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Humana 8-K Report, Financial Results (Oct 30, 2024)

Reports
Earnings & Results·Regulation FD·Exhibits & Filings
Filing Date
Filed October 30, 2024
Period End
October 30, 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 October 30, 2024. Cited figures are marked; the original filing is the authoritative source.

Humana Inc. reported third-quarter 2024 results on October 30, 2024, with GAAP earnings per diluted share of $3.98a and Adjusted EPS of $4.16, compared with $6.71 and $7.78 in 3Q23.

Year-to-date GAAP EPS was $15.72b and Adjusted EPS was $18.35, versus $24.26 and $26.10 a year earlier. GAAP consolidated revenues were $29.40 billion for the quarter, up from $26.42 billion, and GAAP pretax income fell to $651 million from $1,098 million. The consolidated benefit ratio rose to 89.9% from 86.6%, and the operating cost ratio fell to 11.5% from 12.5%.

Humana raised its FY 2024 GAAP EPS guidance to at least $12.89c from approximately $12.81, and its Adjusted EPS guidance to at least $16.00, which was unchanged in substance from approximately $16.00 previously. The company now expects individual Medicare Advantage membership growth of approximately 265,000, up from approximately 225,000, while state-based contract growth was lowered to approximately 200,000 from approximately 250,000. The Insurance segment benefit ratio guidance of approximately 90% was affirmed.

Management said it expects 2025 Adjusted EPS to be at least in line with final 2024 results, inclusive of planned investments, and expects individual MA membership to decline by a few hundred thousand in 2025. The filing also highlights risks tied to the 2025 Medicare Advantage Star Ratings, which are expected to significantly reduce the number of 4-star plans.

Humana filed a lawsuit on October 18, 2024 seeking to set aside and vacate those ratings. Medicaid medical costs ran higher than anticipated in the quarter, and operating cash flows for the nine months fell to $3.49 billiond from $11.12 billion, largely due to the timing of a CMS premium payment received early in 2023.

02—Key points

Key Highlights

  1. 3Q24 GAAP EPS of $3.98 vs. $6.71 in 3Q23; Adjusted EPS of $4.16 vs. $7.78
  2. YTD 2024 GAAP EPS of $15.72 vs. $24.26; Adjusted EPS of $18.35 vs. $26.10
  3. FY 2024 GAAP EPS guidance raised to at least $12.89 from approximately $12.81; Adjusted EPS guidance at least $16.00
  4. Individual Medicare Advantage membership growth guidance raised to approximately 265,000 from approximately 225,000
  5. State-based contracts membership growth guidance lowered to approximately 200,000 from approximately 250,000, citing a delay in Kentucky allocation
  6. Consolidated benefit ratio rose to 89.9% from 86.6% year over year on elevated MA and state-based contract medical cost trends
  7. Humana filed a lawsuit on October 18, 2024 to set aside its 2025 Medicare Advantage Star Ratings, which are expected to decline significantly

03—Questions

Frequently Asked Questions

  1. Why did GAAP pretax income decline in the third quarter?

    GAAP pretax income was $651 million in 3Q24 versus $1,098 million in 3Q23. The filing attributes the higher consolidated benefit ratio (89.9% vs. 86.6%) to elevated Medicare Advantage and state-based contract medical cost trends, partly offset by lower operating cost ratio (11.5% vs. 12.5%).

  2. What changed in Humana's 2024 guidance?

    GAAP EPS guidance was updated to at least $12.89 from approximately $12.81, and Adjusted EPS guidance was set at at least $16.00. Individual MA membership growth guidance rose to approximately 265,000, while state-based contract growth guidance fell to approximately 200,000. The Insurance segment benefit ratio of approximately 90% was affirmed.

  3. What does management expect for 2025?

    Management said it expects 2025 Adjusted EPS to be at least in line with final 2024 results, inclusive of planned investments, assuming 2025 individual MA membership growth is in line with current expectations. It anticipates individual MA membership will decline by a few hundred thousand, primarily from plan and county exits. Formal 2025 guidance will be provided on the fourth-quarter 2024 earnings call.

  4. What is the risk related to the 2025 Star Ratings?

    The filing says the number of Humana MA plans rated 4-star or higher is expected to significantly decline in 2025. Humana filed a lawsuit on October 18, 2024 seeking to set aside and vacate the 2025 Star Ratings and remand the matter to CMS. The filing notes no assurance of success, and a decline could reduce 2026 quality bonus payments and adversely affect revenues, operating results and cash flows.

04—Continue

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