LOUISVILLE, Ky. / Jan 25, 2024 / Business Wire / Humana Inc. (NYSE: HUM) today reported consolidated pretax results and net earnings (loss) per share (EPS) for the quarter ended December 31, 2023 (4Q23) versus the quarter ended December 31, 2022 (4Q22) and for the year ended December 31, 2023 (FY 2023) versus the year ended December 31, 2022 (FY 2022) as noted in the tables below.
Consolidated (loss) income before income taxes and equity in net earnings (pretax results) In millions | 4Q23 (a) | 4Q22 (a) | FY 2023 (a) | FY 2022 (a) | ||||
Generally Accepted Accounting Principles (GAAP) | ($591 | ) | ($71 | ) | $3,383 |
| $3,568 |
|
Amortization associated with identifiable intangibles | 15 |
| 20 |
| 67 |
| 81 |
|
Put/call valuation adjustments associated with company's non-consolidating minority interest investments | 179 |
| 84 |
| 320 |
| 68 |
|
Transaction and integration costs | — |
| 35 |
| (48 | ) | 105 |
|
Change in fair market value of publicly-traded equity securities | — |
| 4 |
| (1 | ) | 123 |
|
Impact of exit of employer group commercial medical products business | 1 |
| 59 |
| 16 |
| 107 |
|
Accrued charge related to certain anticipated litigation expenses | — |
| — |
| 105 |
| — |
|
Value creation initiatives | 384 |
| 188 |
| 436 |
| 473 |
|
Impairment charges | 91 |
| — |
| 91 |
| — |
|
Adjustment (gain) on sale of Gentiva (formerly Kindred) Hospice | — |
| 3 |
| — |
| (237 | ) |
Adjusted (non-GAAP) | $79 |
| $322 |
| $4,369 |
| $4,288 |
|
Net (loss) earnings per share (EPS) | 4Q23 (a) | 4Q22 (a) | FY 2023 (a) | FY 2022 (a) | ||||
GAAP | ($4.42 | ) | ($0.12 | ) | $20.00 |
| $22.08 |
|
Amortization associated with identifiable intangibles | 0.13 |
| 0.16 |
| 0.54 |
| 0.64 |
|
Put/call valuation adjustments associated with company's non-consolidating minority interest investments | 1.46 |
| 0.66 |
| 2.57 |
| 0.53 |
|
Transaction and integration costs | — |
| 0.28 |
| (0.38 | ) | 0.83 |
|
Change in fair market value of publicly-traded equity securities | — |
| 0.03 |
| (0.01 | ) | 0.97 |
|
Impact of exit of employer group commercial medical products business | 0.01 |
| 0.46 |
| 0.13 |
| 0.84 |
|
Accrued charge related to certain anticipated litigation expenses | — |
| — |
| 0.84 |
| — |
|
Value creation initiatives | 3.13 |
| 1.49 |
| 3.50 |
| 3.72 |
|
Impairment charges | 0.74 |
| — |
| 0.73 |
| — |
|
Adjustment (gain) on the sale of Gentiva (formerly Kindred) Hospice | — |
| 0.03 |
| — |
| (1.86 | ) |
Cumulative net tax impact of non-GAAP adjustments | (1.16 | ) | (1.02 | ) | (1.83 | ) | (1.87 | ) |
Adjusted (non-GAAP) | ($0.11 | ) | $1.97 |
| $26.09 |
| $25.88 |
|
For comparative purposes, the 4Q22 and FY 2022 reconciliations noted in the preceding tables have been recast to exclude the impact of the employer group commercial medical products business due the exit from the business as announced by Humana on February 23, 2023. Refer to the "Footnotes" section included herein for further explanation on disclosures for Adjusted (non-GAAP) financial measures, as well as additional reconciliations. |
Please refer to the tables above, as well as the consolidated and segment highlight sections in the detailed earnings release for additional discussion of the factors impacting the year-over-comparisons.
In addition, a summary of key consolidated and segment statistics comparing 4Q23 to 4Q22 and FY 2023 to FY 2022 follows.
Adjusted (non-GAAP) 4Q22 and FY 2022 metrics, where applicable, have been recast to exclude the impact of the employer group commercial medical products business as a result of the exit from the business announced by Humana on February 23, 2023.
Humana Inc. Summary of Results | 4Q23 (a) | 4Q22 (a) | FY 2023 (a) | FY 2022 (a) |
CONSOLIDATED |
|
|
|
|
Revenues | $26,462 | $22,439 | $106,374 | $92,870 |
Revenues - Adjusted (non-GAAP) | $25,734 | $21,303 | $102,645 | $88,304 |
Pretax results | ($591) | ($71) | $3,383 | $3,568 |
Pretax results - Adjusted (non-GAAP) | $79 | $322 | $4,369 | $4,288 |
(Net loss per share) EPS | ($4.42) | ($0.12) | $20.00 | $22.08 |
(Net loss per share) EPS - Adjusted (non-GAAP) | ($0.11) | $1.97 | $26.09 | $25.88 |
Benefits expense ratio | 90.7% | 87.3% | 87.3% | 86.3% |
Benefits expense ratio - Adjusted (non-GAAP) | 90.5% | 87.1% | 87.2% | 86.2% |
Operating cost ratio | 14.6% | 15.9% | 12.5% | 13.7% |
Operating cost ratio - Adjusted (non-GAAP) | 12.9% | 14.7% | 11.7% | 12.8% |
Operating cash flows |
|
| $3,981 | $4,587 |
Parent company cash and short term investments |
|
| $510 | $934 |
Debt-to-total capitalization |
|
| 41.8% | 42.0% |
Days in Claims Payable (DCP) | 41.4 | 45.9 |
|
|
|
|
|
|
|
INSURANCE SEGMENT |
|
|
|
|
Revenues | $25,565 | $21,599 | $102,854 | $88,841 |
Revenues - Adjusted (non-GAAP) | $24,801 | $20,459 | $99,090 | $84,152 |
Benefits expense ratio | 91.5% | 87.5% | 88.0% | 86.6% |
Benefits expense ratio - Adjusted (non-GAAP) | 91.4% | 87.4% | 88.0% | 86.5% |
Operating cost ratio | 11.1% | 12.8% | 10.2% | 10.4% |
Operating cost ratio - Adjusted (non-GAAP) | 10.9% | 12.5% | 9.8% | 10.0% |
(Loss) income from operations | ($426) | $46 | $2,654 | $3,022 |
(Loss) income from operations - Adjusted (non-GAAP) | ($361) | $112 | $2,897 | $3,159 |
|
|
|
|
|
CENTERWELL SEGMENT |
|
|
|
|
Revenues | $4,710 | $4,141 | $18,405 | $17,307 |
Operating cost ratio | 90.6% | 92.6% | 91.2% | 91.5% |
Income from operations | $387 | $263 | $1,404 | $1,291 |
Income from operations - Adjusted (non-GAAP) (b) | $445 | $308 | $1,614 | $1,472 |
Refer to the "Footnotes" section included herein for further explanation on disclosures for Adjusted (non-GAAP) financial measures, as well as reconciliations. |
Initial 2024 Earnings Guidance
Humana provided its initial GAAP and Adjusted EPS guidance for the year ending December 31, 2024 (FY 2024) as detailed below. GAAP and Adjusted EPS results for FY 2023 are also shown for comparison.
Diluted earnings per common share | FY 2024 Guidance (c) | FY 2023 (a) | ||
GAAP | approximately $14.87 | $20.00 |
| |
Amortization of identifiable intangibles | 0.49 |
| 0.54 |
|
Put/call valuation adjustments associated with company's non-consolidating minority interest investments | — |
| 2.57 |
|
Transaction and integration costs | — |
| (0.38 | ) |
Change in fair market value of publicly-traded equity securities | — |
| (0.01 | ) |
Impact of exit of employer group commercial medical products business | 0.97 |
| 0.13 |
|
Accrued charge related to certain anticipated litigation expenses | — |
| 0.84 |
|
Value creation initiatives | — |
| 3.50 |
|
Impairment charges | — |
| 0.73 |
|
Cumulative net tax impact of non-GAAP adjustments | (0.33 | ) | (1.83 | ) |
Adjusted (non-GAAP) – FY 2024 projected; FY 2023 reported | approximately $16.00 | $26.09 |
| |
Refer to the "Footnotes" section included herein for further explanation on disclosures for Adjusted (non-GAAP) financial measures, as well as additional reconciliations. |
Detailed Press Release
Humana’s full earnings press release, including the statistical pages, has been posted to the company’s Investor Relations site and may be accessed at https://humana.gcs-web.com/ or via a current report on Form 8-K filed by the company with the Securities and Exchange Commission this morning (available at www.sec.gov or on the company’s website).
Conference Call
Humana will host a live question and answer session for analysts at 9:00 a.m. Eastern time today to discuss its financial results for the quarter and the company’s expectations for future earnings. In advance of the question and answer session, Humana will post prepared management remarks to the Quarterly Results section of its Investor Relations page.
To participate via phone, please register here.
Upon registration, telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number and a unique registrant ID that can be used to access the call.
A webcast of the 4Q23 earnings call may also be accessed via Humana’s Investor Relations page at humana.com. The company suggests participants for both the conference call and those listening via the web dial in or sign on at least 15 minutes in advance of the call.
For those unable to participate in the live event, the archive will be available in the Historical Webcasts and Presentations section of the Investor Relations page (https://humana.gcs-web.com/events-and-presentations), approximately two hours following the live webcast.
Footnotes
The company has included financial measures throughout this earnings release that are not in accordance with GAAP. Management believes that these measures, when presented in conjunction with the corresponding GAAP measures, provide a comprehensive perspective to more accurately compare and analyze the company’s core operating performance over time. Consequently, management uses these non-GAAP (Adjusted) financial measures as consistent and uniform indicators of the company’s core business operations from period to period, as well as for planning and decision-making purposes and in determination of incentive compensation. Non-GAAP (Adjusted) financial measures should be considered in addition to, but not as a substitute for, or superior to, financial measures prepared in accordance with GAAP. All financial measures in this earnings release are in accordance with GAAP unless otherwise indicated. Please refer to the footnotes for a detailed description of each item adjusted out of GAAP financial measures to arrive at non-GAAP (Adjusted) financial measures.
(a) For the periods covered in this earnings press release, the following items are excluded from the non-GAAP financial measures described above, as applicable:
| 4Q23 | 4Q22 | FY 2023 | FY 2022 |
Insurance segment | $4 | $7 | $22 | $30 |
CenterWell segment | $11 | $13 | $45 | $51 |
In addition to the reconciliations shown on page 2 of this release, the following are reconciliations of GAAP to Adjusted (non-GAAP) measures described above and disclosed within this earnings release:
Revenues
Revenues - CONSOLIDATED (in millions) | 4Q23 | 4Q22 | FY 2023 | FY 2022 | ||||
GAAP | $26,462 |
| $22,439 |
| $106,374 |
| $92,870 |
|
Change in fair market value of publicly-traded equity securities | — |
| 4 |
| (1 | ) | 123 |
|
Impact of exit of employer group commercial medical products business | (764 | ) | (1,140 | ) | (3,764 | ) | (4,689 | ) |
Impairment charges | 36 |
| — |
| 36 |
| — |
|
Adjusted (non-GAAP) | $25,734 |
| $21,303 |
| $102,645 |
| $88,304 |
|
Revenues - INSURANCE SEGMENT (in millions) | 4Q23 | 4Q22 | FY 2023 | FY 2022 | ||||
GAAP | $25,565 |
| $21,599 |
| $102,854 |
| $88,841 |
|
Impact of exit of employer group commercial medical products business | (764 | ) | (1,140 | ) | (3,764 | ) | (4,689 | ) |
Adjusted (non-GAAP) | $24,801 |
| $20,459 |
| $99,090 |
| $84,152 |
|
Benefit Expense Ratio
Benefit expense ratio - CONSOLIDATED | 4Q23 | 4Q22 | FY 2023 | FY 2022 | ||||
GAAP | 90.7 | % | 87.3 | % | 87.3 | % | 86.3 | % |
Impact of exit of employer group commercial medical products business | (0.2 | )% | (0.2 | )% | (0.1 | )% | (0.1 | )% |
Adjusted (non-GAAP) | 90.5 | % | 87.1 | % | 87.2 | % | 86.2 | % |
Benefit expense ratio - INSURANCE SEGMENT | 4Q23 | 4Q22 | FY 2023 | FY 2022 | ||||
GAAP | 91.5 | % | 87.5 | % | 88.0 | % | 86.6 | % |
Impact of exit of employer group commercial medical products business | (0.1 | )% | (0.1 | )% | — | % | (0.1 | )% |
Adjusted (non-GAAP) | 91.4 | % | 87.4 | % | 88.0 | % | 86.5 | % |
Operating Cost Ratio
Operating cost ratio - CONSOLIDATED | 4Q23 | 4Q22 | FY 2023 | FY 2022 | ||||
GAAP | 14.6 | % | 15.9 | % | 12.5 | % | 13.7 | % |
Transaction and integration costs | — | % | (0.2 | )% | — | % | (0.1 | )% |
Impact of exit of employer group commercial medical products business | — | % | (0.2 | )% | (0.2 | )% | (0.3 | )% |
Accrued charge related to certain anticipated litigation expenses | — | % | — | % | (0.1 | )% | — | % |
Value creation initiatives | (1.5 | )% | (0.8 | )% | (0.4 | )% | (0.5 | )% |
Impairment charges | (0.2 | )% | — | % | (0.1 | )% | — | % |
Adjusted (non-GAAP) | 12.9 | % | 14.7 | % | 11.7 | % | 12.8 | % |
Operating cost ratio - INSURANCE SEGMENT | 4Q23 | 4Q22 | FY 2023 | FY 2022 | ||||
GAAP | 11.1 | % | 12.8 | % | 10.2 | % | 10.4 | % |
Impact of exit of employer group commercial medical products business | (0.2 | )% | (0.3 | )% | (0.3 | )% | (0.4 | )% |
Accrued charge related to certain anticipated litigation expenses | — | % | — | % | (0.1 | )% | — | % |
Adjusted (non-GAAP) | 10.9 | % | 12.5 | % | 9.8 | % | 10.0 | % |
Income from Operations
(Loss) income from operations - INSURANCE SEGMENT | 4Q23 | 4Q22 | FY 2023 | FY 2022 | ||||
GAAP | ($426 | ) | $46 | $2,654 | $3,022 | |||
Amortization associated with identifiable intangibles | 4 |
| 7 |
| 22 |
| 30 |
|
Impact of exit of employer group commercial medical products business | 61 |
| 59 |
| 116 |
| 107 |
|
Accrued charge related to certain anticipated litigation expenses | — |
| — |
| 105 |
| — |
|
Adjusted (non-GAAP) | ($361 | ) | $112 |
| $2,897 |
| $3,159 |
|
(b) The CenterWell segment Adjusted income from operations includes an adjustment to add back depreciation and amortization expense to the segment's GAAP income from operations since such an adjustment is commonly utilized for valuation purposes within the healthcare delivery industry. Prior year presentation has been recast to conform to current year presentation.
Income from operations - CENTERWELL SEGMENT (in millions) | 4Q23 | 4Q22 | FY 2023 | FY 2022 |
GAAP | $387 | $263 | $1,404 | $1,291 |
Depreciation and amortization expense | 58 | 45 | 210 | 181 |
Adjusted (non-GAAP) | $445 | $308 | $1,614 | $1,472 |
(c) FY 2024 projected Adjusted results exclude the future impact of items that cannot be estimated at this time.
Cautionary Statement
This news release includes forward-looking statements regarding Humana within the meaning of the Private Securities Litigation Reform Act of 1995. When used in investor presentations, press releases, Securities and Exchange Commission (SEC) filings, and in oral statements made by or with the approval of one of Humana’s executive officers, the words or phrases like “expects,” “believes,” “anticipates,” “intends,” “likely will result,” “estimates,” “projects” or variations of such words and similar expressions are intended to identify such forward-looking statements.
These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and assumptions, including, among other things, information set forth in the “Risk Factors” section of the company’s SEC filings, a summary of which includes but is not limited to the following:
In making forward-looking statements, Humana is not undertaking to address or update them in future filings or communications regarding its business or results. In light of these risks, uncertainties, and assumptions, the forward-looking events discussed herein may or may not occur. There also may be other risks that the company is unable to predict at this time. Any of these risks and uncertainties may cause actual results to differ materially from the results discussed in the forward-looking statements.
Humana advises investors to read the following documents as filed by the company with the SEC for further discussion both of the risks it faces and its historical performance:
About Humana
Humana Inc. is committed to putting health first – for our teammates, our customers, and our company. Through our Humana insurance services, and our CenterWell health care services, we make it easier for the millions of people we serve to achieve their best health – delivering the care and service they need, when they need it. These efforts are leading to a better quality of life for people with Medicare, Medicaid, families, individuals, military service personnel, and communities at large. Learn more about what we offer at www.Humana.com and at www.CenterWell.com.
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