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Humana 8-K Report, Financial Results (Apr 24, 2024)

Reports
Earnings & Results·Regulation FD·Exhibits & Filings
Filing Date
Filed April 24, 2024
Period End
April 24, 2024
Security
HUM
In the record · 2016–202610-K1110-Q328-K199

HUM filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 199 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Aug ’18Aug ’18
  2. Material agreement8-K · Mar ’20Mar ’20
  3. Leadership change8-K · Sep ’22Sep ’22
  4. Leadership change8-K · Jul ’26Jul ’26

01—Abstract

Summary

Summary of the 8-K filed April 24, 2024. Cited figures are marked; the original filing is the authoritative source.

Humana Inc. furnished this Form 8-K under Items 2.02 and 7.01 to report first-quarter 2024 results for the quarter ended March 31, 2024.

GAAP earnings per share were $6.11a versus $9.87 in 1Q23, and Adjusted EPS was $7.23 versus $9.38. Consolidated revenues rose to $29,611 million from $26,742 million, and GAAP pretax income fell to $1,014 million from $1,614 million. The GAAP consolidated benefit ratio was 88.9% versus 85.5%, and the Insurance segment benefit ratio was 89.3% versus 86.1%.

Management attributed the year-over-year benefit ratio increase primarily to higher Medicare Advantage medical cost trends. Operating cash flow was $423 millionb, compared with $6,687 million in the prior-year quarter, which included an early receipt of a $6.65 billion CMS premium payment. Humana revised its FY 2024 GAAP EPS guidance to approximately $13.93 from approximately $14.87, while affirming Adjusted EPS guidance of approximately $16.00 and an Insurance segment benefit ratio of approximately 90%.

The company raised its expected 2024 individual Medicare Advantage membership growth to approximately 150,000 from approximately 100,000. Management said Q1 benefit ratio reflected a more conservative quarter-end reserving approach given the Change Healthcare disruption. Days in claims payable rose to 42.5 days.

Management's prepared remarks, filed as Exhibit 99.3, state that the company no longer believes the previously communicated $6 to $10c of Adjusted EPS growth is the appropriate target range for 2025. They cite the final 2025 MA rate notice, which management says is not sufficient to address current medical cost trends. Formal 2025 guidance is expected with the fourth-quarter 2024 earnings call, and bid pricing decisions were to be submitted by the first Monday in June.

02—Key points

Key Highlights

  1. GAAP EPS of $6.11 in 1Q24 versus $9.87 in 1Q23; Adjusted EPS of $7.23 versus $9.38
  2. FY 2024 GAAP EPS guidance cut to approximately $13.93 from approximately $14.87; Adjusted EPS guidance of approximately $16.00 affirmed
  3. Consolidated GAAP benefit ratio rose to 88.9% from 85.5%, with management citing higher Medicare Advantage medical cost trends
  4. Individual Medicare Advantage membership growth guidance raised to approximately 150,000 from approximately 100,000
  5. Management no longer believes $6 to $10 of Adjusted EPS growth is the appropriate 2025 target range, citing the final MA rate notice
  6. Operating cash flow of $423 million versus $6,687 million in 1Q23, which included an early CMS premium receipt
  7. Debt-to-total capitalization increased to 45.1% from 41.1% a year earlier, driven by a $2.25 billion senior notes issuance

03—Questions

Frequently Asked Questions

  1. Why did Humana revise its GAAP EPS guidance for 2024?

    The filing states the GAAP EPS guidance was revised to approximately $13.93 from approximately $14.87, while Adjusted EPS guidance of approximately $16.00 was affirmed. The reconciliation shows GAAP-to-Adjusted adjustments including put/call valuation adjustments of $1.08 per share, amortization of $0.49, and value creation initiatives of $0.24, among others.

  2. What drove the higher benefit ratio in the first quarter?

    Management attributed the year-over-year increase in the GAAP consolidated benefit ratio primarily to higher Medicare Advantage medical cost trends in 1Q24 compared to 1Q23, partially offset by 2024 MA pricing and benefit design. The company also stated it took a more conservative approach to quarter-end reserving given the Change Healthcare disruption.

  3. What does Humana expect for 2025 earnings?

    Management said it no longer believes the previously communicated $6 to $10 of Adjusted EPS growth is the appropriate 2025 target range. It said the 2025 final MA rate notice is not sufficient to address current medical cost trends and that formal 2025 guidance will be provided on the fourth-quarter 2024 earnings call.

  4. How did operating cash flow compare year over year?

    GAAP operating cash flow was $423 million in 1Q24 versus $6,687 million in 1Q23. The filing attributes the decline primarily to the early receipt of the $6.65 billion April 2023 CMS premium payment in March 2023 and lower earnings in 1Q24.

04—Continue

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