Humana(US:HUM)2025-11-05 17:07Financial Performance - Humana reported net income of $195 million, or $1.62 per diluted common share, for the three months ended September 30, 2025, compared to $480 million, or $3.98 per diluted common share, for the same period in 2024[137]. - For the nine months ended September 30, 2025, net income attributable to Humana was $2.0 billion, or $16.43 per diluted common share, compared to $1.9 billion, or $15.72 per diluted common share, for the same period in 2024[137]. - The total consolidated income before income taxes for the three months ended September 30, 2025, was $442 million, compared to a loss of $4 million in the same period in 2024[136]. - Net income decreased by $286 million, or 59.6%, from $480 million in Q3 2024 to $194 million in Q3 2025, and increased by $82 million, or 4.3%, from $1.897 billion in the first nine months of 2024 to $1.979 billion in 2025[147]. - The effective tax rate was (77.3)% for Q3 2025, compared to 24.4% for Q3 2024, reflecting the impact of a tax loss on the sale of business[153]. Revenue and Expenses - Consolidated premiums revenue increased by $2.8 billion, or 9.9%, from $28.0 billion in Q3 2024 to $30.7 billion in Q3 2025, and by $7.6 billion, or 9.0%, from $84.4 billion in the first nine months of 2024 to $91.9 billion in 2025[144]. - Consolidated services revenue rose by $0.5 billion, or 45.1%, from $1.1 billion in Q3 2024 to $1.6 billion in Q3 2025, and by $1.1 billion, or 32.7%, from $3.3 billion in the first nine months of 2024 to $4.3 billion in 2025[145]. - Consolidated benefits expense increased by $2.9 billion, or 11.4%, from $25.1 billion in Q3 2024 to $28.0 billion in Q3 2025, and by $6.8 billion, or 9.0%, from $75.3 billion in the first nine months of 2024 to $82.1 billion in 2025[147]. - Consolidated operating costs increased by $0.7 billion, or 22.3%, from $3.3 billion in Q3 2024 to $4.1 billion in Q3 2025, and by $1.5 billion, or 15.6%, from $9.5 billion in the first nine months of 2024 to $11.0 billion in 2025[150]. Membership and Market Position - Approximately 3,553,000 members, or 68%, of individual Medicare Advantage members were in value-based relationships as of September 30, 2025, down from 70% in 2024[137]. - Total medical membership decreased by 1,365,900, or 8.3%, from 16,358,100 in September 2024 to 14,992,200 in September 2025[154]. - Individual Medicare Advantage membership declined by 421,900, or 7.5%, from 5,659,200 in September 2024 to 5,237,300 in September 2025[154]. - Group Medicare Advantage membership increased by 23,100 members, or 4.2%, from September 30, 2024, to September 30, 2025[158]. - Medicare stand-alone PDP membership increased by 130,500 members, or 5.6%, from September 30, 2024, to September 30, 2025[158]. - State-based contracts and other membership increased by 212,700 members, or 14.7%, from September 30, 2024, to September 30, 2025[159]. Operational Changes and Initiatives - The company recorded value creation initiative charges of $267 million and $320 million for the three and nine months ended September 30, 2025, respectively[128]. - The company expects to incur additional charges in 2025 related to workforce optimization and consulting expenses[128]. - The Medicare Part D coverage gap was eliminated effective January 1, 2025, which is expected to reduce out-of-pocket costs for beneficiaries[134]. - Humana's strategy focuses on integrated care delivery, aiming for long-term growth in both membership and earnings[137]. - The company anticipates that regulatory changes may have a material adverse effect on its results of operations and financial position[139]. Capital and Cash Flow - Cash and cash equivalents increased to approximately $5.4 billion at September 30, 2025, up from $2.2 billion at December 31, 2024[171]. - Net cash provided by operating activities was $2.6 billion for the nine months ended September 30, 2025, a decrease of $0.9 billion from $3.5 billion in the same period of 2024[172]. - Total net receivables were $2.684 billion at September 30, 2025, a decrease of $20 million from $2.704 billion at December 31, 2024[174]. - The company issued $750 million of 5.550% unsecured senior notes due May 1, 2035, and $500 million of 6.000% unsecured senior notes due May 1, 2055 in March 2025[179]. - Total net capital expenditures, excluding acquisitions, were $344 million in the 2025 period, down from $421 million in the 2024 period[176]. - The company repurchased common shares for $109 million in the 2025 period, compared to $768 million in the 2024 period[183]. - Aggregate statutory capital and surplus of state-regulated subsidiaries was approximately $15.2 billion, exceeding minimum regulatory requirements of $10.9 billion[194]. - The average duration of the investment portfolio was approximately 3.4 years as of September 30, 2025, down from 3.8 years at December 31, 2024[198].