©2024 Humana
LOUISVILLE, Ky.--(BUSINESS WIRE)-- Humana Inc. (NYSE: HUM) today reported consolidated pretax results and diluted earnings per share (EPS) for the quarter ended September 30, 2023 (3Q23) versus the quarter ended September 30, 2022 (3Q22) and for the nine months ended September 30, 2023 (YTD 2023) versus the nine months ended September 30, 2022 (YTD 2022) as noted in the tables below.
Consolidated income before income taxes and equity in net earnings
|
3Q23 (a) |
3Q22 (a) |
YTD 2023 (a) |
YTD 2022 (a) |
||||
Generally Accepted Accounting Principles (GAAP) |
$1,098 |
$1,297 |
|
$3,974 |
|
$3,639 |
|
|
Amortization associated with identifiable intangibles |
17 |
25 |
|
51 |
|
61 |
|
|
Put/call valuation adjustments associated with company's non-consolidating minority interest investments |
35 |
13 |
|
141 |
|
(16 |
) |
|
Transaction and integration costs |
— |
17 |
|
(47 |
) |
70 |
|
|
Change in fair market value of publicly-traded equity securities |
— |
(51 |
) |
(1 |
) |
119 |
|
|
Impact of exit of employer group commercial medical products business |
51 |
70 |
|
15 |
|
48 |
|
|
Accrued charge related to certain anticipated litigation expenses |
15 |
— |
|
105 |
|
— |
|
|
Value creation initiatives |
52 |
82 |
|
52 |
|
285 |
|
|
Gain on sale of Gentiva (formerly Kindred) Hospice |
— |
(240 |
) |
— |
|
(240 |
) |
|
Adjusted (non-GAAP) |
$1,268 |
$1,213 |
|
$4,290 |
|
$3,966 |
|
Diluted earnings per share (EPS) |
3Q23 (a) |
3Q22 (b) |
YTD 2023 (a) |
YTD 2022 (a) |
||||
GAAP |
$6.71 |
|
$9.39 |
|
$24.26 |
|
$22.16 |
|
Amortization associated with identifiable intangibles |
0.14 |
|
0.20 |
|
0.41 |
|
0.48 |
|
Put/call valuation adjustments associated with company's non-consolidating minority interest investments |
0.28 |
|
0.10 |
|
1.13 |
|
(0.13 |
) |
Transaction and integration costs |
— |
|
0.13 |
|
(0.38 |
) |
0.55 |
|
Change in fair market value of publicly-traded equity securities |
— |
|
(0.40 |
) |
(0.01 |
) |
0.94 |
|
Impact of exit of employer group commercial medical products business |
0.42 |
|
0.55 |
|
0.12 |
|
0.37 |
|
Accrued charge related to certain anticipated litigation expenses |
0.12 |
|
— |
|
0.84 |
|
— |
|
Value creation initiatives |
0.42 |
|
0.65 |
|
0.42 |
|
2.24 |
|
Net gain on the sale of Gentiva (formerly Kindred) Hospice |
— |
|
(1.89 |
) |
— |
|
(1.89 |
) |
Cumulative net tax impact of non-GAAP adjustments |
(0.31 |
) |
(1.42 |
) |
(0.69 |
) |
(0.84 |
) |
Adjusted (non-GAAP) |
$7.78 |
|
$7.31 |
|
$26.10 |
|
$23.88 |
|
For comparative purposes, the 3Q22 and YTD 2022 reconciliations noted in the preceding tables have been recast to exclude the impact of the exit of the employer group commercial medical products business as announced by Humana on February 23, 2023. Additionally, 3Q22 and YTD 2022 per share impacts have been recast to disclose the pretax per share impact of each adjustment, followed by a cumulative net tax impact. Refer to the "Footnotes" section included herein for further explanation on disclosures for Adjusted (non-GAAP) financial measures, as well as additional reconciliations. |
“Our third quarter results reinforce Humana’s commitment to delivering strong earnings growth, especially considering the 19 percent increase in our individual Medicare Advantage membership which significantly outpaces the industry growth rate,” said Bruce D. Broussard, Humana’s President and Chief Executive Officer. “Our results can be partially attributed to our team’s continued focus on advancing our CenterWell capabilities, driving durable productivity, and prioritizing quality. Our industry-leading Star Ratings for the sixth consecutive year, our strong Net Promoter Scores, and our numerous awards for customer experience are a testament to our commitment to the health, well-being, and satisfaction of our customers and to our being a trusted brand within the broker community. Our fundamentals are strong and we remain committed to our 2025 Adjusted EPS target of $37, reflecting a 14 percent compound annual growth rate from 2022 to 2025.”
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 3Q23 to 3Q22 and YTD 2023 to YTD 2022 follows.
Prior period segment financial information has been recast to conform to Humana's recently revised segment presentation, as disclosed as part of the company's fourth quarter 2022 earnings release dated February 1, 2023. Additionally, 3Q22 and YTD 2022 Adjusted metrics have also been recast to exclude the impact of the exit of the employer group commercial medical products business as announced by Humana on February 23, 2023.
Humana Inc. Summary of Results
|
3Q23 (a) |
3Q22 (a) |
YTD 2023 (a) |
YTD 2022 (a) |
CONSOLIDATED |
|
|
|
|
Revenues |
$26,423 |
$22,799 |
$79,912 |
$70,431 |
Revenues - Adjusted (non-GAAP) |
$25,526 |
$21,600 |
$76,911 |
$67,001 |
Pretax results |
$1,098 |
$1,297 |
$3,974 |
$3,639 |
Pretax results - Adjusted (non-GAAP) |
$1,268 |
$1,213 |
$4,290 |
$3,966 |
EPS |
$6.71 |
$9.39 |
$24.26 |
$22.16 |
EPS - Adjusted (non-GAAP) |
$7.78 |
$7.31 |
$26.10 |
$23.88 |
Benefits expense ratio |
86.6% |
85.6% |
86.2% |
86.0% |
Benefits expense ratio - Adjusted (non-GAAP) |
86.4% |
85.3% |
86.1% |
85.9% |
Operating cost ratio |
12.5% |
13.5% |
11.8% |
13.0% |
Operating cost ratio - Adjusted (non-GAAP) |
12.0% |
12.8% |
11.3% |
12.2% |
Operating cash flows |
|
|
$11,115 |
$9,714 |
Operating cash flows - Adjusted (non-GAAP) (b) |
|
|
$4,042 |
$3,936 |
Parent company cash and short term investments |
|
|
$518 |
$1,183 |
Debt-to-total capitalization |
|
|
41.1% |
39.4% |
Days in Claims Payable (DCP) |
43.1 |
46.2 |
|
|
|
|
|
|
|
INSURANCE SEGMENT |
|
|
|
|
Revenues |
$25,511 |
$21,743 |
$77,289 |
$67,242 |
Revenues - Adjusted (non-GAAP) |
$24,614 |
$20,595 |
$74,289 |
$63,693 |
Benefits expense ratio |
87.6% |
85.8% |
86.8% |
86.3% |
Benefits expense ratio - Adjusted (non-GAAP) |
87.4% |
85.5% |
86.8% |
86.2% |
Operating cost ratio |
10.4% |
10.6% |
9.9% |
9.7% |
Operating cost ratio - Adjusted (non-GAAP) |
9.9% |
10.1% |
9.4% |
9.2% |
Income from operations |
$722 |
$873 |
$3,080 |
$2,976 |
Income from operations - Adjusted (non-GAAP) |
$794 |
$955 |
$3,217 |
$3,046 |
|
|
|
|
|
CENTERWELL SEGMENT |
|
|
|
|
Revenues |
$4,660 |
$4,274 |
$13,695 |
$13,166 |
Operating cost ratio |
90.3% |
92.0% |
91.5% |
91.2% |
Income from operations |
$400 |
$300 |
$1,017 |
$1,028 |
Income from operations - Adjusted (non-GAAP) (c) |
$453 |
$345 |
$1,169 |
$1,164 |
|
|
|
|
|
Refer to the "Footnotes" section included herein for further explanation on disclosures for Adjusted (non-GAAP) financial measures, as well as reconciliations. |
2023 Earnings Guidance
Humana revised its GAAP EPS guidance for the year ending December 31, 2023 (FY 2023) to 'at least $26.31' from 'at least $26.91', while affirming its Adjusted EPS guidance of 'at least $28.25'. The Adjusted EPS guidance reflects a $0.25 increase from the initial guidance of 'at least $28.00', issued as part of the company's fourth quarter 2022 earnings release.
Diluted earnings per common share |
FY 2023 Guidance (d) |
FY 2022 |
||
GAAP |
at least $26.31 |
|
$22.08 |
|
Amortization of identifiable intangibles |
0.53 |
|
0.64 |
|
Put/call valuation adjustments associated with company's non-consolidating minority interest investments |
1.13 |
|
0.53 |
|
Transaction and integration costs |
(0.38 |
) |
0.83 |
|
Change in fair market value of publicly-traded equity securities |
(0.01 |
) |
0.97 |
|
Impact of exit of employer group commercial medical products business |
0.13 |
|
0.84 |
|
Accrued charge related to certain anticipated litigation expenses |
0.84 |
|
— |
|
Value creation initiatives |
0.42 |
|
3.72 |
|
Net gain on the sale of Gentiva (formerly Kindred) Hospice |
— |
|
(1.86 |
) |
Cumulative net tax impact of non-GAAP adjustments |
(0.72 |
) |
(1.87 |
) |
Adjusted (non-GAAP) – FY 2023 projected; FY 2022 reported |
at least $28.25 |
|
$25.88 |
|
For comparative purposes, the FY 2022 reconciliation noted in the preceding table has been recast to exclude the impact of the exit of the employer group commercial medical products business as announced by Humana on February 23, 2023. Refer to the "Footnotes" section included herein for further explanation on disclosures for Adjusted (non-GAAP) financial measures, as well as additional reconciliations. |
CMS Star Ratings
As previously disclosed, in October 2023, the Centers for Medicare and Medicaid Services (CMS) published its updated Medicare Star Ratings for bonus year 2025 (plan year 2024). Humana has nearly 5.5 million members, or 94 percent of its existing Medicare Advantage membership, currently enrolled in plans rated 4-stars or above, with plans available in all 50 states and Puerto Rico. Four of Humana's contracts received a 5-star rating, covering approximately 790,000 members nationwide and more than doubling the number of members in 5-star plans in 2023. This contributes to the nearly 3.6 million, or 61 percent, of the company's Medicare Advantage members in plans rated 4.5 stars or higher.
About 97.5 percent of retirees in Humana's group Medicare Advantage rated plans remain in 4-star or above contracts for 2024.
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 conference call at 9:00 a.m. Eastern time today to discuss its financial results for the quarter and the company’s expectations for future earnings.
To participate via phone, please register in advance at this link - https://register.vevent.com/register/BId758ed43d68741ac92865ada642803d4 .
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 3Q23 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 at humana.com, 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 press release, the following items are excluded from the non-GAAP financial measures described above, as applicable:
|
3Q23 |
3Q22 |
YTD 2023 |
YTD 2022 |
Insurance segment |
$6 |
$12 |
$17 |
$22 |
CenterWell segment |
$11 |
$13 |
$34 |
$39 |
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) |
3Q23 |
3Q22 |
YTD 2023 |
YTD 2022 |
||||
GAAP |
$26,423 |
|
$22,799 |
|
$79,912 |
|
$70,431 |
|
Change in fair market value of publicly-traded equity securities |
— |
|
(51 |
) |
(1 |
) |
119 |
|
Impact of exit of employer group commercial medical products business |
(897 |
) |
(1,148 |
) |
(3,000 |
) |
(3,549 |
) |
Adjusted (non-GAAP) |
$25,526 |
|
$21,600 |
|
$76,911 |
|
$67,001 |
|
Revenues - INSURANCE SEGMENT (in millions) |
3Q23 |
3Q22 |
YTD 2023 |
YTD 2022 |
||||
GAAP |
$25,511 |
|
$21,743 |
|
$77,289 |
|
$67,242 |
|
Impact of exit of employer group commercial medical products business |
(897 |
) |
(1,148 |
) |
(3,000 |
) |
(3,549 |
) |
Adjusted (non-GAAP) |
$24,614 |
|
$20,595 |
|
$74,289 |
|
$63,693 |
|
Benefit Expense Ratio
Benefit expense ratio - CONSOLIDATED |
3Q23 |
3Q22 |
YTD 2023 |
YTD 2022 |
||||
GAAP |
86.6 |
% |
85.6 |
% |
86.2 |
% |
86.0 |
% |
Impact of exit of employer group commercial medical products business |
(0.2 |
)% |
(0.3 |
)% |
(0.1 |
)% |
(0.1 |
)% |
Adjusted (non-GAAP) |
86.4 |
% |
85.3 |
% |
86.1 |
% |
85.9 |
% |
Benefit expense ratio - INSURANCE SEGMENT |
3Q23 |
3Q22 |
YTD 2023 |
YTD 2022 |
||||
GAAP |
87.6 |
% |
85.8 |
% |
86.8 |
% |
86.3 |
% |
Impact of exit of employer group commercial medical products business |
(0.2 |
)% |
(0.3 |
)% |
— |
% |
(0.1 |
)% |
Adjusted (non-GAAP) |
87.4 |
% |
85.5 |
% |
86.8 |
% |
86.2 |
% |
Operating Cost Ratio
Operating cost ratio - CONSOLIDATED |
3Q23 |
3Q22 |
YTD 2023 |
YTD 2022 |
||||
GAAP |
12.5 |
% |
13.5 |
% |
11.8 |
% |
13.0 |
% |
Transaction and integration costs |
— |
% |
— |
% |
— |
% |
(0.1 |
)% |
Impact of exit of employer group commercial medical products business |
(0.3 |
)% |
(0.3 |
)% |
(0.3 |
)% |
(0.3 |
)% |
Accrued charge related to certain anticipated litigation expenses |
— |
% |
— |
% |
(0.1 |
)% |
— |
% |
Value creation initiatives |
(0.2 |
)% |
(0.4 |
)% |
(0.1 |
)% |
(0.4 |
)% |
Adjusted (non-GAAP) |
12.0 |
% |
12.8 |
% |
11.3 |
% |
12.2 |
% |
Operating cost ratio - INSURANCE SEGMENT |
3Q23 |
3Q22 |
YTD 2023 |
YTD 2022 |
||||
GAAP |
10.4 |
% |
10.6 |
% |
9.9 |
% |
9.7 |
% |
Impact of exit of employer group commercial medical products business |
(0.4 |
)% |
(0.5 |
)% |
(0.4 |
)% |
(0.5 |
)% |
Accrued charge related to certain anticipated litigation expenses |
(0.1 |
)% |
— |
% |
(0.1 |
)% |
— |
% |
Adjusted (non-GAAP) |
9.9 |
% |
10.1 |
% |
9.4 |
% |
9.2 |
% |
Insurance Segment Income from Operations
Income from operations - INSURANCE SEGMENT |
3Q23 |
3Q22 |
YTD 2023 |
YTD 2022 |
||||
GAAP |
$722 |
$873 |
$3,080 |
$2,976 |
||||
Amortization associated with identifiable intangibles |
6 |
12 |
17 |
22 |
||||
Impact of exit of employer group commercial medical products business |
51 |
70 |
15 |
48 |
||||
Accrued charge related to certain anticipated litigation expenses |
15 |
— |
105 |
— |
||||
Adjusted (non-GAAP) |
$794 |
$955 |
$3,217 |
$3,046 |
(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 2023 |
YTD 2022 |
||
GAAP |
$11,115 |
|
$9,714 |
|
Timing of premium payment from CMS |
(7,073 |
) |
(5,778 |
) |
Adjusted (non-GAAP) |
$4,042 |
|
$3,936 |
|
(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. Prior year presentation has been recast to conform to current year presentation.
Income from operations - CENTERWELL SEGMENT (in millions) |
3Q23 |
3Q22 |
YTD 2023 |
YTD 2022 |
||||
GAAP |
$400 |
$300 |
$1,017 |
$1,028 |
||||
Depreciation and amortization expense |
53 |
45 |
152 |
136 |
||||
Adjusted (non-GAAP) |
$453 |
$345 |
$1,169 |
$1,164 |
(d) FY 2023 projected Adjusted results exclude the following:
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,” “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:
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:
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.
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