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Humana 8-K Report, Financial Results (Jul 31, 2024)

Reports
Earnings & Results·Regulation FD·Exhibits & Filings
Filing Date
Filed July 31, 2024
Period End
July 31, 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 July 31, 2024. Cited figures are marked; the original filing is the authoritative source.

Humana Inc. reported second-quarter 2024 results on July 31, 2024, with GAAP diluted EPS of $5.62a (versus $7.66 in 2Q23) and Adjusted EPS of $6.96 (versus $8.94).

Consolidated revenues were $29,540 millionb, up from $26,747 million a year earlier, and GAAP pretax income was $918 million, down from $1,262 million. Year-to-date GAAP diluted EPS was $11.74 and Adjusted EPS was $14.19. The Insurance segment benefit ratio rose to 89.5% in 2Q24 from 86.8% in 2Q23, reflecting continued elevated Medicare Advantage medical cost trends, partly offset by favorable prior period development.

Humana revised its FY 2024 GAAP EPS guidance to approximately $12.81c from approximately $13.93, while affirming Adjusted EPS guidance of approximately $16.00 and an Insurance segment benefit ratio of approximately 90 percent. The company raised its 2024 individual Medicare Advantage membership growth expectation by 75,000 to approximately 225,000. Management's prepared remarks say the company expects margin expansion and Adjusted EPS growth in 2025 and a multiyear path to a normalized individual MA margin of at least 3 percent, and that it expects to decline a few hundred thousand individual MA members in 2025, primarily due to plan and county exits.

The filing also reports operating cash flow of $1,636 milliond year-to-date, versus $9,863 million a year earlier, a decline the company attributes largely to timing of CMS premium receipts. Debt-to-total capitalization was 43.6% at June 30, 2024, and the company repurchased 1,948,690 shares year-to-date with $2.93 billion remaining under its repurchase authorization.

02—Key points

Key Highlights

  1. 2Q24 GAAP diluted EPS of $5.62 vs. $7.66 in 2Q23; Adjusted EPS of $6.96 vs. $8.94
  2. FY 2024 GAAP EPS guidance revised to approximately $12.81 from approximately $13.93; Adjusted EPS guidance of approximately $16.00 affirmed
  3. Individual Medicare Advantage membership growth guidance raised by 75,000 to approximately 225,000
  4. Insurance segment benefit ratio of 89.5% in 2Q24 vs. 86.8% in 2Q23, driven by elevated MA medical cost trends
  5. Year-to-date operating cash flow of $1,636 million vs. $9,863 million, reflecting timing of CMS premium receipts
  6. Management expects margin expansion and Adjusted EPS growth in 2025, with a decline of a few hundred thousand individual MA members from plan and county exits
  7. Debt-to-total capitalization of 43.6% at June 30, 2024; $2.93 billion remaining share repurchase authorization

03—Questions

Frequently Asked Questions

  1. Why did Humana lower its GAAP EPS guidance while keeping Adjusted EPS guidance unchanged?

    The filing shows FY 2024 GAAP EPS guidance moving to approximately $12.81 from approximately $13.93, while Adjusted EPS guidance of approximately $16.00 was affirmed. The GAAP-to-Adjusted bridge includes items such as the put/call valuation adjustments of $1.65 per share, the impact of exiting the employer group commercial medical products business of $1.21 per share, and value creation initiatives of $0.80 per share, which are excluded from Adjusted results.

  2. What drove the increase in the Insurance segment benefit ratio?

    Management attributed the year-over-year increase to the continued impact of elevated Medicare Advantage medical cost trends in 2Q24 and YTD 2024, and a lesser favorable impact from prior period development. This was partly offset by the pricing and benefit design of the 2024 MA products and a shift in line-of-business mix toward MA and state-based contracts.

  3. What does management expect for 2025?

    Management said it expects margin expansion and Adjusted EPS growth in 2025 as the first step toward a normalized individual MA margin of at least 3 percent. It also expects a decline of a few hundred thousand individual MA members, primarily from plan and county exits. Formal 2025 guidance is to be provided on the fourth-quarter earnings call.

  4. Why did operating cash flow decline so sharply year over year?

    The filing states that the decline primarily reflected the early receipt of the $7.00 billion July 2023 CMS premium payment in June 2023, which meant seven payments were received in YTD 2023 versus six in YTD 2024. Operating cash flow was $1,636 million YTD 2024 versus $9,863 million YTD 2023, and the company's Adjusted figure for YTD 2023 was $2,861 million.

04—Continue

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