HUMANA INC
For the period ended Sep 30, 2026. Filed Nov 6, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 6, 2026
HUM$433.74+5.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-07-29.
0000049071-26-000050
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OFCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-06.
0000049071-26-000066
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OFThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 114 previous paragraphs and 120 current paragraphs.
66 unchanged; 43 reworded; 11 added; 5 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
Strategic Joint Venture with BlackRock
Current report
In October 2026, we entered into a new joint venture agreement with funds and accounts managed by HPS Investment Partners, a part of BlackRock (BlackRock), to manage and operate our primary care strategic partnership which sat within joint ventures owned by funds affiliated with Welsh, Carson, Anderson & Stowe (WCAS) and CenterWell. The new joint venture, majority owned by BlackRock and minority owned by CenterWell, has replaced the current CenterWell and WCAS joint ventures. BlackRock acquired WCAS’s current equity ownership, valued at approximately $2.8 billion, with modifications to terms extending the call period to begin in 2028 and removing the put option. Over the next two years, the new joint venture has available committed capital from BlackRock and CenterWell, which is expected to be used to fund existing clinical operations, establish new clinics, and expand the network through strategic acquisitions.
Current report
Net investment income decreased $9 million, or 2.7%, from $338 million in the 2025 quarter to $329 million in the 2026 quarter and decreased $30 million, or 3.4%, from $874 million in the 2025 period to $844 million in the 2026 period.
Current report
Depreciation and amortization decreased $15 million, or 8.7%, from $173 million in the 2025 quarter to $158 million in the 2026 quarter and decreased $54 million, or 10.1%, from $534 million in the 2025 period to $480 million in the 2026 period primarily due to decreased capital spending in prior periods.
Current report
Other (Income) Expense, Net
Current report
Other (income) expense, net increased $393 million from other expense, net of $35 million in the 2025 quarter to other income, net of $358 million in the 2026 quarter and increased $579 million from other expense, net of $398 million in the 2025 period to other income, net of $181 million due to change in fair value of the put and call options associated with our primary care strategic partnership with WCAS.
Current report
(Loss) Income from Operations
Current report
Effective July 1, 2026, we began serving as the central processor for the Medicare GLP-1 Bridge (the Program), a time-limited CMS demonstration that provides eligible Medicare Part D beneficiaries access to certain GLP-1 medications for weight management outside of the Medicare Part D benefit coverage and payment flow. Under the Program, we administer prior authorizations, process claims, facilitate payments to dispensing pharmacies, invoice participating manufacturers, and perform related reconciliation and reporting activities. CMS bears the underlying drug-cost risk, and we do not assume insurance risk for the related claims. Accordingly, CMS funding and CMS-funded claims are accounted for as contract deposits in our condensed consolidated balance sheets and are not recognized as revenues or expenses in our condensed consolidated statements of income. Manufacturer rebate receivables attributable to CMS are recorded separately, with corresponding amounts reflected in the Due to CMS settlement liability. As of September 30, 2026, other current assets included $0.7 billion of manufacturer rebate receivables related to the Program, and trade accounts payable and accrued expenses included $2.7 billion related to the Due to CMS settlement liability in our condensed consolidated balance sheets. Related cash receipts and payments are presented within Receipts (payments) from contract deposits, net in financing activities in our condensed consolidated statements of cash flows. During both the three and nine months ended September 30, 2026, net receipts from contract deposits related to the Program were $2.0 billion.
Current report
In August 2026, we received a short-term cash advance of $100 million from FHLB with certain of our marketable securities as collateral, which remained outstanding as of September 30, 2026.
Removed paragraphs (5)
Previous report
Net investment income decreased $19 million, or 7.0%, from $272 million in the 2025 quarter to $253 million in the 2026 quarter and decreased $21 million, or 3.9%, from $536 million in the 2025 period to $515 million in the 2026 period.
Previous report
Depreciation and amortization decreased $19 million, or 10.7%, from $178 million in the 2025 quarter to $159 million in the 2026 quarter and decreased $39 million, or 10.8%, from $361 million in the 2025 period to $322 million in the 2026 period primarily due to decreased capital spending.
Previous report
Income from operations
Previous report
Net proceeds from the issuance of commercial paper were $1.3 billion in the 2026 period and maximum principal amount outstanding at any one time during the 2026 period was $2.6 billion. Net repayments from the issuance of commercial paper were $5 million in the 2025 period.
Reworded paragraphs (43)
Previous wording
On February 13, 2026, we acquired MaxHealth, a leading primary care platform focused on providing high-quality, integrated care to adults and senior patients throughout Florida, for cash consideration of approximately $908 million, net of cash acquired. This resulted in a preliminary purchase price allocation to goodwill of approximately $800 million, other intangible assets of $71 million, and net tangible assets acquired of $59 million. The other intangible assets, which primarily consist of member relationships and trade names, have an estimated weighted average useful life of 6.9 years. The purchase price allocation is preliminary, subject to completion of valuation analysis, including for example, refining assumptions used to calculate the fair value of intangible assets.
Current wording
On February 13, 2026, we acquired MaxHealth, a leading primary care platform focused on providing high-quality, integrated care to adults and senior patients throughout Florida, for cash consideration of approximately $908 million, net of cash acquired. This resulted in a preliminary purchase price allocation to goodwill of approximately $800 million, other intangible assets of $71 million, and net tangible assets acquired of $59 million. The other intangible assets, which primarily consist of member relationships and trade names, have an estimated weighted average useful life of 6.9 years. The purchase price allocation is preliminary, subject to completion of valuation analysis.
Previous wording
As a result of these initiatives, we recorded charges of $56 million and $154 million for the three and six months ended June 30, 2026, respectively, and $29 million and $53 million for the three and six months ended June 30, 2025, respectively, within operating costs in the consolidated statements of income. The charges primarily relate to severance and associate exit costs, asset impairments, and external consulting expenses incurred to execute the program. We expect to incur additional charges over the course of the program.
Current wording
As a result of these initiatives, we recorded charges of $25 million and $179 million for the three and nine months ended September 30, 2026, respectively, and $267 million and $320 million for the three and nine months ended September 30, 2025, respectively, within operating costs in the consolidated statements of income. The charges primarily relate to severance and associate exit costs, asset impairments and external consulting expenses incurred to execute the program. We expect to incur additional charges over the course of the program.
Previous wording
In addition, we recorded impairment charges related to minority-interest investments of $21 million within net investment income in our condensed consolidated statements of income for the three and six months ended June 30, 2026 and $32 million, relating to indefinite-lived intangible assets, within operating costs in our condensed consolidated statements of income for the three and six months ended June 30, 2025.
Current wording
In addition, we recorded impairment charges related to minority-interest investments of $3 million and $24 million within net investment income in our condensed consolidated statements of income for the three and nine months ended September 30, 2026, respectively, and $32 million relating to indefinite-lived intangible assets, within operating costs in our condensed consolidated statements of income for the nine months ended September 30, 2025.
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, 2026, approximately 4,118,700 members, or 64%, of our individual Medicare Advantage members were in value-based relationships under our integrated care delivery model, as compared to 3,542,300 members, or 68%, at June 30, 2025.
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, 2026, approximately 4,123,700 members, or 64%, of our individual Medicare Advantage members were in value-based relationships under our integrated care delivery model, as compared to 3,553,000 members, or 68%, at September 30, 2025.
Previous wording
•Net income attributable to Humana was $694 million, or $5.73 per diluted common share, and $545 million, or $4.51 per diluted common share, for the three months ended June 30, 2026 and 2025, respectively. Net income attributable to Humana was $1.9 billion, or $15.55 per diluted common share, and $1.8 billion, or $14.81 per diluted common share, for the six months ended June 30, 2026 and 2025, respectively. These comparisons were 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 2026 and 2025 quarter and period:
Current wording
•Net income attributable to Humana was $162 million, or $1.33 per diluted common share, and $195 million, or $1.62 per diluted common share, for the three months ended September 30, 2026 and 2025, respectively. Net income attributable to Humana was $2.0 billion, or $16.84 per diluted common share, and $2.0 billion, or $16.43 per diluted common share, for the nine months ended September 30, 2026 and 2025, respectively. These comparisons were impacted by put/call valuation adjustments associated with non-consolidating minority interest investments, charges associated with value creation initiatives, impairment charges, loss on sale of business and settlement of certain litigation expenses. 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 2026 and 2025 quarters and periods:
Previous wording
The following discussion primarily deals with our results of operations for the three months ended June 30, 2026, or the 2026 quarter, the three months ended June 30, 2025, or the 2025 quarter, the six months ended June 30, 2026, or the 2026 period, and the six months ended June 30, 2025, or the 2025 period.
Current wording
The following discussion primarily deals with our results of operations for the three months ended September 30, 2026, or the 2026 quarter, the three months ended September 30, 2025, or the 2025 quarter, the nine months ended September 30, 2026, or the 2026 period, and the nine months ended September 30, 2025, or the 2025 period.
Previous wording
Consolidated premiums revenue increased $8.1 billion, or 26.4%, from $30.7 billion in the 2025 quarter to $38.8 billion in the 2026 quarter and increased $15.3 billion, or 25.0%, from $61.2 billion in the 2025 period to $76.5 billion in the 2026 period primarily reflecting membership growth across the Medicare businesses in 2026, higher per member Medicare Advantage (MA) and stand-alone PDP premiums largely driven by an increase in MA benchmark funding from the Centers for Medicare and Medicaid Services (CMS) and the increased Part D direct subsidy as a result of the Inflation Reduction Act (IRA). These factors were partially offset by the previously disclosed Bonus Year (BY) 2026 Star Ratings headwind.
Current wording
Consolidated premiums revenue increased $8.0 billion, or 26.0%, from $30.7 billion in the 2025 quarter to $38.7 billion in the 2026 quarter and increased $23.3 billion, or 25.3%, from $91.9 billion in the 2025 period to $115.2 billion in the 2026 period primarily reflecting membership growth across the Medicare businesses in 2026, higher per member individual Medicare Advantage (MA) and stand-alone PDP premiums largely driven by an increase in MA benchmark funding from the Centers for Medicare and Medicaid Services (CMS) and the increased Part D direct subsidy as a result of the Inflation Reduction Act (IRA). These factors were partially offset by the previously disclosed Bonus Year (BY) 2026 Star Ratings headwind.
Previous wording
Consolidated services revenue increased $0.4 billion, or 27.1%, from $1.4 billion in the 2025 quarter to $1.8 billion in the 2026 quarter and increased $0.7 billion, or 26.4%, from $2.7 billion in the 2025 period to $3.5 billion in the 2026 period primarily reflecting the increased payor-agnostic client base across the CenterWell platform partially offset by the final year of the phase-in of the v28 risk model revision.
Current wording
Consolidated services revenue increased $0.5 billion, or 32.8%, from $1.6 billion in the 2025 quarter to $2.1 billion in the 2026 quarter and increased $1.2 billion, or 28.8%, from $4.3 billion in the 2025 period to $5.6 billion in the 2026 period primarily reflecting the increased payor-agnostic client base across the CenterWell platform partially offset by the final year of the phase-in of the v28 risk model revision.
Previous wording
Consolidated benefits expense increased $7.8 billion, or 28.3%, from $27.6 billion in the 2025 quarter to $35.4 billion in the 2026 quarter and increased $15.0 billion, or 27.7%, from $54.1 billion in the 2025 period to $69.1 billion in the 2026 period. The consolidated benefit ratio increased 140 basis points from 89.7% for the 2025 quarter to 91.1% for the 2026 quarter and increased 180 basis points from 88.4% for the 2025 period to 90.2% for the 2026 period primarily reflecting the BY 2026 Star Ratings revenue headwind, the effect of the individual MA membership growth during the most recent Annual Election Period (AEP) and Open Enrollment Period (OEP) as the new members, on average, run at a higher benefit ratio as compared to retained members (excluding the impact of the BY 2026 Star Ratings headwind) and the anticipated lower favorable prior-period medical claims reserve development in 2026. These factors were partially offset by the 2026 individual MA pricing, inclusive of the MA funding environment (excluding the BY 2026 Star Ratings headwind) combined with our ongoing clinical excellence efforts, more than offsetting the assumption of claims trend (with largely stable benefits year-over-year), and the benefit of our group MA recontracting efforts for the 2026 plan year.
Current wording
Consolidated benefits expense increased $8.3 billion, or 29.8%, from $28.0 billion in the 2025 quarter to $36.3 billion in the 2026 quarter and increased $23.3 billion, or 28.4%, from $82.1 billion in the 2025 period to $105.4 billion in the 2026 period. The consolidated benefit ratio increased 280 basis points from 91.1% for the 2025 quarter to 93.9% for the 2026 quarter and increased 220 basis points from 89.3% for the 2025 period to 91.5% for the 2026 period primarily reflecting the BY 2026 Star Ratings revenue headwind, the effect of the individual MA membership growth as the new members, on average, run at a higher benefit ratio as compared to retained members (excluding the impact of the BY 2026 Star Ratings headwind) and the anticipated lower favorable prior-period medical claims reserve development in 2026. These factors were partially offset by the 2026 individual MA pricing, inclusive of the MA funding environment (excluding the BY 2026 Star Ratings headwind) combined with our ongoing clinical excellence efforts, more than offsetting the assumption of claims trend (with largely stable benefits year-over-year), and the benefit of our group MA recontracting efforts for the 2026 plan year.
Previous wording
Consolidated benefits expense included $53 million of favorable prior-period medical claims reserve development in the 2026 quarter and $161 million of favorable prior-period medical claims development in the 2025 quarter. Consolidated benefits expense included $442 million of favorable prior-period medical claims reserve development in the 2026 period and $638 million of favorable prior-period medical claims reserve development in the 2025 period. This development does not directly correspond to our operating results as a portion is attributable to provider risk-sharing arrangements, which are accounted for separately based on contractual terms.
Current wording
Consolidated benefits expense included $67 million of favorable prior-period medical claims reserve development in the 2026 quarter and $275 million of favorable prior-period medical claims development in the 2025 quarter. Consolidated benefits expense included $509 million of favorable prior-period medical claims reserve development in the 2026 period and $913 million of favorable prior-period medical claims reserve development in the 2025 period. This development does not directly correspond to our operating results as a portion is attributable to provider risk-sharing arrangements, which are accounted for separately based on contractual terms.
Previous wording
Consolidated operating costs increased $0.4 billion, or 12.2%, from $3.5 billion in the 2025 quarter to $4.0 billion in the 2026 quarter and increased $1.1 billion, or 15.5%, from $6.9 billion in the 2025 period to $8.0 billion in the 2026 period. The consolidated operating cost ratio decreased 120 basis points from 11.0% for the 2025 quarter to 9.8% for the 2026 quarter and decreased 80 basis points from 10.8% for the 2025 period to 10.0% for the 2026 period primarily reflecting operating leverage associated with increased revenues from membership growth across the Medicare businesses in 2026 combined with an improved MA benchmark funding rate and increased Part D direct subsidy resulting from the IRA, as well as the progress on our previously discussed tactical cost cutting and transformation initiatives combined with the beneficial impact of our prior value creation initiatives that have driven administrative cost efficiencies. These factors were partially offset by the impact of the previously disclosed BY 2026 Star Ratings headwind, higher charges associated with our value creation initiatives and a higher CenterWell operating cost ratio during the 2026 period.
Current wording
Consolidated operating costs increased $0.5 billion, or 12.6%, from $4.1 billion in the 2025 quarter to $4.6 billion in the 2026 quarter and increased $1.6 billion, or 14.4%, from $11.0 billion in the 2025 period to $12.6 billion in the 2026 period. The consolidated operating cost ratio decreased 130 basis points from 12.6% for the 2025 quarter to 11.3% for the 2026 quarter and decreased 100 basis points from 11.4% for the 2025 period to 10.4% for the 2026 period primarily reflecting operating leverage associated with increased revenues from membership growth across the Medicare businesses in 2026 combined with an improved MA benchmark funding rate and increased Part D direct subsidy resulting from the IRA, progress on our previously discussed tactical cost cutting and transformation initiatives combined with the beneficial impact of our prior value creation initiatives that have driven administrative cost efficiencies, as well as lower charges associated with value creation initiatives in 2026. These factors were partially offset by the impact of the previously disclosed BY 2026 Star Ratings headwind and a higher CenterWell operating cost ratio during the 2026 quarter and period.
Previous wording
Interest expense increased $40 million, or 25.5%, from $157 million in the 2025 quarter to $197 million in the 2026 quarter and increased $73 million, or 23.0%, from $317 million in the 2025 period to $390 million in the 2026 period primarily due to financing costs, including liquidity and capital management measures for 2026, and higher average debt balances.
Current wording
Interest expense increased $49 million, or 29.2%, from $168 million in the 2025 quarter to $217 million in the 2026 quarter and increased $122 million, or 25.2%, from $485 million in the 2025 period to $607 million in the 2026 period primarily due to financing costs, including liquidity and capital management measures for 2026, and higher average debt balances.
Previous wording
The effective income tax rate was 25.6% and 24.7% for the three months ended June 30, 2026, and 2025, respectively, and 25.2% and 24.6% for the six months ended June 30, 2026 and 2025, respectively. The 2026 quarter and period effective income tax rate increase is primarily related to state taxes.
Current wording
The effective income tax rate was 19.7% and (77.3)% for the three months ended September 30, 2026 and 2025, respectively, and 24.8% and 20.1% for the nine months ended September 30, 2026 and 2025, respectively. The 2026 quarter and period effective income tax rate increase is primarily attributable to a tax benefit recognized in the prior year in connection with the sale of a business, which did not recur in the current year.
Previous wording
Insurance segment income from operations increased $54 million, or 7.0%, from $766 million in the 2025 quarter to $820 million in the 2026 quarter and decreased $0.09 billion, or 3.6%, from $2.34 billion in the 2025 period to $2.25 billion in the 2026 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 (loss) income from operations decreased $554 million, or 220.7%, from income from operations of $251 million in the 2025 quarter to loss from operations of $303 million in the 2026 quarter and decreased $0.64 billion, or 24.7%, from income from operations of $2.59 billion in the 2025 period to income from operations of $1.95 billion in the 2026 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 increased 1,224,400 members, or 23.4%, from June 30, 2025 to June 30, 2026 reflecting net membership gains during the most recent AEP and OEP. Individual Medicare Advantage membership includes 959,900 D-SNP members as of June 30, 2026, a net increase of 173,900 D-SNP members, or 22.1%, from 786,000 D-SNP members as of June 30, 2025.
Current wording
Individual Medicare Advantage membership increased 1,219,600 members, or 23.3%, from September 30, 2025 to September 30, 2026 reflecting net membership gains during the 2026 annual enrollment period (AEP) and open enrollment period (OEP). Individual Medicare Advantage membership includes 958,300 D-SNP members as of September 30, 2026, a net increase of 192,500 D-SNP members, or 25.1%, from 765,800 D-SNP members as of September 30, 2025.
Previous wording
Group Medicare Advantage membership increased 157,200 members, or 27.6%, from June 30, 2025 to June 30, 2026 reflecting net membership additions from the 2026 selling season.
Current wording
Group Medicare Advantage membership increased 158,500 members, or 27.8%, from September 30, 2025 to September 30, 2026 reflecting net membership additions from the 2026 selling season.
Previous wording
Medicare stand-alone PDP membership increased 1,519,300 members, or 62.6%, from June 30, 2025 to June 30, 2026 reflecting net membership additions from group MA recontracting efforts and the 2026 selling season.
Current wording
Medicare stand-alone PDP membership increased 1,581,300 members, or 64.6%, from September 30, 2025 to September 30, 2026 reflecting net membership additions from group MA recontracting efforts and the 2026 selling season.
Previous wording
State-based contracts and other membership increased 20,300 members, or 1.3%, from June 30, 2025 to June 30, 2026 primarily reflecting net membership additions in state-based contracts offset by shifts in other membership.
Current wording
State-based contracts and other membership decreased 44,700 members, or 2.7%, from September 30, 2025 to September 30, 2026 primarily reflecting shift in other membership offset by net membership additions in state-based contracts.
Previous wording
Specialty membership increased 198,700 members, or 4%, from June 30, 2025 to June 30, 2026 primarily reflecting growth in group dental and vision products.
Current wording
Specialty membership increased 700,600 members, or 14.9%, from September 30, 2025 to September 30, 2026 primarily reflecting growth in group membership from new contracts.
Previous wording
Insurance segment premiums revenue increased $8.1 billion, or 26.4%, from $30.7 billion in the 2025 quarter to $38.8 billion in the 2026 quarter and increased $15.3 billion, or 25.0%, from $61.2 billion in the 2025 period to $76.5 billion in the 2026 period primarily reflecting membership growth across the Medicare businesses in 2026, higher per member MA and stand-alone PDP premiums largely driven by an increase in MA benchmark funding from CMS and the increased Part D direct subsidy as a result of the IRA. These factors were partially offset by the BY 2026 Star Ratings headwind.
Current wording
Insurance segment premiums revenue increased $8.0 billion, or 26.0%, from $30.7 billion in the 2025 quarter to $38.7 billion in the 2026 quarter and increased $23.3 billion, or 25.3%, from $91.9 billion in the 2025 period to $115.2 billion in the 2026 period primarily reflecting membership growth across the Medicare businesses in 2026, higher per member individual MA and stand-alone PDP premiums largely driven by an increase in MA benchmark funding from CMS and the increased Part D direct subsidy as a result of the IRA. These factors were partially offset by the BY 2026 Star Ratings headwind.
Previous wording
Insurance segment services revenue decreased $7 million, or 3.4%, from $206 million in the 2025 quarter to $199 million in the 2026 quarter and decreased $12 million, or 2.6%, from $458 million in the 2025 period to $446 million in the 2026 period.
Current wording
Insurance segment services revenue decreased $13 million, or 4.9%, from $267 million in the 2025 quarter to $254 million in the 2026 quarter and decreased $25 million, or 3.4%, from $725 million in the 2025 period to $700 million in the 2026 period.
Previous wording
The Insurance segment benefit ratio increased 130 basis points from 89.9% for the 2025 quarter to 91.2% for the 2026 quarter and increased 160 basis points from 88.7% for the 2025 period to 90.3% for the 2026 period primarily reflecting the BY 2026 Star Ratings revenue headwind, the effect of the individual MA membership growth during the most recent AEP and OEP as the new members, on average, run at a higher benefit ratio as compared to retained members (excluding the impact of the BY 2026 Star Ratings headwind) and the anticipated lower favorable prior-period medical claims reserve development in 2026. These factors were partially offset by the 2026 individual MA pricing, inclusive of the MA funding environment (excluding the BY 2026 Star Ratings headwind) combined with our ongoing clinical excellence efforts, more than offsetting the assumption of claims trend (with largely stable benefits year-over-year), and the benefit of our group Medicare Advantage recontracting efforts for the 2026 plan year.
Current wording
The Insurance segment benefit ratio increased 260 basis points from 91.1% for the 2025 quarter to 93.7% for the 2026 quarter and increased 190 basis points from 89.5% for the 2025 period to 91.4% for the 2026 period primarily reflecting the BY 2026 Star Ratings revenue headwind, the effect of the individual MA membership growth as the new members, on average, run at a higher benefit ratio as compared to retained members (excluding the impact of the BY 2026 Star Ratings headwind) and the anticipated lower favorable prior-period medical claims reserve development in 2026. These factors were partially offset by the 2026 individual MA pricing, inclusive of the MA funding environment (excluding the BY 2026 Star Ratings headwind) combined with our ongoing clinical excellence efforts, more than offsetting the assumption of claims trend (with largely stable benefits year-over-year), and the benefit of our group Medicare Advantage recontracting efforts for the 2026 plan year.
Previous wording
The Insurance segment operating cost ratio decreased 120 basis points from 8.3% for the 2025 quarter to 7.1% for the 2026 quarter and decreased 110 basis points from 8.3% for the 2025 period to 7.2% for the 2026 period primarily reflecting operating leverage associated with increased revenues from membership growth across the Medicare businesses in 2026 combined with an improved MA benchmark funding rate and increased Part D direct subsidy resulting from the IRA, as well as the progress on our previously discussed tactical cost cutting and transformation initiatives combined with the beneficial impact of prior value creation initiatives that have driven administrative cost efficiencies. These factors were partially offset by the impact of the previously disclosed BY 2026 Star Ratings headwind.
Current wording
The Insurance segment operating cost ratio decreased 140 basis points from 9.1% for the 2025 quarter to 7.7% for the 2026 quarter and decreased 110 basis points from 8.5% for the 2025 period to 7.4% for the 2026 period primarily reflecting operating leverage associated with increased revenues from membership growth across the Medicare businesses in 2026 combined with an improved MA benchmark funding rate and increased Part D direct subsidy resulting from the IRA, as well as the progress on our previously discussed tactical cost cutting and transformation initiatives combined with the beneficial impact of prior value creation initiatives that have driven administrative cost efficiencies. These factors were partially offset by the impact of the previously disclosed BY 2026 Star Ratings headwind.
Previous wording
CenterWell income from operations increased $122 million, or 35.5%, from $344 million in the 2025 quarter to $466 million in the 2026 quarter and increased $19 million, or 2.6%, from $736 million in the 2025 period to $755 million in the 2026 period primarily due to the same factors impacting the CenterWell segment's revenue and operating cost ratio as more fully described below.
Current wording
CenterWell income from operations decreased $62 million, or 20.3%, from $305 million in the 2025 quarter to $243 million in the 2026 quarter and decreased $0.04 billion, or 4.1%, from $1.04 billion in the 2025 period to $1.00 billion in the 2026 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 external services revenue increased $0.4 billion, or 32.4%, from $1.2 billion in the 2025 quarter to $1.6 billion in the 2026 quarter and increased $0.7 billion, or 32.2%, from $2.3 billion in the 2025 period to $3.0 billion in the 2026 period primarily reflecting the continued expansion of our payor-agnostic client base, primarily associated with the primary care business as a result of recent acquisitions, partially offset by the final year of the phase-in of the v28 risk model revision.
Current wording
CenterWell external services revenue increased $0.5 billion, or 40.4%, from $1.3 billion in the 2025 quarter to $1.9 billion in the 2026 quarter and increased $1.3 billion, or 35.2%, from $3.6 billion in the 2025 period to $4.9 billion in the 2026 period primarily reflecting the continued expansion of our payor-agnostic client base, primarily associated with the primary care and pharmacy businesses as a result of recent acquisitions and strategic growth initiatives, partially offset by the final year of the phase-in of the v28 risk model revision.
Previous wording
CenterWell intersegment revenues increased $0.9 billion, or 19.9%, from $4.3 billion in the 2025 quarter to $5.2 billion in the 2026 quarter and increased $1.5 billion, or 18.3%, from $8.4 billion in the 2025 period to $9.9 billion in the 2026 period primarily due to higher revenues associated with growth in each of the CenterWell business lines resulting from increased Medicare membership in 2026.
Current wording
CenterWell intersegment revenues increased $0.7 billion, or 16.3%, from $4.5 billion in the 2025 quarter to $5.3 billion in the 2026 quarter and increased $2.3 billion, or 17.6%, from $12.9 billion in the 2025 period to $15.2 billion in the 2026 period primarily due to higher revenues associated with growth across the CenterWell business lines resulting from increased Medicare membership in 2026.
Previous wording
The CenterWell segment operating cost ratio decreased 30 basis points from 92.7% for the 2025 quarter to 92.4% for the 2026 quarter primarily due to the continued maturation of the v28 mitigation activities within the primary care business and the progress on our tactical cost cutting and transformation initiatives combined with the beneficial impact of prior value creation initiatives that have driven administrative cost efficiencies. These factors were partially offset by the impact of the final year of the phase-in of the v28 risk model revision and the uptick of volume within CenterWell Specialty Pharmacy, which carries a higher operating cost ratio than the traditional pharmacy business. The CenterWell segment operating cost ratio increased 140 basis points from 92.0% for the 2025 period to 93.4% for the 2026 period primarily reflecting the net unfavorable impact of the items affecting the quarterly comparison along with the anticipated headwind in the first quarter of 2026 associated with a primary care acquisition in the fourth quarter of 2025, as well as transaction and integration costs associated with the recent acquisition of MaxHealth in the first quarter of 2026.
Current wording
The CenterWell segment operating cost ratio increased 200 basis points from 93.9% for the 2025 quarter to 95.9% for the 2026 quarter and increased 160 basis points from 92.7% for the 2025 period to 94.3% for the 2026 period primarily due to the impact of the final year of the phase-in of the v28 risk model revision, higher costs within the primary care business, primarily concentrated to a group of specific patients in a single geography, driven by patient and plan mix dynamics across multiple payor partners, and an increased volume within CenterWell Specialty Pharmacy, which carries a higher operating cost ratio than the traditional pharmacy business. These factors were partially offset by the continued maturation of the v28 mitigation activities within the primary care business and the progress on our tactical cost cutting and transformation initiatives combined with the beneficial impact of prior value creation initiatives that have driven administrative cost efficiencies. The year-over-year period comparison further reflected the anticipated headwind in the first quarter of 2026 associated with a primary care acquisition in the fourth quarter of 2025, as well as one-time transaction and integration costs associated with the acquisition of MaxHealth in the first quarter of 2026.
Previous wording
Cash and cash equivalents increased to approximately $6.9 billion at June 30, 2026 from $4.2 billion at December 31, 2025. The change in cash and cash equivalents for the six months ended June 30, 2026 and 2025 is summarized as follows:
Current wording
Cash and cash equivalents increased to approximately $6.9 billion at September 30, 2026 from $4.2 billion at December 31, 2025. The change in cash and cash equivalents for the nine months ended September 30, 2026 and 2025 is summarized as follows:
Previous wording
Cash flows provided by operations of $3.2 billion in the 2026 period increased $1.6 billion from cash flows provided by operations of $1.6 billion in the 2025 period. The increase in our operating cash flows was the result of favorable working capital activity, primarily associated with an increase in the IBNR balance and the favorable timing impact of a $1.05 billion Medicaid state-directed payment that settled shortly after June 30, 2026, combined with a modest increase in earnings.
Current wording
Cash flows provided by operations of $5.4 billion in the 2026 period increased $2.8 billion from cash flows provided by operations of $2.6 billion in the 2025 period. The increase in our operating cash flows was the result of favorable working capital activity, primarily associated with an increase in the IBNR balance and collection of receivables, combined with a modest increase in earnings. We expect significant operating cash outflows in the remainder of 2026 as our results from operations and working capital are impacted by seasonal patterns. For more information, refer to Seasonality under Executive Overview included in this report.
Previous wording
The detail of total net receivables at June 30, 2026 and December 31, 2025 and reconciliation to cash flow for the six months ended June 30, 2026 and 2025 was as follows:
Current wording
The detail of total net receivables at September 30, 2026 and December 31, 2025 and reconciliation to cash flow for the nine months ended September 30, 2026 and 2025 was as follows:
Previous wording
The change in Medicare receivables for the 2026 period and 2025 period reflects 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 2026 period and 2025 period reflects 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 quarters.
Previous wording
During the 2026 period, we acquired MaxHealth for cash consideration of approximately $908 million, net of cash acquired. We acquired and disposed other businesses that individually or in the aggregate did not have a material impact on our results of operations, financial conditions or cash flows during the 2026 and 2025 periods.
Current wording
During the 2026 period, we acquired MaxHealth for cash consideration of approximately $908 million, net of cash acquired. We acquired and disposed of other businesses that individually or in the aggregate did not have a material impact on our results of operations, financial conditions or cash flows during the 2026 and 2025 periods.
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 $253 million in the 2026 period and $209 million in the 2025 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 $390 million in the 2026 period and $344 million in the 2025 period.
Previous wording
Net purchases of investment securities were $1.7 billion in the 2026 period and net proceeds of investment securities were $871 million in the 2025 period.
Current wording
Net purchases of investment securities were $3.5 billion in the 2026 period and net proceeds of investment securities were $1.9 billion in the 2025 period.
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 $479 million in the 2026 period and 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.
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 $261 million and $1.2 billion in the 2026 and 2025 periods, respectively.
Previous wording
Under our administrative services only TRICARE contracts, reimbursements from the federal government exceeded health care costs payments for which we do not assume risk by $68 million in the 2026 period and health care costs payments for which we do not assume risk exceeded reimbursements from the federal government by $97 million in the 2025 period.
Current wording
Under our administrative services only TRICARE contracts, reimbursements from the federal government exceeded health care costs payments for which we do not assume risk by $77 million in the 2026 period and health care costs payments for which we do not assume risk exceeded reimbursements from the federal government by $8 million in the 2025 period.
Previous wording
In March 2026, we issued $1.0 billion in aggregate principal amount of 6.625% fixed-to-fixed rate junior subordinated notes (Subordinated Notes) due September 15, 2056, which resulted in approximately $990 million of net proceeds after deducting underwriters' discounts and offering expenses. We intend to use the net proceeds from this offering for general corporate purposes, including repayment of borrowings under our commercial paper program.
Current wording
In March 2026, we issued $1.0 billion in aggregate principal amount of 6.625% fixed-to-fixed rate junior subordinated notes (Subordinated Notes) due September 15, 2056, which resulted in approximately $990 million of net proceeds after deducting underwriters' discounts and offering expenses. We used the net proceeds from this offering for general corporate purposes, including repayment of borrowings under our commercial paper program.
Previous wording
Under our securities lending program, we loan certain investment securities for short periods of time in exchange for collateral. Net proceeds from the securities lending program were $64 million and $48 million in the 2026 period and 2025 period, respectively. Under the uncommitted receivables purchase facility certain pharmaceutical rebate receivables may be sold on a non-recourse basis to a financial institution. In the 2026 period there were no net repayments from the uncommitted receivables purchase facility. In the 2025 period net repayments from the uncommitted receivables purchase facility were $123 million.
Current wording
Under our securities lending program, we loan certain investment securities for short periods of time in exchange for collateral. Net proceeds from the securities lending program were $179 million and $141 million in the 2026 period and 2025 period, respectively. Under the uncommitted receivables purchase facility certain pharmaceutical rebate receivables may be sold on a non-recourse basis to a financial institution. In the 2026 period there were no net repayments from the uncommitted receivables purchase facility. In the 2025 period net repayments from the uncommitted receivables purchase facility were $123 million.
Previous wording
We repurchased common shares for $103 million and $100 million in the 2026 period and 2025 period, respectively, under share repurchase plans authorized by the Board of Directors. We also acquired common shares in connection with employee stock plans for $5 million and $9 million in the 2026 period and 2025 period, respectively.
Current wording
We repurchased common shares for $103 million and $100 million in the 2026 period and 2025 period, respectively, under share repurchase plans authorized by the Board of Directors. We also acquired common shares in connection with employee stock plans for $7 million and $10 million in the 2026 period and 2025 period, respectively.
Previous wording
We paid dividends to stockholders of $214 million and $214 million during the 2026 period and 2025 period, respectively.
Current wording
We paid dividends to stockholders of $320 million and $321 million during the 2026 period and 2025 period, respectively.
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