 30, 2025, was $261 million, significantly up from $136 million in the same period of 2024[135]. - Consolidated premiums revenue increased by $2.6 billion, or 9.1%, from $28.1 billion in Q2 2024 to $30.7 billion in Q2 2025, and by $4.8 billion, or 8.6%, from $56.4 billion in the first half of 2024 to $61.2 billion in 2025[144]. - Consolidated services revenue rose by $0.3 billion, or 27.3%, from $1.1 billion in Q2 2024 to $1.4 billion in Q2 2025, and by $0.6 billion, or 26.5%, from $2.2 billion in the first half of 2024 to $2.7 billion in 2025[145]. - Investment income decreased by $26 million, or 8.7%, from $298 million in Q2 2024 to $272 million in Q2 2025, and by $50 million, or 8.5%, from $586 million in the first half of 2024 to $536 million in 2025[146]. - Consolidated benefits expense increased by $2.5 billion, or 10.1%, from $25.0 billion in Q2 2024 to $27.6 billion in Q2 2025, and by $3.9 billion, or 7.8%, from $50.2 billion in the first half of 2024 to $54.1 billion in 2025[147]. - The consolidated benefit ratio increased by 70 basis points from 89.0% in Q2 2024 to 89.7% in Q2 2025, reflecting a shift in business mix[147]. - Consolidated operating costs rose by $0.4 billion, or 12.7%, from $3.1 billion in Q2 2024 to $3.5 billion in Q2 2025, and by $0.7 billion, or 11.9%, from $6.2 billion in the first half of 2024 to $6.9 billion in 2025[150]. - The effective income tax rate was 24.7% for Q2 2025, unchanged from Q2 2024, while it decreased from 25.0% in the first half of 2024 to 24.6% in 2025[153]. Membership and Market Trends - Approximately 3,542,300 members, or 68%, of individual Medicare Advantage members were in value-based relationships as of June 30, 2025, down from 70% in June 2024[136]. - Total Medicare membership decreased by 277,300, or 3.3%, from 8,503,700 in June 2024 to 8,226,400 in June 2025[154]. - Individual Medicare Advantage membership declined by 388,300, or 6.9%, from 5,617,600 in June 2024 to 5,229,300 in June 2025[154]. - Group Medicare Advantage membership increased by 25,100 members, or 4.6%, from June 30, 2024, to June 30, 2025[158]. - State-based contracts and other membership increased by 190,600 members, or 13.7%, from June 30, 2024, to June 30, 2025[159]. - Individual Medicare Advantage membership decreased by 388,300 members, or 6.9%, from June 30, 2024, to June 30, 2025, including a net decrease of 166,800 D-SNP members, or 17.5%[157]. Operational Changes and Initiatives - The company recorded impairment charges of $32 million for the three months ended June 30, 2025, compared to no impairment charges in the same period of 2024[128]. - Total charges related to value creation initiatives were $29 million for the three months ended June 30, 2025, compared to $68 million for the same period in 2024[127]. - The operating cost ratio is impacted by costs incurred in the second half of the year associated with the Medicare marketing season[133]. - The company expects to incur additional charges in 2025 related to cost-saving and productivity initiatives[127]. - Regulatory changes, including those from the Inflation Reduction Act, may materially affect Humana's results of operations and financial position[138]. - The Medicare Part D coverage gap was eliminated effective January 1, 2025, which is expected to reduce out-of-pocket costs for beneficiaries[133]. Segment Performance - CenterWell segment total revenues increased by $590 million, or 11.9%, from $4.9 billion in Q2 2024 to $5.5 billion in Q2 2025[165]. - CenterWell services revenue increased by $0.3 billion, or 34.8%, from $0.9 billion in Q2 2024 to $1.2 billion in Q2 2025[167]. - Income from operations for the Insurance segment increased by $3 million, or 0.4%, from $763 million in Q2 2024 to $766 million in Q2 2025, and increased by $679 million, or 40.9%, from $1.7 billion in the first half of 2024 to $2.3 billion in 2025[156]. - The Insurance segment benefit ratio increased by 40 basis points from 89.5% in Q2 2024 to 89.9% in Q2 2025[163]. - The CenterWell segment operating cost ratio increased by 70 basis points from 92.0% in Q2 2024 to 92.7% in Q2 2025[169]. - The Insurance segment operating cost ratio decreased by 10 basis points from 8.4% in Q2 2024 to 8.3% in Q2 2025[164]. Cash Flow and Capital Management - Cash and cash equivalents increased to approximately $4.0 billion at June 30, 2025, up from $2.2 billion at December 31, 2024, reflecting a net increase of $1.819 billion for the six months ended June 30, 2025[171]. - Total net receivables rose to $4.504 billion at June 30, 2025, compared to $2.704 billion at December 31, 2024, marking an increase of $1.800 billion[174]. - Medicare receivables increased by $1.963 billion in the 2025 period, driven by higher per member Medicare premiums due to an increased direct subsidy from the IRA[174]. - Total net capital expenditures, excluding acquisitions, were $209 million in the 2025 period, down from $291 million in the 2024 period[176]. - Net proceeds from investment securities were $871 million in the 2025 period, compared to net purchases of $1.1 billion in the 2024 period[177]. - Claim payments exceeded receipts from CMS associated with Medicare Part D claim subsidies by $482 million in the 2025 period[178]. - The company repurchased common shares for $100 million in the 2025 period, down from $750 million in the 2024 period[185]. - The amount of ordinary dividends paid to the parent company was approximately $0.3 billion during the six months ended June 30, 2025, compared to $0.5 billion in the same period of 2024[195]. - The average duration of the investment portfolio was approximately 3.6 years as of June 30, 2025, indicating sensitivity to interest rate changes[199]. - The company maintained aggregate statutory capital and surplus of approximately $14.5 billion, exceeding the minimum regulatory requirements of $10.9 billion[195].