Humana Inc., headquartered in Louisville, Kentucky, is a leading health and well-being company that operates primarily through its Insurance and CenterWell segments. The company provides a wide range of health insurance products, including medical, dental, hearing, vision, and prescription drug coverage, with a significant emphasis on Medicare Advantage, Medicaid, and Military offerings **[0000049071-24-000012_hum-20231231.htm:3]** **[0001193125-24-062182_d862230ds3asr.htm:7]**. Additionally, Humana offers health services through its CenterWell segment, which includes pharmacy solutions, primary care, and home health services, along with strategic partnerships to develop senior-focused primary care centers **[0000049071-24-000012_hum-20231231.htm:11]**.

1. **Insurance** - Offers a comprehensive range of health insurance products, focusing on Medicare Advantage, Medicaid, and Military offerings, as well as dental, hearing, vision, and prescription drug coverage **[0000049071-24-000012_hum-20231231.htm:3]** **[0001193125-24-062182_d862230ds3asr.htm:7]**.
   - **Medicare Advantage** - Provides enhanced health insurance plans for seniors, focusing on comprehensive care and additional benefits.
   - **Medicaid and Military** - Delivers health insurance solutions tailored for Medicaid recipients and military personnel.

2. **CenterWell** - Delivers health services, including pharmacy solutions, primary care, and home health services, with a focus on senior care through strategic partnerships **[0000049071-24-000012_hum-20231231.htm:11]**.
   - **Pharmacy Solutions** - Offers medication management and pharmacy services to improve patient outcomes.
   - **Primary Care** - Provides primary healthcare services with an emphasis on senior-focused care centers.
   - **Home Health Services** - Offers in-home healthcare services to support patient recovery and well-being.

61bf10daf8d0b94176112a62de86ba6cc12ece861d8d3b86988da80dd9ad7f6e

b726671deec677d3c4e061b3d080786f0ce862fbd485f6e7a53a2e201c152a7c

| Metric [Unit: $ Million] | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|--------------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **Insurance Segment**    | 21,599  **[0000049071-23-000007_hum-2022q48kxex99x1brief.htm:3]**  | 25,550  **[0000049071-23-000025_hum-20230331.htm:27]**  | 25,875  **[0000049071-23-000046_hum-2023q28kxex99x2detailed.htm:6]**  | 25,356  **[0000049071-23-000064_hum-20230930.htm:32]**  | 25,565  **[0000049071-24-000007_hum-2023q48kxex99x2detailed.htm:6]**  | 28,699  **[0000049071-24-000021_hum-2024q18kxex99x2detailed.htm:5]**  | 28,525  **[0000049071-24-000037_hum-2024q28kxex99x2detailed.htm:5]**  | 28,370  **[0000049071-24-000051_hum-2024q38kxex99x2detailed.htm:5]**  |
| **CenterWell Segment**   | 4,141  **[0000049071-23-000007_hum-2022q48kxex99x1brief.htm:3]**   | 757  **[0000049071-23-000025_hum-20230331.htm:27]**     | N/A         | 759  **[0000049071-23-000064_hum-20230930.htm:32]**     | 4,710  **[0000049071-24-000007_hum-2023q48kxex99x2detailed.htm:8]**  | 4,818  **[0000049071-24-000021_hum-2024q18kxex99x2detailed.htm:2]**   | 4,947  **[0000049071-24-000037_hum-2024q28kxex99x2detailed.htm:6]**   | 5,041  **[0000049071-24-000051_hum-2024q38kxex99x1brief.htm:2]**   |
| **Consolidated Total**   | N/A         | 26,742  **[0000049071-23-000025_hum-20230331.htm:27]**  | 26,747  **[0000049071-23-000046_hum-2023q28kxex99x2detailed.htm:10]**  | 26,423  **[0000049071-23-000062_hum-2023q38kxex99x1brief.htm:3]**  | 26,462  **[0000049071-24-000007_hum-2023q48kxex99x2detailed.htm:12]**  | 29,611  **[0000049071-24-000021_hum-2024q18kxex99x2detailed.htm:2]**  | N/A         | 29,397  **[0000049071-24-000051_hum-2024q38kxex99x1brief.htm:2]**  |

f40582f8b0a275c491bac9e8d985166887246140ae78e58e4c64f20f79665eea

| Metric (Unit) | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|---------------|---------|---------|---------|---------|---------|
| Individual Medicare Advantage Membership Increase (Members) | **810,200**  **[0000049071-23-000064_hum-20230930.htm:48]** **[0000049071-23-000064_hum-20230930.htm:47]**  | **843,300**  **[0000049071-24-000012_hum-20231231.htm:61]**  | **395,900**  **[0000049071-24-000023_hum-20240331.htm:40]** **[0000049071-24-000023_hum-20240331.htm:39]**  | **348,500**  **[0000049071-24-000040_hum-20240630.htm:44]**  | **284,800**  **[0000049071-24-000055_hum-20240930.htm:46]** **[0000049071-24-000055_hum-20240930.htm:45]**  |
| D-SNP Membership Increase (Members) | **201,000**  **[0000049071-23-000064_hum-20230930.htm:48]**  | **202,400**  **[0000049071-24-000012_hum-20231231.htm:61]**  | **140,100**  **[0000049071-24-000023_hum-20240331.htm:40]**  | **121,400**  **[0000049071-24-000040_hum-20240630.htm:45]**  | **71,600**  **[0000049071-24-000055_hum-20240930.htm:46]**  |
| Group Medicare Advantage Membership Increase (Members) | **-54,300**  **[0000049071-23-000064_hum-20230930.htm:48]** **[0000049071-23-000064_hum-20230930.htm:47]**  | **-55,500**  **[0000049071-24-000012_hum-20231231.htm:61]**  | **40,300**  **[0000049071-24-000023_hum-20240331.htm:40]** **[0000049071-24-000023_hum-20240331.htm:39]**  | **35,400**  **[0000049071-24-000040_hum-20240630.htm:44]**  | **36,400**  **[0000049071-24-000055_hum-20240930.htm:46]** **[0000049071-24-000055_hum-20240930.htm:45]**  |
| Medicare Stand-alone PDP Membership Decrease (Members) | **-683,300**  **[0000049071-23-000064_hum-20230930.htm:48]** **[0000049071-23-000064_hum-20230930.htm:47]**  | **-702,200**  **[0000049071-24-000012_hum-20231231.htm:61]**  | **-609,300**  **[0000049071-24-000023_hum-20240331.htm:40]** **[0000049071-24-000023_hum-20240331.htm:39]**  | **-574,100**  **[0000049071-24-000040_hum-20240630.htm:44]**  | **-570,100**  **[0000049071-24-000055_hum-20240930.htm:46]** **[0000049071-24-000055_hum-20240930.htm:45]**  |
| State-based Contracts and Other Membership Increase (Members) | **165,700**  **[0000049071-23-000064_hum-20230930.htm:48]** **[0000049071-23-000064_hum-20230930.htm:47]**  | **91,500**  **[0000049071-24-000012_hum-20231231.htm:61]**  | **-110,100**  **[0000049071-24-000023_hum-20240331.htm:40]** **[0000049071-24-000023_hum-20240331.htm:39]**  | **62,100**  **[0000049071-24-000040_hum-20240630.htm:44]**  | **181,500**  **[0000049071-24-000055_hum-20240930.htm:46]** **[0000049071-24-000055_hum-20240930.htm:45]**  |
| Commercial Fully-insured Medical Membership Decrease (Members) | **-165,200**  **[0000049071-23-000064_hum-20230930.htm:48]** **[0000049071-23-000064_hum-20230930.htm:47]**  | **-217,600**  **[0000049071-24-000012_hum-20231231.htm:61]**  | **-412,900**  **[0000049071-24-000023_hum-20240331.htm:40]** **[0000049071-24-000023_hum-20240331.htm:39]**  | **-413,300**  **[0000049071-24-000040_hum-20240630.htm:44]**  | **-383,400**  **[0000049071-24-000055_hum-20240930.htm:46]** **[0000049071-24-000055_hum-20240930.htm:45]**  |
| Commercial ASO Medical Membership Decrease (Members) | **-154,300**  **[0000049071-23-000064_hum-20230930.htm:48]** **[0000049071-23-000064_hum-20230930.htm:47]**  | **-174,800**  **[0000049071-24-000012_hum-20231231.htm:61]**  | **-337,100**  **[0000049071-24-000023_hum-20240331.htm:40]** **[0000049071-24-000023_hum-20240331.htm:39]**  | **-348,300**  **[0000049071-24-000040_hum-20240630.htm:44]**  | **-261,900**  **[0000049071-24-000055_hum-20240930.htm:46]** **[0000049071-24-000055_hum-20240930.htm:45]**  |
| Specialty Membership Decrease (Members) | **-245,800**  **[0000049071-23-000064_hum-20230930.htm:48]** **[0000049071-23-000064_hum-20230930.htm:47]**  | **-326,500**  **[0000049071-24-000012_hum-20231231.htm:61]**  | **-461,500**  **[0000049071-24-000023_hum-20240331.htm:40]** **[0000049071-24-000023_hum-20240331.htm:39]**  | **-439,100**  **[0000049071-24-000040_hum-20240630.htm:44]**  | **-397,500**  **[0000049071-24-000055_hum-20240930.htm:46]** **[0000049071-24-000055_hum-20240930.htm:45]**  |

b5faa8e9abe04755f0a655450ee3c066fc2fca9271ed6a8aa0ec824c7b674433

391474115cd1ccd032c93fd662b9e890c7a65006e64fba6a28104abc589a7627

1. Given the higher inpatient admissions observed in the latter half of the second quarter and continuing into July, can you provide more details on the specific steps you are taking to mitigate this pressure, and how confident are you that these measures will effectively offset the inpatient cost overruns going forward?  **[HUM_3395258_3]** 

2. You mentioned that achieving normalized margins in your Medicare Advantage business will take multiple years due to regulatory constraints and TBC limitations; can you elaborate on the specific challenges you face and what strategies you have in place to accelerate margin recovery before 2027?  **[HUM_3395258_14]** ,  **[HUM_3395258_8]** 

3. With the planned exits from certain markets due to unprofitable plans, how do you anticipate these exits will impact your overall membership growth and earnings in 2025, especially considering the potential retention of members through other plan options?  **[HUM_3395258_12]** ,  **[HUM_3395258_18]** 

4. Regarding your cost management efforts, you've highlighted investments in automation and technology, including partnerships with Google for AI initiatives; can you provide specific examples of how these investments are translating into measurable cost reductions and operational efficiencies, and what is the expected timeline for realizing these benefits?  **[HUM_3395258_14]** ,  **[HUM_3395258_3]** 

5. There have been concerns that extensive cost-cutting measures might have affected your ability to respond swiftly to emerging cost pressures, such as the higher inpatient costs attributed to the two-midnight rule; how do you address this concern, and what safeguards are in place to ensure essential capabilities are not compromised by cost reductions?  **[HUM_3395258_8]** 

47b0eca7d5ed20c2946473782bd82f1d120f14df83dde84711ec9e62c825be84

Individual Medicare Advantage Membership Increase (Members)

D-SNP Membership Increase (Members)

Group Medicare Advantage Membership Increase (Members)

Medicare Stand-alone PDP Membership Decrease (Members)

State-based Contracts and Other Membership Increase (Members)

Commercial Fully-insured Medical Membership Decrease (Members)

Commercial ASO Medical Membership Decrease (Members)

Specialty Membership Decrease (Members)

3399258d67265ae50e14164de90f8c83b0fbb82fe758ddc0b4b6d76fd6b70f7e

- Humana is exiting unprofitable plans, focusing on profitable growth, which is expected to lead to **margin expansion** and **earnings growth**.  **[HUM_3395258_18]** **[HUM_3395258_9]**
- The company is investing in **automation and technology**, including a partnership with **Google around AI**, to drive **long-term cost management**, improve efficiency, and reduce administrative expenses.  **[HUM_3395258_14]** **[HUM_3395258_3]**
- Favorable **risk scores** due to higher-than-anticipated MRA payments provide a **mitigating impact** to headwinds and may positively affect earnings in the coming years.  **[HUM_3395258_16]**

4622d7c199d4042fb703ad61b8035b027ee72f9cb625f10876563240a149a115

139c64617974fbc70729d072b4805d98014ec731a8868b3dda741bf1c6d181b3

cfe9457ce87334a94cecfa61f19f20acbe2bfec4c58dbe93e3f766d015f1d123

Adjustments for Non-Cash Items

Stock-Based Compensation [USD, Millions]

Changes in Working Capital

Capital Expenditures (CapEx)

Proceeds from / Repayments of Debt

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

510a4a8e3280343bef36df0d62bcc91a6807fb77b77be1cdc4cae7fb5dad1add

### Q4 2023 Earnings Call
- **Issued Period**: Q4 2023
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Adjusted EPS for 2024**: Approximately **$16**  **[HUM_3370800_1]** .
  2. **Adjusted EPS Growth for 2025**: Expected to be **$6 to $10** of adjusted EPS growth  **[HUM_3370800_1]** .
  3. **Medical Loss Ratio (MLR) for 2024**: A year-over-year increase of **200 basis points**  **[HUM_3370800_12]** .
  4. **Operating Cost Ratio Improvement for 2024**: About **30 basis points** improvement versus the 20 basis points annual commitment  **[HUM_3370800_5]** .

### Q1 2024 Earnings Call
- **Issued Period**: Q1 2024
- **Guided Period**: FY 2024 and 2025
- **Guidance**:
  1. **Adjusted EPS Guidance**: Reaffirmed full-year adjusted EPS of approximately **$16**  **[HUM_3380429_1]** .
  2. **Individual MA Membership Growth**: Increased outlook by **50,000** to **150,000** net growth  **[HUM_3380429_1]** .
  3. **EPS Seasonality**: Over **80%** of earnings guided to occur in the first half of the year  **[HUM_3380429_12]** .
  4. **Medical Cost Trends**: Early indicators largely in line with or positive relative to expectations  **[HUM_3380429_1]** .
  5. **Margin Recovery and Growth**: Committed to margin recovery and profitable growth, aiming for a long-term margin of at least **3%**  **[HUM_3380429_1]** .
  6. **2025 Adjusted EPS Growth Outlook**: Impacted by several variables including MA bid pricing decisions  **[HUM_3380429_1]** .
  7. **Medicaid Platform Expansion**: Continued organic success with recent contract wins  **[HUM_3380429_1]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Revenue Guidance**: Raised by **$3 billion**, driven by increased expected membership  **[HUM_3395258_13]** .
  2. **Medical Loss Ratio (MLR)**: Step-up in second half MLR due to higher inpatient volumes, with a third quarter impact of about **80 basis points** due to workday seasonality  **[HUM_3395258_5]** .
  3. **Adjusted Earnings Per Share (EPS)**: Reaffirmed full-year 2024 adjusted EPS guidance  **[HUM_3395258_3]** .
  4. **Benefit Ratio**: Reaffirmed full-year 2024 benefit ratio guidance  **[HUM_3395258_3]** .
  5. **Membership Growth**: Raised forecast by **75,000 members**, expecting growth of just over **4%** for the year  **[HUM_3395258_2]** .
  6. **Medicare Advantage Margin**: Expected to achieve at least a **3%** margin, with a path to normalized margin by 2027  **[HUM_3395258_14]** .

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: N/A
- **Guidance**: The documents do not contain information about Humana's guidance for Q3 2024. The available documents only cover discussions and guidance related to Q2 2024. Therefore, I cannot provide the guidance for Q3 2024.

2b385620fdb8f5a13ccba0b7bb0e3629a61be00b892c743fa697b4cb492884f4

| Name                   | Position                                           | Start Date          | Short Bio                                                                                                                                                                                                                                                                                                                                                   |
|------------------------|----------------------------------------------------|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Bruce D. Broussard     | Chief Executive Officer and Director               | January 1, 2013     | Bruce D. Broussard joined Humana in December 2011 as President and was elected CEO on January 1, 2013. Before joining Humana, he served as CEO of McKesson Specialty/US Oncology, Inc., holding various senior executive roles  **[0000049071-24-000012_hum-20231231.htm:23]** **[0001193125-24-062915_d52608ddef14a.htm:13]** .                                                                                                                     |
| Vishal Agrawal, M.D.   | Chief Strategy and Corporate Development Officer   | December 2018       | Vishal Agrawal, M.D. joined Humana in December 2018. Prior to this, he was a Senior Advisor for The Carlyle Group L.P. and served as President and Chief Growth Officer of Ciox Health  **[0000049071-24-000012_hum-20231231.htm:23]** **[0000049071-23-000011_hum-20221231.htm:21]** .                                                                                                                                                             |
| Samir M. Deshpande     | Chief Information Officer                          | July 2021           | Samir M. Deshpande was elected Chief Information Officer in July 2021. He joined Humana in July 2017 after 17 years at Capital One, where he held key leadership positions  **[0000049071-24-000012_hum-20231231.htm:23]** .                                                                                                                                                                            |
| Susan M. Diamond       | Chief Financial Officer                            | June 2021           | Susan M. Diamond became CFO in June 2021. She joined Humana in June 2004 and has held various leadership roles, focusing on growth and consumer segmentation strategies  **[0000049071-24-000012_hum-20231231.htm:23]** .                                                                                                                                                                               |
| John-Paul W. Felter    | Senior Vice President, Chief Accounting Officer    | August 2022         | John-Paul W. Felter was elected to his current position in August 2022. Before joining Humana, he served as Senior Director - Investment Finance for OneAmerica Financial Partners, Inc. and spent nearly 11 years at Ernst & Young LLP  **[0000049071-24-000012_hum-20231231.htm:24]** **[0000049071-23-000011_hum-20221231.htm:22]** .                                                                                                             |
| William K. Fleming     | Chief Corporate Affairs Officer                    | April 2023          | William K. Fleming, PharmD, was elected Chief Corporate Affairs Officer in April 2023. He joined Humana in 1994 and has held various positions, including Segment President of Pharmacy Solutions  **[0000049071-24-000012_hum-20231231.htm:24]** .                                                                                                                                                    |
| Timothy S. Huval       | Chief Administrative Officer                       | July 2019           | Timothy S. Huval became Chief Administrative Officer in July 2019. He joined Humana after 10 years at Bank of America in multiple senior-level roles  **[0000049071-24-000012_hum-20231231.htm:24]** **[0000049071-23-000011_hum-20221231.htm:22]** .                                                                                                                                                                                               |
| James A. Rechtin       | President and Chief Executive Officer              | January 2024        | James A. Rechtin was elected President and CEO in January 2024. Prior to Humana, he was President and CEO at Envision Healthcare and held senior roles at OptumCare and Davita Medical Group  **[0000049071-24-000012_hum-20231231.htm:24]** **[HUM_3395258_1]** .                                                                                                                                                       |
| George Renaudin II     | President, Medicare & Medicaid                     | February 2023       | George Renaudin II was elected to his current position in February 2023. He joined Humana in April 2004 and has held various leadership roles, most recently as President, Medicare  **[0000049071-24-000012_hum-20231231.htm:24]** .                                                                                                                                                                   |
| Sanjay K. Shetty, M.D. | President, CenterWell                              | April 2023          | Sanjay K. Shetty, M.D. became President of CenterWell in April 2023. Before joining Humana, he spent nearly 13 years at Steward Health Care System in multiple senior-level roles  **[0000049071-24-000012_hum-20231231.htm:24]** .                                                                                                                                                                     |
| Joseph C. Ventura      | Chief Legal Officer                                | February 2019       | Joseph C. Ventura joined Humana in January 2009 and became Chief Legal Officer in February 2019. He previously served as Senior Vice President, Associate General Counsel & Corporate Secretary  **[0000049071-24-000012_hum-20231231.htm:23]** **[0000049071-24-000012_hum-20231231.htm:24]** **[0000049071-23-000011_hum-20221231.htm:22]** .                                                                                                                                                 |
| Celeste Mellet         | Chief Financial Officer                            | January 11, 2025    | Celeste Mellet will be appointed CFO effective January 11, 2025. She previously served as CFO of Global Infrastructure Partners and held senior roles at Evercore and Fannie Mae. Her career includes over 18 years at Morgan Stanley  **[0000049071-24-000058_exhibit991release.htm:0]** **[0000049071-24-000058_hum-20241203.htm:1]** .                                                                                                             |

53b79f57146be6b2b9d2810c8a6b0614be0229dbb3dcf13c78d573c6950dac11

| Program Details          | Program 1          | Program 2          |
|--------------------------|--------------------|--------------------|
| Approval Date            | February 2023  **[0000049071-24-000055_hum-20240930.htm:18]**   | February 16, 2024  **[0000049071-24-000055_hum-20240930.htm:18]**  |
| End Date/Duration        | Replaced by 2024 authorization on February 16, 2024  **[0000049071-24-000055_hum-20240930.htm:18]**  | Expires February 15, 2027  **[0000049071-24-000055_hum-20240930.htm:18]**  |
| Total additional amount  | Not specified  **[0000049071-24-000055_hum-20240930.htm:18]**   | **$3 billion**  **[0000049071-24-000055_hum-20240930.htm:18]**  |
| Remaining authorization amount | N/A  **[0000049071-24-000055_hum-20240930.htm:18]**        | **$2.93 billion** as of October 29, 2024  **[0000049071-24-000055_hum-20240930.htm:18]** **[0000049071-24-000055_hum-20240930.htm:57]**  |
| Details                  | Approximately **$824 million** remained unused before replacement  **[0000049071-24-000055_hum-20240930.htm:18]**  | Part of capital deployment strategy, includes investments in organic growth and CenterWell capabilities  **[HUM_3226370_7]**  |

5945db4bdc78d2da14b0ff46adee5eb809fbef244b3d6d8dbd33964119fd62c5

**Annual guidance for FY 2024:**
- **EPS**: at least $16  **[HUM_3404704_1]**  (no change from prior guidance  **[HUM_3395258_3]** )  
- **Medicare Advantage membership growth**: ~5%  **[HUM_3404704_1]**  (raised from just over 4%  **[HUM_3395258_2]** )  

**Annual guidance for FY 2025:**
- **EPS**: no specific figure provided  **[HUM_3404704_1]**  (no prior guidance)  
- **Medicare Advantage membership**: loss of a few hundred thousand members  **[HUM_3404704_4]**  (no prior guidance)  
- **Medicare Advantage margin**: reflects pricing actions and plan exits  **[HUM_3404704_7]**  (no prior guidance)  
- **Medical cost trends**: assumed normal utilization on top of higher FY 2024 baseline  **[HUM_3404704_10]**  (no prior guidance)  

4ba1259b918384ab53d1e5d17c3ee7fb9a04d4aef5ca2d97c053d489314b92d9

| Name                          | Start Date | End Date | Reason for Change |
|-------------------------------|------------|----------|-------------------|
| PricewaterhouseCoopers LLP    | 1968  **[0000049071-24-000012_hum-20231231.htm:147]**    | Present  | Current auditor   |

def88f8104f13f3a3a50cbe0f73447caaa62f800284fbd4ca61db9a27d60ea29

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

- Total Revenue: $29.397 billion (+11% YoY)  **[0000049071-23-000064_hum-20230930.htm:2]** **[0000049071-24-000055_hum-20240930.htm:2]**   
- Operating Income (EBIT): $728 million (-40% YoY)  **[0000049071-23-000064_hum-20230930.htm:2]** **[0000049071-24-000055_hum-20240930.htm:2]**   
- Net Income: $48 million (**-94% YoY**)  **[0000049071-23-000064_hum-20230930.htm:2]** **[0000049071-24-000055_hum-20240930.htm:2]**   
- Insurance – Premiums: $27.951 billion (+11% YoY)  **[0000049071-23-000064_hum-20230930.htm:32]** **[0000049071-24-000055_hum-20240930.htm:33]**   
- Commercial Fully-Insured: $85 million (**-90% YoY**)  **[0000049071-23-000064_hum-20230930.htm:32]** **[0000049071-24-000055_hum-20240930.htm:33]**   
- CenterWell: $877 million (-81% YoY)  **[0000049071-23-000064_hum-20230930.htm:32]** **[0000049071-24-000055_hum-20240930.htm:33]**   

2b2de5aec2dbbd32805cfa8428230696b9f53137ac6bd4cf3accf4d375146a46

dfe090a838c695d5f38e5e54099881fcb01129f316215d5350005b66d6b95298

Number of members for Individual Medicare Advantage (members)

Number of members for Group Medicare Advantage (members)

Number of members for Medicare stand-alone PDP (members)

Number of members for Total Medicare (members)

Number of members for Medicare Supplement (members)

Number of members for Commercial fully-insured (members)

Number of members for State-based contracts and other (members)

Number of members for Military services (members)

Number of members for Commercial ASO (members)

Number of members for Total Medical membership (members)

Number of members for Total Specialty membership (members)

Number of Individual Medicare Advantage members in value-based relationships (members)

Percentage of Individual Medicare Advantage membership in value-based relationships (percent)

2fe2cb5624d7dd58c4285e9a0dc1646133b7a8b9c8764777ad597ab9ae596f74

| Year | Amount Due (in millions) | Debt Type                     | Interest Rate (%) | % of Total Debt                                                                 |
|----------|------------------------------|------------------------------------|-----------------------|------------------------------------------------------------------------------------|
| 2024     | $600                         | Senior Notes                      | 3.850                | 4.6% = (600 / 13,022) * 100 **[0000049071-24-000055_hum-20240930.htm:19]** **[0000049071-24-000055_hum-20240930.htm:19]**                                       |
| 2025     | $1,177                       | Senior Notes                      | 4.500                | 9.0% = (1,177 / 13,022) * 100 **[0000049071-24-000055_hum-20240930.htm:19]** **[0000049071-24-000055_hum-20240930.htm:19]**                                     |
| 2026     | $500                         | Senior Notes                      | 5.700                | 3.8% = (500 / 13,022) * 100 **[0000049071-24-000055_hum-20240930.htm:19]**                                               |
| 2027     | $1,350                       | Senior Notes                      | 1.350, 3.950         | 10.4% = (1,350 / 13,022) * 100 **[0000049071-24-000055_hum-20240930.htm:19]**                                            |
| 2028     | $1,000                       | Senior Notes                      | 5.750                | 7.7% = (1,000 / 13,022) * 100 **[0000049071-24-000055_hum-20240930.htm:19]**                                             |
| 2029     | $1,250                       | Senior Notes                      | 3.700, 3.125         | 9.6% = (1,250 / 13,022) * 100 **[0000049071-24-000055_hum-20240930.htm:19]**                                             |
| 2030     | $500                         | Senior Notes                      | 4.875                | 3.8% = (500 / 13,022) * 100 **[0000049071-24-000055_hum-20240930.htm:19]**                                               |
| 2031     | $1,250                       | Senior Notes                      | 5.375                | 9.6% = (1,250 / 13,022) * 100 **[0000049071-24-000055_hum-20240930.htm:19]**                                             |
| 2032     | $750                         | Senior Notes                      | 2.150                | 5.8% = (750 / 13,022) * 100 **[0000049071-24-000055_hum-20240930.htm:19]**                                               |
| 2033     | $750                         | Senior Notes                      | 5.875                | 5.8% = (750 / 13,022) * 100 **[0000049071-24-000055_hum-20240930.htm:19]**                                               |
| 2034     | $850                         | Senior Notes                      | 5.950                | 6.5% = (850 / 13,022) * 100 **[0000049071-24-000055_hum-20240930.htm:19]**                                               |
| 2038     | $250                         | Senior Notes                      | 8.150                | 1.9% = (250 / 13,022) * 100 **[0000049071-24-000055_hum-20240930.htm:19]**                                               |
| 2042     | $400                         | Senior Notes                      | 4.625                | 3.1% = (400 / 13,022) * 100 **[0000049071-24-000055_hum-20240930.htm:19]**                                               |
| 2044     | $750                         | Senior Notes                      | 4.950                | 5.8% = (750 / 13,022) * 100 **[0000049071-24-000055_hum-20240930.htm:19]**                                               |
| 2047     | $400                         | Senior Notes                      | 4.800                | 3.1% = (400 / 13,022) * 100 **[0000049071-24-000055_hum-20240930.htm:19]**                                               |
| 2049     | $500                         | Senior Notes                      | 3.950                | 3.8% = (500 / 13,022) * 100 **[0000049071-24-000055_hum-20240930.htm:19]**                                               |
| 2053     | $750                         | Senior Notes                      | 5.500                | 5.8% = (750 / 13,022) * 100 **[0000049071-24-000055_hum-20240930.htm:19]**                                               |
| 2054     | $1,000                       | Senior Notes                      | 5.750                | 7.7% = (1,000 / 13,022) * 100 **[0000049071-24-000055_hum-20240930.htm:19]**                                             |

fd03d1edf3d27aea26bf7ef6df820dd02d49ed0d5e88600cb5c0aae9280247ad

ca7e295f695f9d14e4d44c2b9390d96449fbbff3bcd129d25916d62dcc17f944

- **Humana increased its individual Medicare Advantage (MA) membership growth target by 50,000 due to strong performance during the Open Enrollment Period (OEP), driven by competitive advantages, market share gains, and strong brand loyalty.**  **[HUM_3380429_13]**
- **The company is committed to pricing discipline and margin recovery, aiming to achieve at least a 3% MA margin over time through multiyear pricing actions and productivity improvements, which will drive long-term shareholder value.**  **[HUM_3380429_2]** **[HUM_3380429_4]**
- **Humana believes in the strong core fundamentals and growth outlook for Medicare Advantage and value-based care, expecting mid-single-digit growth over the coming years, with its unique focus and expanding CenterWell capabilities positioning it well for future growth.**  **[HUM_3380429_10]** **[HUM_3380429_7]**

05c1424fb28f610895ddfb74eef4c8c9b735b31536fcc492d5e8b40285552bb3

1. **2025 EPS Guidance and Investments**  
   **Q:** Is investment spending cutting 2025 EPS growth?  
   **A:** Management reaffirmed that **2024 performance is a floor** for 2025 and sees room for EPS progression, but they're prioritizing long-term earnings potential over near-term EPS growth due to planned investments that could impact 2025 earnings.  **[HUM_3404704_3]** 

2. **2027 Margin Target and Stars**  
   **Q:** Can you achieve 3% margin by 2027?  
   **A:** They believe the **3% margin target is realistic** for 2027 but acknowledge risk; meaningful improvement in **Stars ratings** is needed to reach this goal.  **[HUM_3404704_5]** **[HUM_3404704_13]** 

3. **Utilization and Cost Trends**  
   **Q:** How are utilization trends affecting bids?  
   **A:** Utilization and claims development are in line with expectations. They've incorporated higher 2024 baseline trends into 2025 bids and feel good about assumptions. No large regulatory changes expected in 2025 to disrupt projections.  **[HUM_3404704_4]** **[HUM_3404704_9]** **[HUM_3404704_10]** 

4. **Impact of IRA and Specialty Drugs**  
   **Q:** Are specialty drug costs a concern for 2025?  
   **A:** They saw higher **oncology costs** due to new treatments and expect further uptick in 2025 from **IRA changes** and lower maximum out-of-pocket limits; have built induced utilization assumptions into 2025 planning.  **[HUM_3404704_6]** 

5. **Membership Outlook and Plan Exits**  
   **Q:** What's the outlook on membership growth?  
   **A:** Expect industry growth of **5% to 5.5%** in 2025 vs. **6%** in 2024. Humana anticipates losing a few hundred thousand members due to plan exits but is focusing on retention efforts and digital tools to mitigate impact. Expects positive contribution from higher-performing plans.  **[HUM_3404704_8]** 

6. **Stars Ratings and Litigation Impact**  
   **Q:** Will Stars appeal affect investments in 2025?  
   **A:** The appeal won't significantly impact 2025 investment plans. Investments are aimed at improving operational performance and **Stars progression** regardless of the appeal outcome; key to long-term earnings potential.  **[HUM_3404704_12]** **[HUM_3404704_13]** 

7. **D-SNP Redetermination Impact**  
   **Q:** How will D-SNP redetermination affect you?  
   **A:** Anticipate an **80 basis point** industry headwind in 2025 from D-SNP redeterminations due to the 6-month grace period ending; built into expectations with potential dual disenrollment affecting membership.  **[HUM_3404704_8]** **[HUM_3404704_15]** 

8. **Claims Denials and MLR Impact**  
   **Q:** Are claim denials affecting MLR materially?  
   **A:** With the **2 midnight rule**, they've seen higher initial approvals but also higher appeal and uphold rates; anticipated this early and incorporated into estimates, with no meaningful MLR impact since. Trends are stable.  **[HUM_3404704_11]** 

9. **Investment in Sales Channels**  
   **Q:** How are you addressing broker capacity?  
   **A:** Invested in internal sales channels and digital tools, seeing a **70% increase in internal brokerage sales**. Focused on improving member experience and capacity to achieve expected growth despite industry shifts.  **[HUM_3404704_8]** **[HUM_3404704_14]** 

10. **Early Thoughts on 2026 Rates**  
    **Q:** Expectations for 2026 rate environment?  
    **A:** While hard to predict, they're cautiously optimistic about **2026 rates**, hoping for positive adjustments to reflect current trends and acknowledging prior assumptions may not have materialized.  **[HUM_3404704_14]** 

11. **Crosswalk Possibilities for 2026**  
    **Q:** Can you crosswalk members to mitigate Stars?  
    **A:** Exploring crosswalk options to de-risk member concentration but need to consider factors like **Stars progression**, group contracts, and membership mix; it's one lever among others, not a sole solution.  **[HUM_3404704_7]** 

12. **Inpatient Claims Denial Trends**  
    **Q:** Trends in inpatient claims denials?  
    **A:** Since implementing the **2 midnight rule**, they've seen stable trends with higher initial approvals and appeals; working with providers to ensure understanding, with no significant impact on MLR.  **[HUM_3404704_11]** 

9d20ea9712e1f92aa7c26d358d714622d473da538c8ec03155346fefd95f1692

- **Humana is committed to restoring margins and achieving sustainable, profitable growth by leveraging their integrated model and focusing on their best-in-class capabilities**, which include strong relationships with value-based providers and high-quality scores.  **[HUM_3370800_15]** **[HUM_3370800_7]** **[HUM_3370800_13]** **[HUM_3370800_10]**
- **The company sees significant opportunity in the expansion and scaling of their CenterWell business**, particularly by integrating primary care assets to drive disproportionate growth and improve clinical outcomes and satisfaction, supporting enterprise margin expansion.  **[HUM_3370800_5]** **[HUM_3370800_14]** **[HUM_3370800_13]** **[HUM_3370800_10]**
- **Humana continues to successfully mitigate cost pressures through productivity efforts, administrative cost reductions, and leveraging technology and AI**, exceeding their cost improvement commitments and positioning them to better handle industry challenges.  **[HUM_3370800_15]** **[HUM_3370800_5]**

2b4caf4b622340d890debf4b74cee3ef57c78d84104a9445a75e30303314028c

1. **2025 EPS Improvement**  
   **Q:** How will you achieve 2025 EPS growth?  
   **A:** Humana plans to prioritize margin improvement in 2025, aiming for an EPS increase of **$6 to $10** per share. They acknowledge that achieving this may involve lower membership growth depending on competitor pricing actions. The company is committed to restoring margins but notes that factors like the rate notice and industry pricing will impact the exact outcome.  **[HUM_3370800_3]** 

2. **Competitive Pricing and Growth**  
   **Q:** Will you prioritize profitability over growth if competition doesn't reprice?  
   **A:** Humana intends to focus on sustainable, profitable growth. If competitors do not adjust pricing, Humana is prepared to prioritize margin over membership growth, even if it means growing below the industry average temporarily. They believe disciplined pricing is necessary and are committed to restoring appropriate profitability levels.  **[HUM_3370800_7]** 

3. **Utilization Trends Impact**  
   **Q:** Are higher utilization trends expected to continue?  
   **A:** Humana observed unprecedented increases in inpatient utilization in late 2023, particularly in November and December. They assume these higher costs will persist throughout 2024 and have adjusted their forecasts accordingly. Early January data suggests that elevated levels are continuing, so they are planning cautiously.  **[HUM_3370800_8]** **[HUM_3370800_10]** 

4. **Margin Recovery Timeline**  
   **Q:** Why not restore margins to target levels sooner?  
   **A:** Given significant trends and regulatory changes, Humana believes restoring margins to target levels will take more than one year. They will address the higher medical costs in their 2025 pricing but recognize limits on how much can be achieved in a single year due to competitive dynamics and regulatory constraints.  **[HUM_3370800_4]** **[HUM_3370800_6]** **[HUM_3370800_18]** 

5. **Assumptions on Membership Attrition**  
   **Q:** Does 2025 guidance account for potential membership loss?  
   **A:** Yes, the **$6 to $10** EPS improvement range for 2025 considers scenarios with lower than industry average membership growth, potentially losing **hundreds of thousands** of members. This is due to targeted pricing actions and benefit adjustments aimed at restoring margins.  **[HUM_3370800_9]** 

6. **Competition Impact**  
   **Q:** Is one competitor driving the market share shift?  
   **A:** Humana notes that one large competitor has been particularly aggressive in pricing and gaining market share in 2024. They have seen similar patterns in the past and expect that competitor to readjust in 2025. Humana remains focused on their strengths rather than engaging in unsustainable pricing competition.  **[HUM_3370800_12]** 

7. **Operating Expense Management**  
   **Q:** Can you do more to reduce operating expenses?  
   **A:** Humana has been proactively reducing administrative costs, achieving a **30 basis point** improvement in operating cost ratio versus their **20 basis point** commitment. They continue to look for additional opportunities, particularly leveraging technology and AI, but acknowledge that some benefits will take longer to realize.  **[HUM_3370800_5]** 

8. **Long-Term Margin Outlook**  
   **Q:** Has your view on long-term margins changed?  
   **A:** Humana remains focused on maximizing margin contributions across the enterprise, especially as they expand CenterWell capabilities. They expect to restore health plan margins to reasonable levels over a relatively short period but emphasize overall enterprise margin expansion rather than setting specific targets for individual segments.  **[HUM_3370800_10]** 

9. **Capitated Provider Relationships**  
   **Q:** How are providers handling utilization pressures?  
   **A:** Some risk-sharing providers are facing challenges due to higher utilization and regulatory changes. Humana is working with them, offering support and sharing learnings from CenterWell. They do not see this as a headwind but as an opportunity to strengthen relationships and improve outcomes.  **[HUM_3370800_17]** 

10. **Claims Visibility and Regulatory Changes**  
    **Q:** Is claims clarity affecting your forecasting?  
    **A:** Humana relies on authorization data for inpatient events and paid claims data for non-inpatient services. They have accounted for regulatory changes affecting utilization management effective January 2024 in their pricing. They are enhancing analytics and forecasting models to improve claims visibility.  **[HUM_3370800_19]** 

bfd0cdb57fc9d2462789aefb3959161bbc170b649f4974e14aab7c5c22c24ee3

1. **Margin Outlook and Recovery Timeline**  
   **Q:** What's your long-term margin target and recovery timeline?  
   **A:** Humana reiterated its long-term margin target of **3% plus** for individual Medicare Advantage (MA), acknowledging that recovering to this level will be a multiyear process due to funding, regulatory, and competitive environments. The company expects margin improvement to be slower than initially anticipated, especially in **2025**, but sees more opportunity for recovery in **2026 and beyond** as headwinds lessen.  **[HUM_3380429_4]** **[HUM_3380429_6]** **[HUM_3380429_9]** **[HUM_3380429_11]** 

2. **Impact of Final Rate Notice and TBC Thresholds**  
   **Q:** How does the final rate notice affect 2025 earnings and margins?  
   **A:** The final rate notice requires larger benefit reductions to maintain stable margins, bringing Total Beneficiary Cost (TBC) thresholds into play. This limits the company's ability to price products profitably, potentially leading to plan and county exits. Humana needs more visibility into competitors' reactions before fully evaluating the impact on **2025 earnings**, but acknowledges that net membership will be more impactful than previously thought.  **[HUM_3380429_5]** **[HUM_3380429_6]** **[HUM_3380429_9]** 

3. **Medicare Advantage Membership Expectations**  
   **Q:** How will MA membership change in 2025?  
   **A:** Humana anticipates **membership declines** in 2025 due to planned exits from certain plans and counties where TBC limits prevent profitable pricing. The extent of the decline will depend on competitive dynamics and the company's strategies to optimize benefits while maintaining margins.  **[HUM_3380429_6]** **[HUM_3380429_7]** **[HUM_3380429_11]** 

4. **Utilization Trends and Cost Impacts**  
   **Q:** What are the current cost trends and utilization impacts?  
   **A:** In the first quarter, inpatient utilization was **in line with expectations** after initial higher levels due to the 2-midnight rule changes. Training and adjustments have brought avoidance rates back in line, potentially providing a tailwind for the year. Non-inpatient trends and unit costs are still being evaluated due to limited claim visibility caused by data disruptions.  **[HUM_3380429_3]** **[HUM_3380429_8]** **[HUM_3380429_12]** 

5. **Value Proposition of MA vs Traditional Medicare**  
   **Q:** How does MA's value proposition compare to Traditional Medicare in 2025?  
   **A:** Despite headwinds, Humana believes MA continues to offer significant value over Traditional Medicare, providing about **$2,400** annually in additional benefits such as care coordination, transportation, and dental services. While benefits may reduce slightly in 2025, the overall value proposition remains strong, supporting mid-single-digit growth expectations.  **[HUM_3380429_10]** 

6. **Potential Market Exits**  
   **Q:** Are you planning market exits, and how many members could be affected?  
   **A:** Humana is evaluating plan and county exits where TBC limits impede profitable pricing. While specifics are not disclosed for competitive reasons, the company will share more details post bid filing.  **[HUM_3380429_5]** **[HUM_3380429_6]** **[HUM_3380429_11]** 

7. **Impact on CenterWell**  
   **Q:** How will membership changes affect CenterWell operations?  
   **A:** The largest impact on CenterWell from membership changes will be on the pharmacy business due to its high penetration among Humana members. The primary care and home divisions are less affected, as they have contracts with other providers and payers, helping retain patients even if membership shifts.  **[HUM_3380429_4]** **[HUM_3380429_6]** 

8. **Standalone PDP Strategy and IRA Impacts**  
   **Q:** How are you approaching standalone PDP given IRA impacts?  
   **A:** Humana is taking a cautious approach to its standalone Part D plans in 2025, focusing on risk mitigation due to significant changes from the Inflation Reduction Act. The company anticipates larger premium increases for some plans and aims to minimize inherent risks while assessing industry responses and reevaluating for 2026.  **[HUM_3380429_15]** 

9. **CEO Transition and Operational Changes**  
   **Q:** Any operational changes with the CEO transition?  
   **A:** No changes to the team have been made. The company is evaluating opportunities to drive efficiency and strengthen medical cost management, with plans to outline strategies by the end of the year.  **[HUM_3380429_14]** 

10. **EPS Seasonality**  
    **Q:** What's driving EPS seasonality this year?  
    **A:** The disproportionate earnings in the first half are due to a lower contribution from the MA insurance business compared to prior years. Factors include the impact of Prescription Drug Plan (PDP) seasonality and investment income. Administrative expenses show typical seasonality with no unusual patterns expected.  **[HUM_3380429_12]** 

b78222b4421a6ab58d95333e10a58e38e547e5d1de7f54506a6990d186ca7831

- **Humana anticipates significant challenges in restoring margins due to high medical cost trends and regulatory changes, which may limit earnings growth and necessitate benefit reductions that could lead to membership losses.**  **[HUM_3370800_5]** **[HUM_3370800_4]** **[HUM_3370800_3]** **[HUM_3370800_9]**
- **Competitive pressures from aggressive pricing by competitors may force Humana to accept below-market growth if they prioritize margins over growth, potentially leading to loss of market share.**  **[HUM_3370800_7]** **[HUM_3370800_3]**
- **Provider groups are experiencing financial pressures due to utilization trends and regulatory changes, which could result in increased costs for Humana if providers demand higher rates or if Humana has to absorb more risk.**  **[HUM_3370800_17]**

b840a3507adaea20891d5a0c612856860fc0823e4ff326217f46f5807f3224e1

1. **Inpatient Trends Impact**  
   **Q:** Is the 2-Midnight Rule causing pressure on inpatient trends?  
   **A:** Management acknowledges that higher inpatient volumes are partly due to the **2-Midnight Rule** implementation, leading to increased utilization particularly in the back half of the second quarter, continuing into July. They note that although inpatient volumes are higher than anticipated, the admissions are of **lower acuity and lower average costs**, and there are corresponding reductions in observation stays. They believe the situation has stabilized but is higher than initially expected.  **[HUM_3395258_4]** **[HUM_3395258_5]** **[HUM_3395258_7]** 

2. **MLR Progression and Guidance**  
   **Q:** How is the MLR expected to progress in the second half?  
   **A:** Management expects the **Medical Loss Ratio (MLR)** to increase in the third quarter due to higher inpatient volumes, with **workday seasonality** contributing about **80 basis points** to the MLR. They anticipate higher MLRs in the second half, with the third quarter impacted more than the fourth due to favorable workday seasonality in Q4. The higher inpatient activity is fully accounted for in their guidance.  **[HUM_3395258_5]** **[HUM_3395258_6]** **[HUM_3395258_8]** 

3. **Margin Recovery and 2025 Bids**  
   **Q:** Will higher inpatient costs affect 2025 margin recovery plans?  
   **A:** Although the higher inpatient utilization was not fully anticipated in the 2025 bids, management feels confident in their ability to deliver margin and earnings expansion as planned. This confidence is based on offsetting factors such as higher **risk scores**, lower inpatient **unit costs**, and lower **observation days** not previously contemplated in the bids. They believe these factors will mitigate the impact of higher utilization.  **[HUM_3395258_7]** **[HUM_3395258_8]** **[HUM_3395258_15]** 

4. **Management Changes and Strategic Review**  
   **Q:** Are there changes in management processes or strategic reviews underway?  
   **A:** CEO Jim Rechtin discusses enhancing the company's **multiyear planning** and increasing discipline in measuring returns on expenses and investments over multiple years. This approach aims to ensure consistent performance and optimize shareholder value over time. The company is conducting a strategic review, going deeper than usual to implement these management processes, with more details to be shared early to mid next year.  **[HUM_3395258_9]** **[HUM_3395258_14]** 

5. **Medicaid Trends and Favorability**  
   **Q:** How is Medicaid performing compared to peers?  
   **A:** Management notes that their Medicaid performance is slightly better than peers, particularly in **Florida**, due to conservative assumptions about redeterminations and member acuity. They are seeing favorability relative to expectations in Florida, while acknowledging discrete pressures in newer states like **Oklahoma** (pharmacy-related) and **Kentucky** (behavioral-related). They feel good about Medicaid performance relative to expectations.  **[HUM_3395258_11]** 

6. **PDP Segment Expectations**  
   **Q:** What are expectations for the PDP segment in 2025?  
   **A:** There is significant activity in the Part D space due to program changes for 2025. Management believes industry participants are focused on mitigating increased exposure and liability risks. They acknowledge that the recently released benchmarks suggest the **direct subsidy** may be higher than analysts expected, reflecting higher costs the industry will face in 2025. They await additional guidance on the **demonstration project** before commenting further.  **[HUM_3395258_10]** 

7. **Impact of Higher Risk Scores**  
   **Q:** How are higher-than-anticipated risk scores affecting V-28 headwinds?  
   **A:** Favorability in the 2023 final **Membership Risk Adjustment (MRA)** is primarily related to new members where full claims history was not available. This outperformance was not contemplated in the 2025 bids but is expected to recur into 2025, potentially mitigating higher inpatient utilization if it persists. The impact on V-28 is proportional but does not change previous assumptions.  **[HUM_3395258_16]** **[HUM_3395258_15]** 

8. **Operating Expenses Timing**  
   **Q:** Are lower-than-planned admin expenses timing-related?  
   **A:** Management confirms that some favorability in administrative costs is timing-related, with expenses expected to occur later in the year. Areas like **marketing** and **IT** may see spend shift into the third or fourth quarters.  **[HUM_3395258_15]** 

9. **Capital Deployment and Growth Opportunities**  
   **Q:** How are you thinking about capital deployment and growth?  
   **A:** Management sees growth opportunities in **CenterWell**, **Medicaid**, and their **Medicare book**, emphasizing synergies between these areas. They evaluate capital deployment based on strategic alignment with reducing total cost of care and improving quality, focusing on investments that offer attractive returns over time.  **[HUM_3395258_18]** 

10. **Revenue Guidance Increase**  
    **Q:** What's driving the $3 billion increase in revenue guidance?  
    **A:** The largest driver of the increased revenue guidance is higher-than-expected **membership growth**, which impacts both revenue and plan costs. Favorable performance in the 2023 final MRA and intra-year positive adjustments to revenue risk scores also contribute, but membership is the primary factor.  **[HUM_3395258_13]** 

11. **Provider Business Trends**  
    **Q:** Are you seeing the same inpatient pressures in the provider business?  
    **A:** The provider business is experiencing similar results to the health plan but with less inpatient pressure. They have been effective in working with hospital systems on authorization requests and determining appropriate levels of care, often avoiding unnecessary inpatient stays. They are cautious due to less real-time information but generally see consistent performance.  **[HUM_3395258_9]** 

12. **2025 Bid Strategy and Plan Exits**  
    **Q:** How are plan exits affecting 2025 membership and margins?  
    **A:** Management plans to exit plans that are unprofitable with no path to breakeven, impacting a number of members. In most cases, affected members will have access to another Humana plan. These exits allow for **margin expansion** as they remove loss-making plans, but overall earnings growth will depend on membership changes, and there's a wider range of potential outcomes for next year.  **[HUM_3395258_17]** **[HUM_3395258_12]** 

13. **Cost Management Efforts**  
    **Q:** Have cost cuts affected ability to react to cost activity?  
    **A:** Management does not see evidence that cost-cutting efforts have cut into muscle. They acknowledge that initial quick hits are easy, but ongoing cost management requires planning and investment over multiple years. They've planted seeds for multiyear cost management and see more opportunity ahead.  **[HUM_3395258_8]** **[HUM_3395258_9]** 

14. **Inpatient Claims and Provider Negotiations**  
    **Q:** Will there be revisions on inpatient claims or provider negotiations?  
    **A:** They have robust utilization management programs in place, including front-end reviews and post-pay reviews for medical necessity and site of service. They do not expect material changes from these programs. Contracting efforts focus on aligning incentives around appropriate utilization and care, working towards better alignment with providers.  **[HUM_3395258_19]** 

0b3a48f5b7809fb1a2513cb80c6408b20072f5c156bfe13cac1a6c906b079fd7

- **Humana expects to increase the number of contribution margin positive primary care centers from 110 at the end of 2022 to approximately 130 by the end of 2023**, exceeding previous expectations and representing an **18% increase year-over-year**.  **[HUM_3363245_7]**
- **Humana anticipates future margin progression due to increased agent sales of about $250,000 for agents for the full year**, with incremental benefits disproportionately weighted to **year 3** when members fully convert to risk adjustment.  **[HUM_3363245_22]**
- **Humana has completed approximately $1 billion in share repurchases to date and continues to anticipate share repurchases of approximately $1.5 billion in 2023**, signaling confidence in the company's value and commitment to returning capital to shareholders.  **[HUM_3363245_7]**

b4cfd68b982fb6048d6dd34d21c2b0370684d4e6bcb922599b40e6d96eb09378

- **Higher-than-expected medical cost trends are leading to increased Medical Loss Ratios (MLRs), requiring additional mitigation efforts and potentially impacting profitability in 2024.**  **[HUM_3363245_12]** **[HUM_3363245_14]** **[HUM_3363245_15]**
- **Anticipated modestly higher attrition rates in 2024 due to benefit design changes and increased competition may negatively affect membership growth and revenue.**  **[HUM_3363245_19]**
- **New Medicare Advantage members are running higher MLRs than expected, partly due to a higher proportion of agent-sold plans which initially operate at 100% MLR, pressuring margins in the short term.**  **[HUM_3363245_22]** **[HUM_3363245_12]** **[HUM_3363245_14]**

78547c366aab689d1b198799474f4c55ca460a3cb0f04e78c2d34cf1c468cf11

- **Margin Recovery Delayed Until 2027**: Humana expects to achieve normalized margins in its Medicare Advantage business **not before 2027**, indicating a prolonged period of margin pressure due to regulatory environment and total benefit cost challenges.  **[HUM_3395258_14]**
- **Reduction in Membership Due to Plan Exits**: The company plans to exit certain unprofitable plans, leading to a **membership reduction of a few hundred thousand members**, which could negatively impact revenue growth.  **[HUM_3395258_18]** **[HUM_3395258_5]**
- **Higher Inpatient Costs Pressuring Profitability**: Humana is experiencing **higher-than-expected inpatient admissions**, which continued into July and may impact future profitability as these pressures were **not fully accounted for in 2025 bids**.  **[HUM_3395258_7]**

e458620a298fbde57cf4e77259eb02b89a0aabe867a00b967ed0729c58f71025

Humana Inc (HUM)

Financials