01—Abstract
Summary
Summary of the 10-K filed February 20, 2025. Cited figures are marked; the original filing is the authoritative source.
Humana Inc. reported net income attributable to Humana of $1.2 billiona, or $9.98 per diluted common share, in 2024, down from $2.5 billion, or $20.00 per diluted common share, in 2023.
Consolidated total revenues rose 10.7% to $117.8 billionb, driven by Insurance premiums, which increased 10.7% to $112.1 billion on higher per member Medicare premiums and Medicare Advantage and state-based contracts membership growth. Income from operations fell 36.2% to $2.56 billion, as the benefit ratio rose to 89.8% from 87.3% on elevated Medicare Advantage and state-based contracts medical cost trends and lower favorable prior-period reserve development. The operating cost ratio improved to 11.8% from 12.5%.
The company's Insurance segment income from operations fell 51.4% to $1.3 billionc, while CenterWell income from operations fell 5.3% to $1.3 billion. Interest expense rose 33.9% to $660 million. Cash and cash equivalents decreased to $2.2 billion from $4.7 billion, and operating cash flow was $3.0 billion.
Medicare Advantage membership grew 4.7%d to 5,661,800 individual members, while stand-alone PDP membership fell 19.7%. The filing states that Humana expects individual Medicare Advantage membership to decline by approximately 550,000 members in 2025, and that about 25% of its Medicare Advantage members are enrolled in plans rated 4-star or higher for 2025, versus 94% based on 2024 Star Ratings. Humana has filed a lawsuit seeking to vacate the 2025 Star Ratings.
02—Key points
Key Highlights
- Net income attributable to Humana was $1.2 billion, or $9.98 per diluted share, in 2024, versus $2.5 billion, or $20.00 per diluted share, in 2023.
- Benefit ratio rose 250 basis points to 89.8%, driven by elevated Medicare Advantage and state-based contracts medical cost trends and lower favorable prior-period reserve development ($701 million in 2024 versus $872 million in 2023).
- Operating cost ratio improved to 11.8% from 12.5%, reflecting scale efficiencies and value creation initiatives, with charges of $281 million in 2024.
- Insurance premiums revenue grew 10.7% to $112.1 billion; Medicare Advantage individual membership rose 4.7% to 5,661,800 while stand-alone PDP membership fell 19.7%.
- Only about 25% of Medicare Advantage members are in plans rated 4-star or higher for 2025, compared with 94% based on 2024 Star Ratings; Humana has sued to vacate the 2025 Star Ratings.
- Company expects individual Medicare Advantage membership to decline by approximately 550,000 members in 2025 and exit the Employer Group Commercial Medical Products business in the first half of 2025.
- Repurchase authorization remained $2.9 billion as of February 19, 2025; quarterly dividend declared at $0.8850 per share, and no shares were repurchased in Q4 2024.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2024filed February 20, 2025Financial Statements
FY2024 against FY2023
| Line item | FY2024FY2023 | Change |
|---|---|---|
| Revenue | $117.76B$106.37B | +10.7% |
| SG&A Expenses | $13.70B$13.19B | +3.9% |
| Operating Income | $2.56B$4.01B | −36.2% |
| Net Income | $1.21B$2.49B | −51.5% |
| EPS (Basic) | $10.01$20.09 | −50.2% |
| EPS (Diluted) | $9.98$20.00 | −50.1% |
| Shares Outstanding (Basic) | 120.57M123.87M | −2.7% |
| Shares Outstanding (Diluted) | 120.87M124.44M | −2.9% |
05—Questions
Frequently Asked Questions
Why did Humana's net income decline sharply in 2024?
Net income attributable to Humana fell to $1.2 billion from $2.5 billion. The filing attributes the comparison to a benefit ratio that rose 250 basis points to 89.8%, driven by elevated Medicare Advantage and state-based contracts medical cost trends and lower favorable prior-period reserve development. Impairment charges of $200 million on indefinite-lived intangibles and a $296 million put/call valuation adjustment also affected results.
How concentrated is Humana's revenue in government programs?
Government contracts accounted for approximately 94% of total premiums and services revenue in 2024 under the filing's risk factor disclosure, and the company states that 85% of premiums and services revenue came from federal government contracts. Florida Medicare Advantage contracts alone represented about 14% of consolidated premiums and services revenue.
What is the outlook for Humana's Medicare membership in 2025?
The filing anticipates a net decline of approximately 550,000 individual Medicare Advantage members and net growth of approximately 200,000 stand-alone PDP members and 175,000 to 250,000 state-based contracts members. Group Medicare Advantage membership is expected to be relatively flat.
What are the main risks tied to Humana's Star Ratings?
Only about 25% of Medicare Advantage members are enrolled in plans rated 4-star or higher for 2025, compared with 94% based on 2024 Star Ratings. The filing states this decline will negatively affect 2026 quality bonus payments from CMS and may significantly affect revenues, operating results and cash flows. Humana has filed a lawsuit seeking to vacate the 2025 Star Ratings, but there is no assurance it will prevail.
How is Humana's balance sheet and liquidity position?
Cash and cash equivalents fell to $2.2 billion at December 31, 2024 from $4.7 billion, and operating cash flow was $3.0 billion. Senior notes were the company's main debt, and total long-term debt rose to $11.1 billion. The company's investment-grade credit rating was BBB from S&P and Baa2 from Moody's, and it stated that its resources are adequate for at least the next twelve months.
06—Continue