The drop in **cash and cash equivalents** during Q4 2023 was mainly driven by a combination of factors: a **decline in operating cash flows** due to lower earnings and unfavorable changes in working capital, a significant increase in cash used for **investing activities** (notably higher purchases of investment securities, additional acquisitions, and increased capital expenditures), and impacts from **financing activities** including ongoing common stock repurchases and dividend payments.  **[0000049071-24-000007_hum-2023q48kxex99x2detailed.htm:19]** **[0000049071-24-000012_hum-20231231.htm:81]** **[0000049071-24-000012_hum-20231231.htm:85]** 

Why did Cash and cash equivalents drop so drastically in Q4 2023?

The documents do not provide a specific explanation for the decline in total assets from **55,905 million USD in Q3 2023** to **47,065 million USD in Q4 2023**. While one document details changes in asset components (such as a decrease in cash and variations in investment securities, receivables, and other assets) to explain the increase from **43,055 million USD** at the end of 2022 to **47,065 million USD** at the end of 2023, they do not offer details on the drivers behind the Q3‐to‐Q4 decline.  **[0000049071-23-000064_hum-20230930.htm:1]** **[0000049071-24-000055_hum-20240930.htm:1]** **[0000049071-24-000007_hum-2023q48kxex99x2detailed.htm:19]** **[0000049071-24-000012_hum-20231231.htm:81]** 

What drove the decline in Total assets in Q4 2023?

Humana’s short-term debt was lower in Q4 2023 primarily because the company repaid its **$1.5 billion senior notes with a 0.650% interest rate due on August 3, 2023**. This repayment significantly reduced the amount of short-term debt outstanding. Additionally, adjustments in commercial paper levels also contributed to the overall decrease in short-term debt.  **[0000049071-24-000012_hum-20231231.htm:118]** **[0000049071-24-000007_hum-2023q48kxex99x2detailed.htm:19]** 

Why was Short-term debt lower in Q4 2023?

The long-term debt spike in Q1 2024 was primarily caused by the issuance of new senior notes. Specifically, Humana issued **$1.25 billion** of 5.375% unsecured senior notes due April 15, 2031, and **$1.0 billion** of 5.750% unsecured senior notes due April 15, 2054. The net proceeds from these offerings, approximately **$2.2 billion** after deducting underwriters' discounts and commissions, were used for general corporate purposes, including the repayment of existing indebtedness such as borrowings under the company's commercial paper program.  **[0000049071-24-000023_hum-20240331.htm:17]** **[0001628280-24-010997_exhibit992-8xk31224.htm:0]** 

What caused the long-term debt spike in Q1 2024?

cd57c41d4181afeded6583e4f350902a0560d1d758b28e5c6e485087aff91f35

Income from Operations turned negative in Q4 2023 primarily because **benefits expenses increased significantly**. Specifically, the **GAAP Benefits Expense Ratio** for the Insurance Segment rose from **87.5% in Q4 2022 to 91.5% in Q4 2023**, driven by higher-than-expected inpatient utilization, increased non-inpatient costs (including physician services and outpatient surgeries), and higher initial benefit expenses for new Medicare Advantage members. In addition, **investments in the benefit design** of Medicare Advantage products, adjustments related to the exit from Employer Group Commercial Medical Products, and the resulting operational losses (a GAAP loss of **$426 million** and an adjusted loss of **$361 million** in Q4 2023 compared to prior gains) all contributed to the negative outcome.  **[0000049071-24-000007_hum-2023q48kxex99x2detailed.htm:6]** **[0000049071-24-000007_hum-2023q48kxex99x2detailed.htm:2]** 

Why did Income from Operations turn negative in Q4 2023?

The significant drop in net income in Q4 2023 was driven primarily by **increased Medicare Advantage medical costs**—notably from higher-than-expected inpatient utilization in November and December—as well as by **substantially higher operating expenses** (rising to **$26,810 million** from **$22,315 million** in Q4 2022) and **increased interest and other expenses** (with interest rising to **$146 million** from **$108 million** and other expenses to **$97 million** from **$84 million**), all of which contributed to the reported **net loss of $540 million**.  **[0000049071-24-000007_hum-2023q48kxex99x1brief.htm:1]** **[0000049071-24-000007_hum-2023q48kxex99x2detailed.htm:18]** 

What drove the significant drop in Net Income in Q4 2023?

The negative EPS in **Q4 2023** was driven by several factors. These include **unprecedented increases in medical cost trends** in Medicare Advantage—particularly in inpatient utilization—which significantly affected profitability.  **[0000049071-24-000007_hum-2023q48kxex99x1brief.htm:1]** **[0000049071-24-000007_a4q2023humanaincpreparedre.htm:1]**  Additionally, Humana experienced a **net loss attributable to Humana of $541 million**, resulting in a **Basic Loss per Common Share of $4.42** compared to much smaller losses in the previous year.  **[0000049071-24-000007_hum-2023q48kxex99x2detailed.htm:18]** **[0000049071-24-000007_hum-2023q48kxex99x1brief.htm:1]**  The company also incurred **non-cash impairment charges** on intangible assets and investments in joint ventures, along with other adjustments such as accrued litigation expenses and value creation initiatives, further impacting the bottom line.  **[0000049071-24-000005_hum-20240118.htm:4]**  Finally, **higher operating expenses**—rising from $22,315 million to $26,810 million—along with broader Medicare Advantage industry dynamics, contributed to the negative EPS performance.  **[0000049071-24-000007_hum-2023q48kxex99x2detailed.htm:18]** **[0000049071-24-000007_a4q2023humanaincpreparedre.htm:1]** 

What factors contributed to the negative EPS in Q4 2023?

The jump in Premiums Revenue in Q1 2024 was primarily driven by **higher per member Medicare premiums** and **growth in individual and group Medicare Advantage memberships**. This increase resulted in an additional **$2.7 billion** in revenue, equivalent to a **10.6%** rise from the previous period. These factors were partially offset by declines in **group commercial medical** and **stand-alone PDP memberships**, as well as a slowdown in state-based contracts due to the end of suspended state eligibility redetermination efforts during the Public Health Emergency.  **[0000049071-24-000023_hum-20240331.htm:37]** 

Why did Premiums Revenue jump in Q1 2024?

9490516d94b1c774d1a3939a01baa394a5b8ebccfed2fa1cfdc41f26920c4d6b

The negative shift in **Operating Cash Flow in Q4 2023** is primarily due to a combination of factors. **Lower earnings** played a major role, as the net income declined from **$2,802 million in 2022 to $2,484 million in 2023**. Additionally, **working capital changes** significantly impacted cash flows, with the timing of benefit expense payments (including claim payments, capitation, pharmacy costs, and related health insurance coverage costs) and premium receipts affecting the overall cash position. There were also adjustments in **unearned revenues**, which decreased slightly from **$286 million to $266 million**, and an increase in **net receivables** from **$1,674 million in 2022 to $2,035 million in 2023** due to growth in Medicare Advantage membership and timing differences in collections. These combined factors contributed to the considerably negative net cash provided by operating activities in Q4 2023.  **[0000049071-24-000012_hum-20231231.htm:85]** **[0000049071-24-000012_hum-20231231.htm:64]** **[0000049071-24-000007_hum-2023q48kxex99x2detailed.htm:19]** 

Why did Operating Cash Flow turn so negative in Q4 2023?

The **steep decline** in Q1 2024 operating cash flow was primarily driven by three factors: first, the absence of an **early Medicare premium remittance of $6.6 billion**, which had significantly boosted Q1 2023 cash flows; second, a **larger increase in receivables** in Q1 2024 compared to Q1 2023; and third, a **minimal increase in unearned revenues** in Q1 2024 relative to the substantial increase seen in Q1 2023.  **[0000049071-24-000023_hum-20240331.htm:43]** **[0000049071-24-000021_hum-2024q18kxex99x2detailed.htm:15]** 

What drove the steep decline in Operating Cash Flow in Q1 2024?

0b8cb2b60c89c42a6a3933c1e0de1224130146ff6c645eb53daa017d44248b53

Net Income (USD, millions)

(Gain) loss on investment securities, net (USD, millions)

Equity in net losses (USD, millions)

Stock-based compensation (USD, millions)

Depreciation (USD, millions)

Amortization (USD, millions)

Net cash provided by operating activities (USD, millions)

Acquisitions, net of cash and cash equivalents acquired (USD, millions)

Purchases of property and equipment, net (USD, millions)

Purchases of investment securities (USD, millions)

Proceeds from maturities of investment securities (USD, millions)

Proceeds from sales of investment securities (USD, millions)

Net cash used in investing activities (USD, millions)

(Payments) receipts from contract deposits, net (USD, millions)

Proceeds from issuance of senior notes, net (USD, millions)

(Repayments) issuance of commercial paper, net (USD, millions)

Debt issue costs (USD, millions)

Change in book overdraft (USD, millions)

Common stock repurchases (USD, millions)

Dividends paid (USD, millions)

Net cash provided by financing activities (USD, millions)

Increase in cash and cash equivalents (USD, millions)

Cash and cash equivalents at beginning of period (USD, millions)

Cash and cash equivalents at end of period (USD, millions)

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Premiums Revenue (USD, millions)

Services Revenue (USD, millions)

Investment Income (USD, millions)

Total Revenues (USD, millions)

Benefits Expense (USD, millions)

Operating Costs (USD, millions)

Depreciation and Amortization (USD, millions)

Total Operating Expenses (USD, millions)

Income from Operations (USD, millions)

Interest Expense (USD, millions)

Other (Income) Expense, Net (USD, millions)

Income before Income Taxes and Equity in Net Losses (USD, millions)

Provision for Income Taxes (USD, millions)

Equity in Net Losses (USD, millions)

Net Loss Attributable to Noncontrolling Interests (USD, millions)

Net Income Attributable to Humana (USD, millions)

Basic Earnings per Common Share (USD)

Diluted Earnings per Common Share (USD)

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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]

27c5baba13ba6c34d1c55cd9cbc45f8ec18037903b319ade0d64e42e42dea833

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)

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HUMANA (HUM)

Financials