HUMANA INC

Previous wording

In order to create capacity to fund growth and investment in our Medicare Advantage business and further expansion of our healthcare services capabilities, we have committed to driving 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, severance charges in connection with workforce optimization and external consulting spend, of $29 million and $53 million for the three and six months ended June 30, 2025, respectively. We recorded charges, primarily in asset impairments, of $68 million and $97 million for the three and six months ended June 30, 2024, respectively. These charges were included within operating costs in the condensed consolidated statements of income. We expect to incur additional charges in 2025.

Current wording

In order to create capacity to fund growth and investment in our Medicare Advantage business and further expansion of our healthcare services capabilities, we have committed to driving 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 severance charges in connection with workforce optimization and external consulting spend, of $267 million and $320 million for the three and nine months ended September 30, 2025, respectively. We recorded charges, primarily in asset impairments, of $55 million and $151 million for the three and nine months ended September 30, 2024, respectively. These charges were included within operating costs in the condensed consolidated statements of income. We expect to incur additional charges in 2025.

Previous wording

In addition, we recorded impairment charges of $32 million, relating to indefinite-lived intangible assets, for the three and six months ended June 30, 2025 within operating costs in our condensed consolidated statements of income. There were no impairment charges relating to indefinite-lived intangible assets recorded during the three and six months ended June 30, 2024.

Current wording

In addition, we recorded impairment charges of $32 million, relating to indefinite-lived intangible assets, for the nine months ended September 30, 2025 within operating costs in our condensed consolidated statements of income. There were no impairment charges relating to indefinite-lived intangible assets recorded during the three and nine months ended September 30, 2024.

Previous wording

Our quarterly Insurance segment earnings and operating cash flows are impacted by the Medicare Part D benefit design and changes in the composition of our stand-alone prescription drug plan, or PDP, membership. The Medicare Part D benefit design results in coverage that varies as a member’s cumulative out-of-pocket costs pass through successive stages of a member’s plan period, which begins annually on January 1 for renewals. Effective January 1, 2025, the Medicare Part D coverage gap was eliminated as mandated by the Inflation Reduction Act of 2022, or IRA. The standard Part D benefit now comprises three phases: the deductible phase, the initial coverage phase and the catastrophic coverage phase. Beneficiaries' out-of-pocket expenses for covered prescription drugs are capped at $2,000, after which they incur no additional cost sharing for the remainder of the year. In addition, the Coverage Gap Discount Program was replaced by the Manufacturer Discount Program, requiring pharmaceutical manufacturers to provide discounts on brand name drugs during both the initial coverage and catastrophic phases. These changes are anticipated to reduce out-of-pocket costs for beneficiaries and impact plan liabilities, accordingly. These benefit design changes will result in us sharing a greater portion of the responsibility and result in prescription costs that are more level throughout the year as compared to the historical seasonal decline seen prior to the IRA. In addition, the number of low-income senior members, as well as year-over-year changes in the mix of membership in our stand-alone PDP products, affects the quarterly benefit ratio pattern. 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.

Current wording

Our quarterly Insurance segment earnings and operating cash flows are impacted by the Medicare Part D benefit design and changes in the composition of our stand-alone prescription drug plan, or PDP, membership. The Medicare Part D benefit design results in coverage that varies as a member’s cumulative out-of-pocket costs pass through successive stages of a member’s plan period, which begins annually on January 1 for renewals. Effective January 1, 2025, the Medicare Part D coverage gap was eliminated as mandated by the Inflation Reduction Act of 2022, or IRA. The standard Part D benefit now comprises three phases: the deductible phase, the initial coverage phase and the catastrophic coverage phase. Beneficiaries' out-of-pocket expenses for covered prescription drugs are capped at $2,000, after which they incur no additional cost sharing for the remainder of the year. In addition, the Coverage Gap Discount Program was replaced by the Manufacturer Discount Program, requiring pharmaceutical manufacturers to provide discounts on brand name drugs during both the initial coverage and catastrophic phases. These changes are anticipated to reduce out-of-pocket costs for beneficiaries and impact plan liabilities, accordingly. These benefit design changes will result in us sharing a greater portion of the responsibility and result in net prescription costs that are more level throughout the year as compared to the historical seasonal decline seen prior to the IRA. In addition, the number of low-income senior members, as well as year-over-year changes in the mix of membership in our stand-alone PDP products, affects the quarterly benefit ratio pattern. 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.

Previous wording

•Our strategy is to offer 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, 2025, approximately 3,542,300 members, or 68%, of our individual Medicare Advantage members were in value-based relationships under our integrated care delivery model, as compared to 3,923,200 members, or 70%, at June 30, 2024.

Current wording

•Our strategy is to offer 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, 2025, approximately 3,553,000 members, or 68%, of our individual Medicare Advantage members were in value-based relationships under our integrated care delivery model, as compared to 3,984,900 members, or 70%, at September 30, 2024.

Previous wording

•Net income attributable to Humana was $545 million, or $4.51 per diluted common share, and $679 million, or $5.62 per diluted common share, for the three months ended June 30, 2025 and 2024, respectively. Net income attributable to Humana was $1.8 billion, or $14.81 per diluted common share, and $1.4 billion, or $11.74 per diluted common share, for the six months ended June 30, 2025 and 2024, respectively. These comparisons were significantly impacted by put/call valuation adjustments associated with non-consolidating minority interest investments, impairment charges and charges associated with value creation initiatives. The impact of these adjustments to our consolidated income before income taxes and equity in net losses and diluted earnings per common share was as follows for the 2025 and 2024 quarter and period:

Current wording

•Net income attributable to Humana was $195 million, or $1.62 per diluted common share, and $480 million, or $3.98 per diluted common share, for the three months ended September 30, 2025 and 2024, respectively. Net income attributable to Humana was $2.0 billion, or $16.43 per diluted common share, and $1.9 billion, or $15.72 per diluted common share, for the nine months ended September 30, 2025 and 2024, respectively. These comparisons were significantly impacted by put/call valuation adjustments associated with non-consolidating minority interest investments, impairment charges, settlement of certain litigation expenses, loss on sale of business and charges associated with value creation initiatives. The impact of these adjustments to our consolidated income before income taxes and equity in net losses and diluted earnings per common share was as follows for the 2025 and 2024 quarter and period:

Previous wording

The following discussion primarily deals with our results of operations for the three months ended June 30, 2025, or the 2025 quarter, the three months ended June 30, 2024, or the 2024 quarter, the six months ended June 30, 2025, or the 2025 period, and the six months ended June 30, 2024, or the 2024 period.

Current wording

The following discussion primarily deals with our results of operations for the three months ended September 30, 2025, or the 2025 quarter, the three months ended September 30, 2024, or the 2024 quarter, the nine months ended September 30, 2025, or the 2025 period, and the nine months ended September 30, 2024, or the 2024 period.

Previous wording

Consolidated premiums revenue increased $2.6 billion, or 9.1%, from $28.1 billion in the 2024 quarter to $30.7 billion in the 2025 quarter and increased $4.8 billion, or 8.6%, from $56.4 billion in the 2024 period to $61.2 billion in the 2025 period primarily due to higher per member Medicare premiums, largely driven by an increased direct subsidy due to the IRA, and higher per member state-based contracts premiums, as well as membership growth in the state-based contracts and stand-alone PDP businesses. These factors were partially offset by the membership decline within the individual Medicare Advantage business, inclusive of the decision to exit certain unprofitable plans and counties.

Current wording

Consolidated premiums revenue increased $2.8 billion, or 9.9%, from $28.0 billion in the 2024 quarter to $30.7 billion in the 2025 quarter and increased $7.6 billion, or 9.0%, from $84.4 billion in the 2024 period to $91.9 billion in the 2025 period primarily due to higher per member Medicare premiums, largely driven by an increased direct subsidy due to the IRA, and higher per member state-based contracts premiums, as well as membership growth in the state-based contracts and stand-alone PDP businesses. These factors were partially offset by the membership decline within the individual Medicare Advantage business, inclusive of the decision to exit certain unprofitable plans and counties.

Previous wording

Consolidated services revenue increased $0.3 billion, or 27.3%, from $1.1 billion in the 2024 quarter to $1.4 billion in the 2025 quarter and increased $0.6 billion, or 26.5%, from $2.2 billion in the 2024 period to $2.7 billion in the 2025 period primarily due to higher revenues associated with growth in the primary care and pharmacy solutions businesses, partially offset by the impact of the v28 risk model revision.

Current wording

Consolidated services revenue increased $0.5 billion, or 45.1%, from $1.1 billion in the 2024 quarter to $1.6 billion in the 2025 quarter and increased $1.1 billion, or 32.7%, from $3.3 billion in the 2024 period to $4.3 billion in the 2025 period primarily due to higher revenues associated with growth in the primary care and pharmacy solutions businesses, partially offset by the impact of the v28 risk model revision impacting the Primary Care business.

Previous wording

Investment income decreased $26 million, or 8.7%, from $298 million in the 2024 quarter to $272 million in the 2025 quarter and decreased $50 million, or 8.5%, from $586 million in the 2024 period to $536 million in the 2025 period primarily due to lower interest income on debt securities.

Current wording

Investment income decreased $5 million, or 1.5%, from $343 million in the 2024 quarter to $338 million in the 2025 quarter and decreased $55 million, or 5.9%, from $929 million in the 2024 period to $874 million in the 2025 period primarily due to lower interest income on debt securities.

Previous wording

Consolidated benefits expense increased $2.5 billion, or 10.1%, from $25.0 billion in the 2024 quarter to $27.6 billion in the 2025 quarter and increased $3.9 billion, or 7.8%, from $50.2 billion in the 2024 period to $54.1 billion in the 2025 period. The consolidated benefit ratio increased 70 basis points from 89.0% for the 2024 quarter to 89.7% for the 2025 quarter primarily reflecting a shift in line of business mix resulting growth in the state-based contracts and stand-alone PDP businesses that carry a higher benefit ratio, combined with a reduction in individual Medicare Advantage membership, as well as incremental investments to improve member and patient outcomes and support operational excellence. These factors were partially offset by individual Medicare Advantage pricing inclusive of plan exits and benefit design changes that more than offset claims trend and the funding environment, as well as the change in Medicare Part D seasonality due to the IRA. The consolidated benefit ratio decreased 50 basis points from 88.9% for the 2024 period to 88.4% for the 2025 period primarily due to the net favorable impact of the factors impacting the quarter comparison, as well as the favorable workday impact in the first quarter of 2025, partially offset by lower favorable prior-period medical claims reserve development in the 2025 period.

Current wording

Consolidated benefits expense increased $2.9 billion, or 11.4%, from $25.1 billion in the 2024 quarter to $28.0 billion in the 2025 quarter and increased $6.8 billion, or 9.0%, from $75.3 billion in the 2024 period to $82.1 billion in the 2025 period. The consolidated benefit ratio increased 120 basis points from 89.9% for the 2024 quarter to 91.1% for the 2025 quarter and increased 10 basis points from 89.2% for the 2024 period to 89.3% for the 2025 period primarily reflecting a shift in line of business mix resulting growth in the state-based contracts and stand-alone PDP businesses that carry a higher benefit ratio, combined with a reduction in individual Medicare Advantage membership, as well as incremental investments to improve member and patient outcomes and support operational excellence. These factors were partially offset by individual Medicare Advantage pricing inclusive of plan exits and benefit design changes that more than offset claims trend and the funding environment, as well as higher favorable prior-period medical claims development in the 2025 quarter and period. Further, the quarter comparison was negatively impacted in the 2025 quarter as a result of the change in Medicare Part D seasonality due to the IRA and the period comparison was affected by the favorable workday impact in the 2025 period combined with the favorability associated with the change in Medicare Part D seasonality due to the IRA.

Previous wording

Consolidated benefits expense included $161 million of favorable prior-period medical claims reserve development in the 2025 quarter and $134 million of favorable prior-period medical claims development in the 2024 quarter. Consolidated benefits expense included $638 million of favorable prior-period medical claims reserve development in the 2025 period and $669 million of favorable prior-period medical claims reserve development in the 2024 period. Prior-period medical claims reserve development decreased the consolidated benefit ratio by approximately 50 basis points in the 2025 quarter and decreased the consolidated benefit ratio by approximately 50 basis points in the 2024 quarter. Prior-period medical claims reserve development decreased the consolidated benefit ratio by approximately 100 basis points in the 2025 period and decreased the consolidated benefit ratio by approximately 120 basis points in the 2024 period.

Current wording

Consolidated benefits expense included $275 million of favorable prior-period medical claims reserve development in the 2025 quarter and $24 million of favorable prior-period medical claims development in the 2024 quarter. Consolidated benefits expense included $913 million of favorable prior-period medical claims reserve development in the 2025 period and $693 million of favorable prior-period medical claims reserve development in the 2024 period. Prior-period medical claims reserve development decreased the consolidated benefit ratio by approximately 90 basis points in the 2025 quarter and decreased the consolidated benefit ratio by approximately 10 basis points in the 2024 quarter. Prior-period medical claims reserve development decreased the consolidated benefit ratio by approximately 100 basis points in the 2025 period and decreased the consolidated benefit ratio by approximately 80 basis points in the 2024 period.

Previous wording

Consolidated operating costs increased $0.4 billion, or 12.7%, from $3.1 billion in the 2024 quarter to $3.5 billion in the 2025 quarter and increased $0.7 billion, or 11.9%, from $6.2 billion in the 2024 period to $6.9 billion in the 2025 period. The consolidated operating cost ratio increased 20 basis points from 10.8% for the 2024 quarter to 11.0% for the 2025 quarter and increased 20 basis points from 10.6% for the 2024 period to 10.8% for the 2025 period primarily due to business mix changes, including within the CenterWell segment that runs a significantly higher operating cost ratio than the Insurance segment, combined with the operating leverage impact of the loss of individual Medicare Advantage membership. This was partially offset by administrative cost efficiencies resulting from the value creation initiatives, net of charges related to ongoing initiatives, as well as operating leverage associated with increased revenues from the impact of the IRA as previously described.

Current wording

Consolidated operating costs increased $0.7 billion, or 22.3%, from $3.3 billion in the 2024 quarter to $4.1 billion in the 2025 quarter and increased $1.5 billion, or 15.6%, from $9.5 billion in the 2024 period to $11.0 billion in the 2025 period. The consolidated operating cost ratio increased 110 basis points from 11.5% for the 2024 quarter to 12.6% for the 2025 quarter and increased 50 basis points from 10.9% for the 2024 period to 11.4% for the 2025 period primarily due to business mix changes, including within the CenterWell segment that runs a significantly higher operating cost ratio than the Insurance segment, combined with the operating leverage impact of the loss of individual Medicare Advantage membership, as well as the impact of charges associated with the value creation initiatives, primarily related to severance in connection with workforce optimization and external consulting spend. The value creation initiative charges were recorded at the corporate level and not allocated to the segments. These factors were partially offset by administrative cost efficiencies resulting from the value creation initiatives and operating leverage associated with increased revenues from the impact of the IRA as previously described.

Previous wording

Insurance segment income from operations increased $3 million, or 0.4%, from $763 million in the 2024 quarter to $766 million in the 2025 quarter and increased $679 million, or 40.9%, from $1.7 billion in the 2024 period to $2.3 billion in the 2025 period primarily due to the same factors impacting the Insurance segment's benefit and operating cost ratios as more fully described below.

Current wording

Insurance segment income from operations decreased $23 million, or 8.4%, from $274 million in the 2024 quarter to $251 million in the 2025 quarter and increased $0.7 billion, or 33.9%, from $1.9 billion in the 2024 period to $2.6 billion in the 2025 period primarily due to the same factors impacting the Insurance segment's benefit and operating cost ratios as more fully described below.

Previous wording

Individual Medicare Advantage membership decreased 388,300 members, or 6.9%, from June 30, 2024 to June 30, 2025, inclusive of the decision to exit certain unprofitable plans and counties. Individual Medicare Advantage membership includes 786,000 D-SNP members as of June 30, 2025, a net decrease of 166,800 D-SNP members, or 17.5%, from 952,800 D-SNP members as of June 30, 2024.

Current wording

Individual Medicare Advantage membership decreased 421,900 members, or 7.5%, from September 30, 2024 to September 30, 2025, inclusive of the decision to exit certain unprofitable plans and counties. Individual Medicare Advantage membership includes 765,800 D-SNP members as of September 30, 2025, a net decrease of 173,800 D-SNP members, or 18.5%, from 939,600 D-SNP members as of September 30, 2024.

Previous wording

Group Medicare Advantage membership increased 25,100 members, or 4.6%, from June 30, 2024 to June 30, 2025, consistent with expectations as we maintain pricing discipline in a competitive market.

Current wording

Group Medicare Advantage membership increased 23,100 members, or 4.2%, from September 30, 2024 to September 30, 2025, consistent with expectations as we maintain pricing discipline in a competitive market.

Previous wording

Medicare stand-alone PDP membership increased 85,900 members, or 3.7%, from June 30, 2024 to June 30, 2025, reflecting shifting competitive dynamics.

Current wording

Medicare stand-alone PDP membership increased 130,500 members, or 5.6%, from September 30, 2024 to September 30, 2025, reflecting shifting competitive dynamics.

Previous wording

State-based contracts and other membership increased 190,600 members, or 13.7%, from June 30, 2024 to June 30, 2025, reflecting allocation of additional membership in Kentucky and Ohio, as well as additional membership related to the Indiana contract implemented in July 2024.

Current wording

State-based contracts and other membership increased 212,700 members, or 14.7%, from September 30, 2024 to September 30, 2025, reflecting allocation of additional membership in Kentucky and Ohio, as well as additional membership related to the Virginia contract implemented in the 2025 quarter.

Previous wording

Insurance segment premiums revenue increased $2.6 billion, or 9.1%, from $28.1 billion in the 2024 quarter to $30.7 billion in the 2025 quarter and increased $4.8 billion, or 8.6%, from $56.4 billion in the 2024 period to $61.2 billion in the 2025 period primarily due to higher per member Medicare premiums, largely driven by an increased direct subsidy due to the IRA, and higher per member state-based contracts premiums, as well as membership growth in the state-based contracts and stand-alone PDP businesses. These factors were partially offset by the membership decline within the individual Medicare Advantage business, inclusive of the decision to exit certain unprofitable plans and counties.

Current wording

Insurance segment premiums revenue increased $2.8 billion, or 9.9%, from $28.0 billion in the 2024 quarter to $30.7 billion in the 2025 quarter and increased $7.6 billion, or 9.0%, from $84.4 billion in the 2024 period to $91.9 billion in the 2025 period primarily due to higher per member Medicare premiums, largely driven by an increased direct subsidy due to the IRA, and higher per member state-based contracts premiums, as well as membership growth in the state-based contracts and stand-alone PDP businesses. These factors were partially offset by the membership decline within the individual Medicare Advantage business, inclusive of the decision to exit certain unprofitable plans and counties.

Previous wording

The Insurance segment benefit ratio increased 40 basis points from 89.5% for the 2024 quarter to 89.9% for the 2025 quarter primarily reflecting a shift in line of business mix resulting growth in the state-based contracts and stand-alone PDP businesses that carry a higher benefit ratio, combined with a reduction in individual Medicare Advantage membership, as well as incremental investments to improve member and patient outcomes and support operational excellence. These factors were partially offset by individual Medicare Advantage pricing inclusive of plan exits and benefit design changes that more than offset claims trend and the funding environment, as well as the change in Medicare Part D seasonality due to the IRA. The Insurance segment benefit ratio decreased 70 basis points from 89.4% for the 2024 period to 88.7% for the 2025 period primarily due to the net favorable impact of the factors impacting the quarter comparison, as well as the favorable workday impact in the first quarter of 2025, partially offset by lower favorable prior-period medical claims reserve development in the 2025 period.

Current wording

The Insurance segment benefit ratio increased 50 basis points from 90.6% for the 2024 quarter to 91.1% for the 2025 quarter primarily reflecting a shift in line of business mix resulting growth in the state-based contracts and stand-alone PDP businesses that carry a higher benefit ratio, combined with a reduction in individual Medicare Advantage membership, as well as incremental investments to improve member and patient outcomes and support operational excellence. These factors were partially offset by individual Medicare Advantage pricing inclusive of plan exits and benefit design changes that more than offset claims trend and the funding environment, as well as higher favorable prior-period medical claims development in the 2025 quarter. Further, the quarter comparison was negatively impacted in the 2025 quarter as a result of the change in Medicare Part D seasonality due to the IRA. The Insurance segment benefit ratio decreased 30 basis points from 89.8% for the 2024 period to 89.5% for the 2025 period resulting from the net favorable impact of the factors impacting the quarterly comparison. The period comparison was further affected by the favorable workday impact in the 2025 period combined with the favorability associated with the change in Medicare Part D seasonality due to the IRA.

Previous wording

The Insurance segment operating cost ratio decreased 10 basis points from 8.4% for the 2024 quarter to 8.3% for the 2025 quarter and decreased 10 basis points from 8.4% for the 2024 period to 8.3% for the 2025 period primarily due to administrative cost efficiencies resulting from the value creation initiatives and operating leverage associated with increased revenues from the impact of the IRA as previously described. These factors were partially offset by the operating leverage impact of the loss of individual Medicare Advantage membership.

Current wording

The Insurance segment operating cost ratio decreased 10 basis points from 9.2% for the 2024 quarter to 9.1% for the 2025 quarter and decreased 10 basis points from 8.6% for the 2024 period to 8.5% for the 2025 period primarily due to administrative cost efficiencies resulting from the value creation initiatives and operating leverage associated with increased revenues from the impact of the IRA as previously described. These factors were partially offset by the operating leverage impact of the loss of individual Medicare Advantage membership.

Previous wording

CenterWell income from operations increased $6 million, or 1.8%, from $338 million in the 2024 quarter to $344 million in the 2025 quarter and increased $116 million, or 18.7%, from $620 million in the 2024 period to $736 million in the 2025 period primarily due to the same factors impacting the CenterWell segment's operating cost ratio as more fully described below.

Current wording

CenterWell income from operations decreased $77 million, or 20.2%, from $382 million in the 2024 quarter to $305 million in the 2025 quarter and increased $39 million, or 3.9%, from $1,002 million in the 2024 period to $1,041 million in the 2025 period primarily due to the same factors impacting the CenterWell segment's revenue and operating cost ratio as more fully described below.

Previous wording

CenterWell services revenue increased $0.3 billion, or 34.8%, from $0.9 billion in the 2024 quarter to $1.2 billion in the 2025 quarter and increased $0.6 billion, or 36.0%, from $1.7 billion in the 2024 period to $2.3 billion in the 2025 period primarily due to higher revenues associated with growth in the primary care and pharmacy solutions businesses, partially offset by the impact of the v28 risk model revision.

Current wording

CenterWell external services revenue increased $0.5 billion, or 52.0%, from $0.9 billion in the 2024 quarter to $1.3 billion in the 2025 quarter and increased $1.1 billion, or 41.5%, from $2.6 billion in the 2024 period to $3.6 billion in the 2025 period primarily due to higher revenues associated with growth in the primary care and pharmacy solutions businesses, partially offset by the impact of the v28 risk model revision impacting the Primary Care business.

Previous wording

The CenterWell segment operating cost ratio increased 70 basis points from 92.0% for the 2024 quarter to 92.7% for the 2025 quarter primarily resulting from the continued phase-in of the v28 risk model revision within the primary care business, partially offset by more favorable operating trends in the primary care business as a result of stabilizing medical cost trends and maturation of the v28 mitigation activities, as well as administrative cost efficiencies resulting from the value creation initiatives. The CenterWell segment operating cost ratio decreased 50 basis points from 92.5% for the 2024 period to 92.0% for the 2025 period primarily due to the net favorable impact of the factors impacting the quarter comparison.

Current wording

The CenterWell segment operating cost ratio increased 260 basis points from 91.3% for the 2024 quarter to 93.9% for the 2025 quarter and increased 60 basis points from 92.1% for the 2024 period to 92.7% for the 2025 period primarily resulting from the continued phase-in of the v28 risk model revision within the primary care business, as well as the uptick of volume within CenterWell Specialty Pharmacy, which carries a higher operating cost ratio than the traditional pharmacy business. These factors were partially offset by more favorable operating trends in the primary care business as a result of maturation of the v28 mitigation activities, as well as administrative cost efficiencies resulting from the value creation initiatives.

Previous wording

Cash and cash equivalents increased to approximately $4.0 billion at June 30, 2025 from $2.2 billion at December 31, 2024. The change in cash and cash equivalents for the six months ended June 30, 2025 and 2024 is summarized as follows:

Current wording

Cash and cash equivalents increased to approximately $5.4 billion at September 30, 2025 from $2.2 billion at December 31, 2024. The change in cash and cash equivalents for the nine months ended September 30, 2025 and 2024 is summarized as follows:

Previous wording

Cash flows provided by operations remained relatively unchanged year-over-year and reflected the unfavorable impact of working capital items, partially offset by higher earnings in the 2025 period.

Current wording

Cash flows provided by operations of $2.6 billion in the 2025 period decreased $0.9 billion from cash flows provided by operations of $3.5 billion in the 2024 period. The decrease in our operating cash flows primarily reflected the unfavorable impact of working capital items, partially offset by higher earnings in the 2025 period.

Previous wording

The detail of total net receivables at June 30, 2025 and December 31, 2024 and reconciliation to cash flow for the six months ended June 30, 2025 and 2024 was as follows:

Current wording

The detail of total net receivables at September 30, 2025 and December 31, 2024 and reconciliation to cash flow for the nine months ended September 30, 2025 and 2024 was as follows:

Previous wording

The change in Medicare receivables for the 2025 period reflects higher per member Medicare premiums, driven largely by an increased direct subsidy due to the IRA. The change in Medicare receivables for the 2024 period reflects individual Medicare Advantage membership growth. In addition, both periods further reflect 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.

Current wording

The change in Medicare receivables for the 2025 period reflects lower individual Medicare Advantage membership partially offset by higher per member Medicare premiums, driven largely by an increased direct subsidy due to the IRA. The change in Medicare receivables for the 2024 period reflects individual Medicare Advantage membership growth. In addition, both periods further reflect 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

Acquisition related activities did not have a material impact on our cash flows during the 2025 period and 2024 period.

Current wording

Acquisition and divestiture related activities did not have a material impact on our cash flows during the 2025 period and 2024 period.

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 $209 million in the 2025 period and $291 million in the 2024 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 $344 million in the 2025 period and $421 million in the 2024 period.

Previous wording

Net proceeds of investment securities were $871 million in the 2025 period and net purchases of investment securities were $1.1 billion in the 2024 period.

Current wording

Net proceeds of investment securities were $1.9 billion in the 2025 period and net purchases of investment securities were $2.4 billion in the 2024 period.

Previous wording

Claim payments were higher than receipts from CMS associated with Medicare Part D claim subsidies for which we do not assume risk by $482 million in the 2025 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 $348 million in the 2024 period.

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 $1.2 billion and $0.6 billion in the 2025 and 2024 periods, respectively.

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 $97 million and $63 million in the 2025 and 2024 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 $8 million and $75 million in the 2025 and 2024 periods, respectively.

Previous wording

In 2024, we entered into a securities lending program where we loan certain investment securities for short periods of time in exchange for collateral. In 2024, we also entered into an uncommitted receivables purchase facility under which certain pharmaceutical rebate receivables may be sold on a non-recourse basis to a financial institution. In the 2025 period net proceeds from the securities lending program were $48 million and net repayments from the uncommitted receivables purchase facility were $123 million. In the 2024 period, net proceeds from the securities lending program were $79 million.

Current wording

In 2024, we entered into a securities lending program where we loan certain investment securities for short periods of time in exchange for collateral. In 2024, we also entered into an uncommitted receivables purchase facility under which certain pharmaceutical rebate receivables may be sold on a non-recourse basis to a financial institution. In the 2025 period net proceeds from the securities lending program were $141 million and net repayments from the uncommitted receivables purchase facility were $123 million. In the 2024 period, net proceeds from the securities lending program were $361 million.

Previous wording

We repurchased common shares for $100 million and $750 million in the 2025 period and 2024 period, respectively, under share repurchase plans authorized by the Board of Directors. We also acquired common shares in connection with employee stock plans for $9 million and $16 million in the 2025 period and 2024 period, respectively.

Current wording

We repurchased common shares for $109 million and $768 million in the 2025 period and 2024 period, respectively, under share repurchase plans authorized by the Board of Directors and in connection with employee stock plans.

Previous wording

We paid dividends to stockholders of $214 million and $216 million during the 2025 period and 2024 period, respectively.

Current wording

We paid dividends to stockholders of $321 million and $323 million during the 2025 period and 2024 period, respectively.

Previous wording

In addition, we operate as a holding company in a highly regulated industry. Humana Inc., our parent company, is dependent upon dividends and administrative expense reimbursements from our subsidiaries, most of which are subject to regulatory restrictions. We continue to maintain significant levels of aggregate excess statutory capital and surplus in our state-regulated operating subsidiaries. Cash, cash equivalents, and short-term investments at the parent company were $1.3 billion at June 30, 2025 compared to $562 million at December 31, 2024. This increase primarily reflects working capital changes, net proceeds from the issuance of senior notes, and dividends from insurance subsidiaries, partially offset by repayments of senior notes, capital contributions to certain subsidiaries, cash dividends to shareholders, capital expenditures, and common stock repurchases. Our use of operating cash derived from our non-insurance subsidiaries, such as our CenterWell segment, is generally not restricted by departments of insurance (or comparable state regulators).

Current wording

In addition, we operate as a holding company in a highly regulated industry. Humana Inc., our parent company, is dependent upon dividends and administrative expense reimbursements from our subsidiaries, most of which are subject to regulatory restrictions. We continue to maintain significant levels of aggregate excess statutory capital and surplus in our state-regulated operating subsidiaries. Cash, cash equivalents, and short-term investments at the parent company were $1.9 billion at September 30, 2025 compared to $562 million at December 31, 2024. This increase primarily reflects working capital changes, net proceeds from the issuance of senior notes, and proceeds from sale of business, partially offset by repayments of senior notes, capital contributions to certain subsidiaries, cash dividends to shareholders, capital expenditures, and common stock repurchases. Our use of operating cash derived from our non-insurance subsidiaries, such as our CenterWell segment, is generally not restricted by departments of insurance (or comparable state regulators).

Previous wording

Although minimum required levels of equity are largely based on premium volume, product mix, and the quality of assets held, minimum requirements vary significantly at the state level. Based on the most recently filed statutory financial statements as of March 31, 2025, our state regulated subsidiaries had aggregate statutory capital and surplus of approximately $14.5 billion, which exceeded aggregate minimum regulatory requirements of $10.9 billion. The amount of ordinary dividends paid to our parent company was approximately $0.3 billion during the six months ended June 30, 2025 compared to $0.5 billion during the six months ended June 30, 2024. The amount, timing and mix of ordinary and extraordinary dividend payments will vary due to state regulatory requirements, the level of excess statutory capital and surplus and expected future surplus requirements related to, for example, premium volume and product mix.

Current wording

Although minimum required levels of equity are largely based on premium volume, product mix, and the quality of assets held, minimum requirements vary significantly at the state level. Based on the most recently filed statutory financial statements as of June 30, 2025, our state regulated subsidiaries had aggregate statutory capital and surplus of approximately $15.2 billion, which exceeded aggregate minimum regulatory requirements of $10.9 billion. The amount of ordinary dividends paid to our parent company was approximately $0.3 billion during the nine months ended September 30, 2025 compared to $0.5 billion during the nine months ended September 30, 2024. The amount, timing and mix of ordinary and extraordinary dividend payments will vary due to state regulatory requirements, the level of excess statutory capital and surplus and expected future surplus requirements related to, for example, premium volume and product mix.