HUMANA INC

Previous wording

In February 2023, we announced our planned exit from the Employer Group Commercial Medical Products business, which includes all fully insured, self-funded and Federal Employee Health Benefit medical plans, as well as associated wellness and rewards programs. No other Humana health plan offerings are materially affected. Following a strategic review, we determined the Employer Group Commercial Medical Products business was no longer positioned to sustainably meet the needs of commercial members over the long term or support our long-term strategic plans. The exit from this line of business will be phased over the 18 to 24 months following our February 2023 announcement.

Current wording

In February 2023, we announced our planned exit from the Employer Group Commercial Medical Products business, which includes all fully insured, self-funded and Federal Employee Health Benefit medical plans, as well as associated wellness and rewards programs. No other Humana health plan offerings are materially affected. Following a strategic review, we determined the Employer Group Commercial Medical Products business was no longer positioned to sustainably meet the needs of commercial members over the long term or support our long-term strategic plans. We anticipate the exit of this line of business to be finalized in the first half of 2025.

Previous wording

Beginning in 2022, in order to create capacity to fund growth and investment in our Medicare Advantage business and further expansion of our healthcare services capabilities, we committed to drive additional value for the enterprise through cost saving, productivity initiatives, and value acceleration from previous investments. As a result of these initiatives, we recorded charges, primarily in asset impairments, of $68 million and $97 million for the three and six months ended June 30, 2024, respectively, within operating costs in the condensed consolidated statements of income. These charges were recorded at the corporate level and not allocated to the segments. We expect to incur additional charges through the end of 2024. We did not record any charges for the three and six months ended June 30, 2023.

Current wording

Beginning in 2022, in order to create capacity to fund growth and investment in our Medicare Advantage business and further expansion of our healthcare services capabilities, we committed to drive additional value for the enterprise through cost saving, productivity initiatives, and value acceleration from previous investments. As a result of these initiatives, we recorded charges, primarily in asset impairments, of $55 million and $151 million for the three and nine months ended September 30, 2024, respectively, and $52 million for the three and nine months ended September 30, 2023 within operating costs in the condensed consolidated statements of income. These charges were recorded at the corporate level and not allocated to the segments. We expect to incur additional charges through the end of 2024.

Previous wording

The Insurance segment also experiences seasonality in the commercial fully-insured product offering. The effect on the Insurance segment benefit ratio is opposite of the Medicare stand-alone PDP impact, with the benefit ratio increasing as fully-insured members progress through their annual deductible and maximum out-of-pocket expenses. The Employer Group Commercial Fully-Insured business increased the Insurance segment benefit ratio by 10 basis points and increased the Insurance segment benefit ratio by 20 basis points for the three months ended June 30, 2024 and 2023, respectively. The Employer Group Commercial Fully-Insured business did not impact the Insurance segment benefit ratio for the six months ended June 30, 2024 and decreased the Insurance segment benefit ratio by 10 basis points for the six months ended 2023.

Current wording

The Insurance segment also experiences seasonality in the commercial fully-insured product offering. The effect on the Insurance segment benefit ratio is opposite of the Medicare stand-alone PDP impact, with the benefit ratio increasing as fully-insured members progress through their annual deductible and maximum out-of-pocket expenses. The Employer Group Commercial Fully-Insured business increased the Insurance segment benefit ratio by 10 basis points and increased the Insurance segment benefit ratio by 20 basis points for the three months ended September 30, 2024 and 2023, respectively. The Employer Group Commercial Fully-Insured business did not impact the Insurance segment benefit ratio for the nine months ended September 30, 2024 and 2023.

Previous wording

The Insurance segment also experiences seasonality in the operating cost ratio as a result of costs incurred in the second half of the year associated with the Medicare marketing season. The Insurance segment may experience adverse impacts in the operating cost ratio as a result of our Employer Group Commercial Medical Products exit phased over the 18-24 months following our February 2023 announcement. The Employer Group Commercial Fully-Insured business did not impact the Insurance segment operating cost ratio for the three months ended June 30, 2024 and increased the Insurance segment operating cost ratio by 30 basis points for the three months ended 2023. The Employer Group Commercial Fully-Insured business increased the Insurance segment operating cost ratio by 10 basis points and increased the Insurance segment operating cost ratio by 30 basis points for the six months ended June 30, 2024 and 2023, respectively.

Current wording

The Insurance segment also experiences seasonality in the operating cost ratio as a result of costs incurred in the second half of the year associated with the Medicare marketing season. The Insurance segment may experience adverse impacts in the operating cost ratio as a result of our Employer Group Commercial Medical Products exit. The Employer Group Commercial Fully-Insured business increased the Insurance segment operating cost ratio by 10 basis points for the three months ended September 30, 2024 and increased the Insurance segment operating cost ratio by 40 basis points for the three months ended September 30, 2023. The Employer Group Commercial Fully-Insured business did not impact the Insurance segment operating cost ratio for the nine months ended September 30, 2024 and increased the Insurance segment operating cost ratio by 40 basis points for the nine months ended September 30, 2023.

Previous wording

•Our strategy offers our members affordable health care combined with a positive consumer experience in growing markets. At the core of this strategy is our integrated care delivery model, which unites quality care, high member engagement, and sophisticated data analytics. Our approach to primary, physician-directed care for our members aims to provide quality care that is consistent, integrated, cost-effective, and member-focused, provided by both employed physicians and physicians with network contract arrangements. The model is designed to improve health outcomes and affordability for individuals and for the health system as a whole, while offering our members a simple, seamless healthcare experience. We believe this strategy is positioning us for long-term growth in both membership and earnings. We offer providers a continuum of opportunities to increase the integration of care and offer assistance to providers in transitioning from a fee-for-service to a value-based arrangement. These include performance bonuses, shared savings and shared risk relationships. At June 30, 2024, approximately 3,923,200 members, or 70%, of our individual Medicare Advantage members were in value-based relationships under our integrated care delivery model, as compared to 3,618,500 members, or 69%, at June 30, 2023.

Current wording

•Our strategy offers our members affordable health care combined with a positive consumer experience in growing markets. At the core of this strategy is our integrated care delivery model, which unites quality care, high member engagement, and sophisticated data analytics. Our approach to primary, physician-directed care for our members aims to provide quality care that is consistent, integrated, cost-effective, and member-focused, provided by both employed physicians and physicians with network contract arrangements. The model is designed to improve health outcomes and affordability for individuals and for the health system as a whole, while offering our members a simple, seamless healthcare experience. We believe this strategy is positioning us for long-term growth in both membership and earnings. We offer providers a continuum of opportunities to increase the integration of care and offer assistance to providers in transitioning from a fee-for-service to a value-based arrangement. These include performance bonuses, shared savings and shared risk relationships. At September 30, 2024, approximately 3,984,900 members, or 70%, of our individual Medicare Advantage members were in value-based relationships under our integrated care delivery model, as compared to 3,727,500 members, or 69%, at September 30, 2023.

Previous wording

•Net income attributable to Humana was $679 million, or $5.62 per diluted common share, and $959 million, or $7.66 per diluted common share, for the three months ended June 30, 2024 and 2023, respectively. Net income attributable to Humana was $1.4 billion, or $11.74 per diluted common share, and $2.2 billion, or $17.54 per diluted common share for the six months ended June 30, 2024, and 2023, respectively. These comparisons were significantly impacted by put/call valuation adjustments associated with non-consolidating minority interest investments, transaction and integration costs, and charges associated with value creation initiatives. The impact of these adjustments to our consolidated income before income taxes and equity in net earnings and diluted earnings per common share was as follows for the 2024 and 2023 quarter and period:

Current wording

•Net income attributable to Humana was $0.5 billion, or $3.98 per diluted common share, and $0.8 billion, or $6.71 per diluted common share, for the three months ended September 30, 2024 and 2023, respectively. Net income attributable to Humana was $1.9 billion, or $15.72 per diluted common share, and $3.0 billion, or $24.26 per diluted common share, for the nine months ended September 30, 2024, and 2023, respectively. These comparisons were significantly impacted by put/call valuation adjustments associated with non-consolidating minority interest investments, charges associated with value creation initiatives, transaction and integration costs and an accrual related to certain anticipated litigation expenses. The impact of these adjustments to our consolidated income before income taxes and equity in net earnings and diluted earnings per common share was as follows for the 2024 and 2023 quarter and period:

Previous wording

The following discussion primarily deals with our results of operations for the three months ended June 30, 2024, or the 2024 quarter, the three months ended June 30, 2023, or the 2023 quarter, the six months ended June 30, 2024, or the 2024 period, and the six months ended June 30, 2023, or the 2023 period.

Current wording

The following discussion primarily deals with our results of operations for the three months ended September 30, 2024, or the 2024 quarter, the three months ended September 30, 2023, or the 2023 quarter, the nine months ended September 30, 2024, or the 2024 period, and the nine months ended September 30, 2023, or the 2023 period.

Previous wording

Consolidated premiums revenue increased $2.6 billion, or 10.4%, from $25.5 billion in the 2023 quarter to $28.1 billion in the 2024 quarter and increased $5.4 billion, or 10.5%, from $51.0 billion in the 2023 period to $56.4 billion in the 2024 period primarily due to higher per member Medicare premiums as well as individual and group

Current wording

Consolidated premiums revenue increased $2.9 billion, or 11.4%, from $25.1 billion in the 2023 quarter to $28.0 billion in the 2024 quarter and increased $8.2 billion, or 10.8%, from $76.1 billion in the 2023 period to $84.4 billion in the 2024 period primarily due to higher per member Medicare premiums as well as Medicare Advantage and state-based contracts membership growth. These factors were partially offset by the continued decline in our group commercial medical and stand-alone PDP membership.

Previous wording

Consolidated services revenue increased $122 million, or 12.5%, from $978 million in the 2023 quarter to $1.1 billion in the 2024 quarter and increased $185 million, or 9.4%, from $2.0 billion in the 2023 period to $2.2 billion in the 2024 period.

Current wording

Consolidated services revenue increased $87 million, or 8.6%, from $1.0 billion in the 2023 quarter to $1.1 billion in the 2024 quarter and increased $272 million, or 9.1%, from $3.0 billion in the 2023 period to $3.3 billion in the 2024 period primarily due to higher revenues associated with growth in the primary care business, partially offset by the impact of the v28 risk model revision.

Previous wording

Investment income increased $24 million, or 8.8%, from $274 million in the 2023 quarter to $298 million in the 2024 quarter and increased $119 million, or 25.5%, from $467 million in the 2023 period to $586 million in the 2024 period primarily due to increase in interest income on our debt securities.

Current wording

Investment income increased $35 million, or 11.4%, from $308 million in the 2023 quarter to $343 million in the 2024 quarter and increased $154 million, or 19.9%, from $775 million in the 2023 period to $929 million in the 2024 period primarily due to increase in interest income on our debt securities.

Previous wording

Consolidated benefits expense increased $3.0 billion, or 13.8%, from $22.0 billion in the 2023 quarter to $25.0 billion in the 2024 quarter and increased $6.3 billion, or 14.4%, from $43.9 billion in the 2023 period to $50.2 billion in the 2024 period. The consolidated benefit ratio increased 270 basis points from 86.3% for the 2023 quarter to 89.0% for the 2024 quarter and increased 300 basis points from 85.9% for the 2023 period to 88.9% for the 2024 period primarily due to the continued impact of elevated Medicare Advantage medical cost trends in the 2024 quarter and period and a lesser favorable impact from prior-period medical claims reserve development in 2024. These factors were partially offset by the impact of the pricing and benefit design of our 2024 Medicare Advantage products, which included a reduction in benefits in response to the net impact of the 2024 final rate notice and the initial emergence of increased medical cost trends in 2023. Further, the year-over-year comparison continues to reflect a shift in line of business mix, with growth in Medicare Advantage and state-based contracts and other membership, which can carry a higher benefit ratio.

Current wording

Consolidated benefits expense increased $3.4 billion, or 15.5%, from $21.7 billion in the 2023 quarter to $25.1 billion in the 2024 quarter and increased $9.7 billion, or 14.7%, from $65.6 billion in the 2023 period to $75.3 billion in the 2024 period. The consolidated benefit ratio increased 330 basis points from 86.6% for the 2023 quarter to 89.9% for the 2024 quarter and increased 300 basis points from 86.2% for the 2023 period to 89.2% for the 2024 period primarily due to the continued impact of elevated Medicare Advantage and state-based contracts medical cost trends in the 2024 quarter and period. The elevated medical cost trend was partially offset by the impact of the pricing and benefit design of our 2024 Medicare Advantage products, which included a reduction in member benefits in response to the net impact of the 2024 final rate notice and the initial emergence of increased medical cost trends in 2023. Further, the year-over-year comparisons continue to reflect a shift in line of business mix, with growth in Medicare Advantage and state-based contracts and other membership, which can carry a higher benefit ratio.

Previous wording

Consolidated benefits expense included $134 million of favorable prior-period medical claims reserve development in the 2024 quarter and $232 million of favorable prior-period medical claims development in the 2023 quarter. Consolidated benefits expense included $669 million of favorable prior-period medical claims reserve development in the 2024 period and $754 million of favorable prior-period medical claims reserve development in the 2023 period. Prior-period medical claims reserve development decreased the consolidated benefit ratio by approximately 50 basis points in the 2024 quarter and decreased the consolidated benefit ratio by approximately 90 basis points in the 2023 quarter. Prior-period medical claims reserve development decreased the consolidated benefit ratio by approximately 120 basis points in the 2024 period and decreased the consolidated benefit ratio by approximately 150 basis points in the 2023 period.

Current wording

Consolidated benefits expense included $24 million of favorable prior-period medical claims reserve development in the 2024 quarter and $4 million of favorable prior-period medical claims development in the 2023 quarter. Consolidated benefits expense included $693 million of favorable prior-period medical claims reserve development in the 2024 period and $758 million of favorable prior-period medical claims reserve development in the 2023 period. Prior-period medical claims reserve development decreased the consolidated benefit ratio by approximately 10 basis points in the 2024 quarter and did not impact the consolidated benefit ratio in the 2023 quarter. Prior-period medical claims reserve development decreased the consolidated benefit ratio by approximately 80 basis points in the 2024 period and decreased the consolidated benefit ratio by approximately 100 basis points in the 2023 period.

Previous wording

Consolidated operating costs increased $37 million, or 1.2%, from $3.1 billion in the 2023 quarter to $3.1 billion in the 2024 quarter and increased $100 million, or 1.6%, from $6.1 billion in the 2023 period to $6.2 billion in the 2024 period. The consolidated operating cost ratio decreased 100 basis points from 11.8% for the 2023 quarter to 10.8% for the 2024 quarter and decreased 90 basis points from 11.5% for the 2023 period to 10.6% for the 2024 period primarily due to scale efficiencies associated with growth in our Medicare Advantage membership, administrative cost efficiencies resulting from our value creation initiatives, lower commission expense for brokers in the 2024 quarter and period compared to the 2023 quarter and period as a result of significant individual Medicare Advantage membership growth in 2023, and the impact of the accrued charge related to certain anticipated litigation expenses included in the 2023 quarter and period results. These factors were partially offset by the impact from charges related to value creation initiatives in the 2024 quarter and period.

Current wording

Consolidated operating costs increased $68 million, or 2.1%, from $3.3 billion in the 2023 quarter to $3.3 billion in the 2024 quarter and increased $168 million, or 1.8%, from $9.4 billion in the 2023 period to $9.5 billion in the 2024 period. The consolidated operating cost ratio decreased 100 basis points from 12.5% for the 2023 quarter to 11.5% for the 2024 quarter and decreased 90 basis points from 11.8% for the 2023 period to 10.9% for the 2024 period primarily due to scale efficiencies associated with growth in our Medicare Advantage membership, administrative cost efficiencies resulting from our value creation initiatives, lower impact of commission expense for brokers in 2024 compared to 2023 as a result of significant individual Medicare Advantage membership growth in 2023, and the impact of the accrued charge related to certain anticipated litigation expenses included in the 2023 quarter and period results. These factors were partially offset by the impact from charges related to value creation initiatives in the 2024 quarter and period.

Previous wording

Interest expense increased $48 million, or 40.0%, from $120 million in the 2023 quarter to $168 million in the 2024 quarter and increased $94 million, or 40.3%, from $233 million in the 2023 period to $327 million in the 2024 period primarily due to increase in interest rates and higher average debt balances.

Current wording

Interest expense increased $55 million, or 48.2%, from $114 million in the 2023 quarter to $169 million in the 2024 quarter and increased $149 million, or 42.9%, from $347 million in the 2023 period to $496 million in the 2024 period primarily due to increase in interest rates and higher average debt balances.

Previous wording

The effective income tax rate was 24.7% and 23.6% for the three months ended June 30, 2024, and 2023, respectively, and 25.0% and 23.0% for the six months ended June 30, 2024 and 2023, respectively. The year-over-year increase in the effective income tax rate is primarily due to a change in the mix of current year earnings between our Insurance segment and our CenterWell health services segment, as the latter incurs a higher effective domestic tax rate than the former. In addition, the prior year income tax rate was favorably impacted by the recognition of a non-taxable gain.

Current wording

The effective income tax rate was 24.4% and 23.5% for the three months ended September 30, 2024, and 2023, respectively, and 24.9% and 23.1% for the nine months ended September 30, 2024 and 2023, respectively. The year-over-year increase in the effective income tax rate is primarily due to a change in the mix of current year earnings between our Insurance segment and our CenterWell health services segment, as our CenterWell health services segment is subject to a higher effective tax rate than our Insurance segment. In addition, the prior year income tax rate was favorably impacted by the recognition of a non-taxable gain.

Previous wording

Insurance segment income from operations decreased $268 million, or 26.0%, from $1.0 billion in the 2023 quarter to $763 million in the 2024 quarter and decreased $697 million, or 29.6%, from $2.4 billion in the 2023 period to $1.7 billion in the 2024 period primarily due to the same factors impacting the segment's higher benefit ratio partially offset by the lower operating cost ratio as more fully described below.

Current wording

Insurance segment income from operations decreased $0.4 billion, or 62.0%, from $0.7 billion in the 2023 quarter to $0.3 billion in the 2024 quarter and decreased $1.1 billion, or 37.2%, from $3.1 billion in the 2023 period to $1.9 billion in the 2024 period primarily due to the same factors impacting the segment's higher benefit ratio partially offset by the lower operating cost ratio as more fully described below.

Previous wording

Individual Medicare Advantage membership increased 348,500 members, or 6.6%, from June 30, 2023 to June 30, 2024 primarily due to membership additions associated with the most recent Annual Election Period, or AEP. Individual Medicare Advantage membership includes 952,800 D-SNP members as of June 30, 2024, a net increase of 121,400 D-SNP members, or 14.6%, from 831,400 D-SNP members as of June 30, 2023.

Current wording

Individual Medicare Advantage membership increased 284,800 members, or 5.3%, from September 30, 2023 to September 30, 2024 primarily due to membership additions associated with the previous Annual Election Period, or AEP. Individual Medicare Advantage membership includes 939,600 D-SNP members as of September 30, 2024, a net increase of 71,600 D-SNP members, or 8.2%, from 868,000 D-SNP members as of September 30, 2023.

Previous wording

Group Medicare Advantage membership increased 35,400 members, or 6.9%, from June 30, 2023 to June 30, 2024 primarily due to growth in small and medium group accounts.

Current wording

Group Medicare Advantage membership increased 36,400 members, or 7.1%, from September 30, 2023 to September 30, 2024 primarily due to growth in small and medium group accounts.

Previous wording

Medicare stand-alone PDP membership decreased 574,100 members, or 19.7%, from June 30, 2023 to June 30, 2024 primarily due to continued intensified competition for Medicare stand-alone PDP offerings.

Current wording

Medicare stand-alone PDP membership decreased 570,100 members, or 19.8%, from September 30, 2023 to September 30, 2024 primarily due to continued intensified competition for Medicare stand-alone PDP offerings.

Previous wording

State-based contracts and other membership increased 62,100 members, or 4.7%, from June 30, 2023 to June 30, 2024 primarily reflecting the impact of membership additions associated with the implementation of new contracts.

Current wording

State-based contracts and other membership increased 181,500 members, or 14.4%, from September 30, 2023 to September 30, 2024 primarily reflecting the impact of membership additions associated with the implementation of new contracts partially offset with membership loss as a result of the public health of emergency unwind.

Previous wording

Commercial fully-insured medical membership decreased 413,300 members, or 86.9%, from June 30, 2023 to June 30, 2024 and commercial ASO medical membership decreased 348,300 members, or 88.1%, from June 30, 2023 to June 30, 2024. These decreases reflect our planned exit of the Employer Group Commercial Medical Products business, which includes all fully insured, self-funded and Federal Employee Health Benefit medical plans, as well as associated wellness and rewards programs. The exit from this line of business will be phased over the 18 to 24 months following our February 2023 announcement.

Current wording

Commercial fully-insured medical membership decreased 383,400 members, or 93.7%, from September 30, 2023 to September 30, 2024 and commercial ASO medical membership decreased 261,900 members, or 92.1%, from September 30, 2023 to September 30, 2024. These decreases reflect our planned exit of the Employer Group Commercial Medical Products business, which includes all fully insured, self-funded and Federal Employee Health Benefit medical plans, as well as associated wellness and rewards programs. We anticipate the exit of this line of business to be finalized in the first half of 2025.

Previous wording

Specialty membership decreased 439,100 members, or 8.7%, from June 30, 2023 to June 30, 2024 primarily due to non-renewal of dental and vision plans as a result of exit from the Employer Group Commercial Medical Products business partially offset by growth in dental and vision plans as a result of Medicare Advantage enrollment.

Current wording

Specialty membership decreased 397,500 members, or 8.0%, from September 30, 2023 to September 30, 2024 primarily due to non-renewal of dental and vision plans as a result of exit from the Employer Group Commercial Medical Products business partially offset by growth in dental and vision plans as a result of Medicare Advantage enrollment.

Previous wording

Insurance segment premiums revenue increased $2.6 billion, or 10.4%, from $25.5 billion in the 2023 quarter to $28.1 billion in the 2024 quarter and increased $5.4 billion, or 10.5%, from $51.0 billion in the 2023 period to $56.4 billion in the 2024 period primarily due to higher per member Medicare premiums as well as individual and group Medicare Advantage and state-based contracts membership growth. These factors were partially offset by the continued decline in our group commercial medical and stand-alone PDP membership.

Current wording

Insurance segment premiums revenue increased $2.9 billion, or 11.4%, from $25.1 billion in the 2023 quarter to $28.0 billion in the 2024 quarter and increased $8.2 billion, or 10.8%, from $76.1 billion in the 2023 period to $84.4 billion in the 2024 period primarily due to higher per member Medicare premiums as well as Medicare Advantage and state-based contracts membership growth. These factors were partially offset by the continued decline in our group commercial medical and stand-alone PDP membership.

Previous wording

The Insurance segment benefit ratio increased 270 basis points from 86.8% for the 2023 quarter to 89.5% for the 2024 quarter and increased 300 basis points from 86.4% for the 2023 period to 89.4% for the 2024 period primarily due to the continued impact of elevated Medicare Advantage medical cost trends in the 2024 quarter and period and a lesser favorable impact from prior-period medical claims reserve development in 2024. These factors were partially offset by the impact of the pricing and benefit design of our 2024 Medicare Advantage products, which included a reduction in benefits in response to the net impact of the 2024 final rate notice and the initial emergence of increased medical cost trends in 2023. Further, the year-over-year comparison continues to reflect a shift in line of business mix, with growth in Medicare Advantage and state-based contracts and other membership, which can carry a higher benefit ratio.

Current wording

The Insurance segment benefit ratio increased 300 basis points from 87.6% for the 2023 quarter to 90.6% for the 2024 quarter and increased 300 basis points from 86.8% for the 2023 period to 89.8% for the 2024 period primarily due to the continued impact of elevated Medicare Advantage and state-based contracts medical cost trends in the 2024 quarter and period. The elevated medical cost trend was partially offset by the impact of the pricing and benefit design of our 2024 Medicare Advantage products, which included a reduction in member benefits in response to the net impact of the 2024 final rate notice and the initial emergence of increased medical cost trends in 2023. Further, the year-over-year comparisons continue to reflect a shift in line of business mix, with growth in Medicare Advantage and state-based contracts and other membership, which can carry a higher benefit ratio.

Previous wording

The Insurance segment operating cost ratio decreased 150 basis points from 9.9% for the 2023 quarter to 8.4% for the 2024 quarter and decreased 120 basis points from 9.6% for the 2023 period to 8.4% for the 2024 period primarily due to scale efficiencies associated with growth in our individual Medicare Advantage membership, administrative cost efficiencies resulting from our value creation initiatives, lower commission expense for brokers in the 2024 quarter and period compared to the 2023 quarter and period as a result of significant individual Medicare Advantage membership growth in 2023, and the impact of the accrued charge related to certain anticipated litigation expenses included in the 2023 quarter and period results.

Current wording

The Insurance segment operating cost ratio decreased 120 basis points from 10.4% for the 2023 quarter to 9.2% for the 2024 quarter and decreased 130 basis points from 9.9% for the 2023 period to 8.6% for the 2024 period primarily due to scale efficiencies associated with growth in our individual Medicare Advantage membership, administrative cost efficiencies resulting from our value creation initiatives, lower impact of commission expense for brokers in 2024 compared to 2023 as a result of significant individual Medicare Advantage membership growth in 2023, and the impact of the accrued charge related to certain anticipated litigation expenses included in the 2023 quarter and period results.

Previous wording

CenterWell income from operations increased $51 million, or 17.8%, from $287 million in the 2023 quarter to $338 million in the 2024 quarter and increased $3 million, or 0.5%, from $617 million in the 2023 period to $620 million in the 2024 period primarily due to the same factors impacting the segment's operating cost ratio as more fully described below.

Current wording

CenterWell income from operations decreased $18 million, or 4.5%, from $400 million in the 2023 quarter to $382 million in the 2024 quarter and decreased $0.02 billion, or 1.5%, from $1.02 billion in the 2023 period to $1.00 billion in the 2024 period primarily due to the same factors impacting the segment's operating cost ratio as more fully described below.

Previous wording

CenterWell intersegment revenues increased $0.3 billion, or 7.3%, from $3.8 billion in the 2023 quarter to $4.1 billion in the 2024 quarter and increased $0.6 billion, or 7.4%, from $7.5 billion in the 2023 period to $8.1 billion in the 2024 period primarily due to greater intersegment revenues associated with the home solutions business in the 2024 quarter and period as compared to the 2023 quarter and period as a result of the expansion of the value-based home care mode and higher intersegment revenues associated with growth in the primary care business, partially offset by the impact of the v28 risk model revision.

Current wording

CenterWell intersegment revenues increased $0.3 billion, or 6.7%, from $3.9 billion in the 2023 quarter to $4.2 billion in the 2024 quarter and increased $0.8 billion, or 7.2%, from $11.4 billion in the 2023 period to $12.3 billion in the 2024 period primarily due to greater intersegment revenues associated with the home solutions business in the 2024 quarter and period as compared to the 2023 quarter and period as a result of the expansion of the value-based home care model, higher revenues associated with growth in the primary care business, partially offset by the impact of the v28 risk model revision, as well as an increase in pharmacy solutions revenues resulting from growth in the specialty pharmacy business, driven by increased penetration of Humana health plan members and payor agnostic consumers.

Previous wording

The CenterWell segment operating cost ratio decreased 60 basis points from 92.6% for the 2023 quarter to 92.0% for the 2024 quarter primarily due to administrative cost efficiencies resulting from the our value creation initiatives and favorable prior-period medical claims reserve development within the primary care business, partially offset by the impact of the v28 risk model revision. The CenterWell segment operating cost ratio increased 40 basis points from 92.1% for the 2023 period to 92.5% for the 2024 period primarily due tothe unfavorable impact of the v28 risk model revision to the primary care business.

Current wording

The CenterWell segment operating cost ratio increased 100 basis points from 90.3% for the 2023 quarter to 91.3% for the 2024 quarter and increased 60 basis points from 91.5% for the 2023 period to 92.1% for the 2024 period primarily due to the unfavorable impact of the v28 risk model revision to the primary care business partially offset by administrative cost efficiencies resulting from our value creation initiatives and positive prior-period medical claims reserve development within the Primary Care Organization.

Previous wording

Cash and cash equivalents increased to approximately $5.5 billion at June 30, 2024 from $4.7 billion at December 31, 2023. The change in cash and cash equivalents for the six months ended June 30, 2024 and 2023 is summarized as follows:

Current wording

Cash and cash equivalents increased to approximately $5.1 billion at September 30, 2024 from $4.7 billion at December 31, 2023. The change in cash and cash equivalents for the nine months ended September 30, 2024 and 2023 is summarized as follows:

Previous wording

Cash flows provided by operations of $1.6 billion in the 2024 period decreased $8.2 billion from cash flows provided by operations of $9.9 billion in the 2023 period. Our operating cash flows for the 2023 period were significantly impacted by the early receipt of the Medicare premium remittance of $7.0 billion in June 2023 because the payment date for July 2023 fell on a weekend. This also resulted in an increase to unearned revenues in our condensed consolidated balance sheet at June 30, 2023. Additionally, the 2023 period includes the CMS mid-year settlement of $2.2 billion which was received in June 2023. The 2024 period does not include the CMS mid-year settlement as it was received in July 2024.

Current wording

Cash flows provided by operations of $3.5 billion in the 2024 period decreased $7.6 billion from cash flows provided by operations of $11.1 billion in the 2023 period. Our operating cash flows for the 2023 period were significantly impacted by the early receipt of the Medicare premium remittance of $7.1 billion in September 2023 because the payment date for October 2023 fell on a weekend. Generally, when the first day of a month falls on a weekend or holiday, with the exception of January 1 (New Year's Day), we receive this payment at the end of the previous month. This also resulted in an increase to unearned revenues in our condensed consolidated balance sheet at September 30, 2023. The 2024 period does not include an early receipt of the Medicare premium remittance. Our operating cash flows for the 2024 period also reflect lower earnings compared to the 2023 period, partially offset by the favorable impact of working capital items in the 2024 period.

Previous wording

The detail of total net receivables at June 30, 2024 and December 31, 2023 and reconciliation to cash flow for the six months ended June 30, 2024 and 2023 was as follows:

Current wording

The detail of total net receivables at September 30, 2024 and December 31, 2023 and reconciliation to cash flow for the nine months ended September 30, 2024 and 2023 was as follows:

Previous wording

The changes in Medicare receivables for both the 2024 period and the 2023 period reflect individual Medicare Advantage membership growth and the typical pattern caused by the timing of accruals and related collections associated with the CMS risk-adjustment model. Significant collections occur with the mid-year and final settlements with CMS in the second and third quarter. We received the 2024 mid-year settlement of approximately $2.3 billion in July 2024. The 2023 period was impacted by the early receipt of the 2023 mid-year payment in June 2023.

Current wording

The changes in Medicare receivables for both the 2024 period and the 2023 period reflect individual Medicare Advantage membership growth and the typical pattern caused by the timing of accruals and related collections associated with the CMS risk-adjustment model. Significant collections occur with the mid-year and final settlements with CMS in the second and third quarter.

Previous wording

During the 2024 period and 2023 period, we acquired various businesses for approximately $17 million and $189 million, net of cash and cash equivalents received, respectively.

Current wording

During the 2024 period and 2023 period, we acquired various businesses for approximately $37 million and $223 million, net of cash and cash equivalents received, respectively.

Previous wording

Our ongoing capital expenditures primarily relate to our information technology initiatives, support of services in our primary care operations including medical and administrative facility improvements necessary for activities such as the provision of care to members, claims processing, billing and collections, wellness solutions, care coordination, regulatory compliance and customer service. Total net capital expenditures, excluding acquisitions, were $291 million in the 2024 period and $487 million in the 2023 period.

Current wording

Our ongoing capital expenditures primarily relate to our information technology initiatives, support of services in our primary care operations including medical and administrative facility improvements necessary for activities such as the provision of care to members, claims processing, billing and collections, wellness solutions, care coordination, regulatory compliance and customer service. Total net capital expenditures, excluding acquisitions, were $421 million in the 2024 period and $721 million in the 2023 period.

Previous wording

Net purchases of investment securities were $1.1 billion and $1.3 billion in the 2024 period and 2023 period, respectively.

Current wording

Net purchases of investment securities were $2.4 billion and $1.7 billion in the 2024 period and 2023 period, respectively.

Previous wording

Receipts from CMS associated with Medicare Part D claim subsidies for which we do not assume risk were higher than claim payments by $0.3 billion and $3.5 billion in the 2024 and 2023 periods, respectively.

Current wording

Claim payments were higher than receipts from CMS associated with Medicare Part D claim subsidies for which we do not assume risk by $0.6 billion in the 2024 period and receipts from CMS associated with Medicare Part D claim subsidies for which we do not assume risk were higher than claim payments by $2.5 billion in the 2023 period.

Previous wording

Under our administrative services only TRICARE contracts, health care costs payments for which we do not assume risk exceeded reimbursements from the federal government by $63 million and $27 million in the 2024 and 2023 periods, respectively.

Current wording

Under our administrative services only TRICARE contracts, health care costs payments for which we do not assume risk exceeded reimbursements from the federal government by $75 million and $28 million in the 2024 and 2023 periods, respectively.

Previous wording

In March 2023, we entered into a Rule 10b5-1 Repurchase Plan, or the Plan, to repurchase a portion of our $1.5 billion aggregate principal amount of 0.650% senior notes maturing in August 2023 and our $600 million aggregate principal amount of 3.850% senior notes maturing in October 2024 during the Plan period beginning on March 13, 2023 and ending on July 21, 2023. During the six months ended June 30, 2023, we repurchased $325 million principal amount of our $1.5 billion, 0.650% senior notes for approximately $322 million cash and $28 million principal amount of our $600 million, 3.850% senior notes for approximately $27 million cash.

Current wording

In March 2023, we entered into a Rule 10b5-1 Repurchase Plan to repurchase a portion of our $1.5 billion aggregate principal amount of 0.650% senior notes maturing in August 2023 and our $600 million aggregate principal amount of 3.850% senior notes maturing in October 2024 during the period beginning on March 13, 2023 and ending on July 21, 2023. For the nine months ended September 30, 2023, we repurchased $361 million principal amount of these senior notes for approximately $358 million cash. In August 2023, we repaid the remaining $1.2 billion aggregate principal amount of our 0.650% senior notes due on their maturity date of August 3, 2023.

Previous wording

Net repayments from the issuance of commercial paper were $895 million in the 2024 period and net proceeds from the issuance of commercial paper were $238 million in the 2023 period. The maximum principal amount outstanding at any one time during the 2024 period was $2.7 billion.

Current wording

Net repayments from the issuance of commercial paper were $895 million in the 2024 period and net proceeds from the issuance of commercial paper were $1.6 billion in the 2023 period. The maximum principal amount outstanding at any one time during the 2024 period was $2.7 billion.

Previous wording

We repurchased common shares for $750 million and $601 million in the 2024 period and 2023 period, respectively, under share repurchase plans authorized by the Board of Directors. We also acquired common shares in connection with employee stock plans for $16 million and $27 million in the 2024 period and 2023 period, respectively.

Current wording

We repurchased common shares for $750 million and $980 million in the 2024 period and 2023 period, respectively, under share repurchase plans authorized by the Board of Directors. We also acquired common shares in connection with employee stock plans for $18 million and $31 million in the 2024 period and 2023 period, respectively.