Humana Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)


													Insurance		CenterWell		Eliminations/ Corporate		Consolidated
		Retail		Group and Specialty		Healthcare Services		Eliminations/ Corporate		Consolidated
Nine months ended September 30, 2021		(in millions)
External Revenues
Nine months ended September 30, 2023												Nine months ended September 30, 2023	(in millions)
External revenues												External revenues
Premiums:	Premiums:											Premiums:
Individual Medicare Advantage	Individual Medicare Advantage	$	44,042	$	—	$	—	$	—	$	44,042	Individual Medicare Advantage	$	59,195	$	—	$	—	$	59,195
Group Medicare Advantage	Group Medicare Advantage	5,267		—		—		—		5,267		Group Medicare Advantage	5,192		—		—		5,192
Medicare stand-alone PDP	Medicare stand-alone PDP	1,867		—		—		—		1,867		Medicare stand-alone PDP	1,677		—		—		1,677
Total Medicare	Total Medicare	51,176		—		—		—		51,176		Total Medicare	66,064		—		—		66,064
Fully-insured		545		3,229		—		—		3,774
Specialty		—		1,298		—		—		1,298
Medicaid and other		3,739		—		—		—		3,739
Commercial fully-insured												Commercial fully-insured	2,810		—		—		2,810
Specialty benefits												Specialty benefits	758		—		—		758
Medicare Supplement												Medicare Supplement	546		—		—		546
State-based contracts and other												State-based contracts and other	5,966		—		—		5,966
Total premiums	Total premiums	55,460		4,527		—		—		59,987		Total premiums	76,144		—		—		76,144
Services revenue:	Services revenue:											Services revenue:

Home solutions	Home solutions	—		—		423		—		423		Home solutions	—		997		—		997
Provider services		—		—		298		—		298
ASO and other		17		582		—		—		599
Primary care												Primary care	—		605		—		605
Commercial ASO												Commercial ASO	190		—		—		190
Military and other												Military and other	540		—		—		540
Pharmacy solutions	Pharmacy solutions	—		—		482		—		482		Pharmacy solutions	—		661		—		661
Total services revenue	Total services revenue	17		582		1,203		—		1,802		Total services revenue	730		2,263		—		2,993
Total external revenues	Total external revenues	55,477		5,109		1,203		—		61,789		Total external revenues	76,874		2,263		—		79,137
Intersegment revenues	Intersegment revenues											Intersegment revenues
Services	Services	1		30		14,838		(14,869)		—		Services	30		3,584		(3,614)		—
Products	Products	—		—		6,716		(6,716)		—		Products	—		7,848		(7,848)		—
Total intersegment revenues	Total intersegment revenues	1		30		21,554		(21,585)		—		Total intersegment revenues	30		11,432		(11,462)		—
Investment income	Investment income	155		11		3		52		221		Investment income	385		—		390		775
Total revenues	Total revenues	55,633		5,150		22,760		(21,533)		62,010		Total revenues	77,289		13,695		(11,072)		79,912
Operating expenses:	Operating expenses:											Operating expenses:
Benefits	Benefits	48,574		3,674		—		(487)		51,761		Benefits	66,096		—		(484)		65,612
Operating costs	Operating costs	4,653		1,227		21,749		(20,903)		6,726		Operating costs	7,597		12,526		(10,762)		9,361

Depreciation and amortization	Depreciation and amortization	320		63		127		(74)		436		Depreciation and amortization	516		152		(90)		578
Total operating expenses	Total operating expenses	53,547		4,964		21,876		(21,464)		58,923		Total operating expenses	74,209		12,678		(11,336)		75,551
Income (loss) from operations		2,086		186		884		(69)		3,087
Income from operations												Income from operations	3,080		1,017		264		4,361

Interest expense	Interest expense	—		—		—		235		235		Interest expense	—		2		345		347
Other income, net		—		—		—		(562)		(562)
Income before income taxes and equity in net earnings		2,086		186		884		258		3,414
Equity in net earnings		—		—		69		—		69
Segment earnings		$	2,086	$	186	$	953	$	258	$	3,483

Other expense, net												Other expense, net	—		—		40		40
Income (loss) before income taxes and equity in net losses												Income (loss) before income taxes and equity in net losses	3,080		1,015		(121)		3,974
Equity in net losses												Equity in net losses	(2)		(37)		—		(39)
Segment earnings (loss)												Segment earnings (loss)	$	3,078	$	978	$	(121)	$	3,935
Net loss (income) attributable to noncontrolling interests												Net loss (income) attributable to noncontrolling interests	7		(1)		—		6
Segment earnings (loss) attributable to Humana												Segment earnings (loss) attributable to Humana	$	3,085	$	977	$	(121)	$	3,941

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Humana Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)


	Insurance		CenterWell		Eliminations/ Corporate		Consolidated
Nine months ended September 30, 2022	(in millions)
External Revenues
Premiums:
Individual Medicare Advantage	$	49,751	$	—	$	—	$	49,751
Group Medicare Advantage	5,524		—		—		5,524
Medicare stand-alone PDP	1,779		—		—		1,779
Total Medicare	57,054		—		—		57,054
Commercial fully-insured	3,324		—		—		3,324
Specialty benefits	784		—		—		784
Medicare Supplement	555		—		—		555
State-based contracts and other	4,720		—		—		4,720
Total premiums	66,437		—		—		66,437
Services revenue:


Home solutions	—		1,997		—		1,997
Primary care	—		409		—		409
Commercial ASO	225		—		—		225
Military and other	395		—		—		395
Pharmacy solutions	—		746		—		746
Total services revenue	620		3,152		—		3,772
Total external revenues	67,057		3,152		—		70,209
Intersegment revenues
Services	42		2,614		(2,656)		—
Products	—		7,394		(7,394)		—
Total intersegment revenues	42		10,008		(10,050)		—
Investment income	143		6		73		222
Total revenues	67,242		13,166		(9,977)		70,431
Operating expenses:
Benefits	57,311		—		(203)		57,108
Operating costs	6,486		12,002		(9,368)		9,120

Depreciation and amortization	469		136		(78)		527
Total operating expenses	64,266		12,138		(9,649)		66,755
Income (loss) from operations	2,976		1,028		(328)		3,676
Gain on sale of Gentiva Hospice	—		(240)		—		(240)
Interest expense	—		—		293		293
Other income, net	—		—		(16)		(16)
Income (loss) before income taxes and equity in net losses	2,976		1,268		(605)		3,639
Equity in net earnings (losses)	16		(15)		—		1
Segment earnings (loss)	$	2,992	$	1,253	$	(605)	$	3,640
Net loss (income) attributable to noncontrolling interests	2		(1)		—		1
Segment earnings (loss) attributable to Humana	$	2,994	$	1,252	$	(605)	$	3,641

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Humana Inc.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The condensed consolidated financial statements of Humana Inc. in this document present the Company’s financial position, results of operations and cash flows, and should be read in conjunction with the following discussion and analysis. References to “we,” “us,” “our,” “Company,” and “Humana” mean Humana Inc. and its subsidiaries. This discussion includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in filings with the Securities and Exchange Commission, or SEC, in our press releases, investor presentations, and in oral statements made by or with the approval of one of our executive officers, the words or phrases like “believes,” “expects,” “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~~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 Item 1A. – Risk Factors in our ~~2021~~2022 Form 10-K, as modified by any changes to those risk factors included in this document and in other reports we filed subsequent to February ~~17, 2022,~~16, 2023, in each case incorporated by reference herein. In making these statements, we are not undertaking to address or update such forward-looking statements in future filings or communications regarding our business or results. In light of these risks, uncertainties and assumptions, the forward–looking events discussed in this document might not occur. There may also be other risks that we are 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~~forward-looking statements.

Executive Overview

General

Humana Inc., headquartered in Louisville, Kentucky, is ~~a leading health and well-being company~~ committed to ~~helping~~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 ~~medical and specialty members~~people we serve to achieve their best ~~health. Our successful history in~~health – delivering the care ~~delivery~~ and ~~health plan administration is helping us create a new kind of integrated care with the power to improve health and well being and lower costs. Our~~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. To accomplish that, we support physicians and other health care professionals as they work to deliver the right care in the right place for their patients, our members. Our range of clinical capabilities, resources and tools, such as in home care, behavioral health, pharmacy services, data analytics and wellness solutions, combine to produce a simplified experience that makes health care easier to navigate and more effective.

Our industry relies on two key statistics to measure performance. The benefit ratio, which is computed by taking

total benefits expense as a percentage of premiums revenue, represents a statistic used to measure underwriting profitability. The operating cost ratio, which is computed by taking total operating costs, excluding depreciation and amortization, as a percentage of total revenue less investment income, represents a statistic used to measure administrative spending efficiency.

~~Kindred at Home Acquisition~~Employer Group Commercial Medical Products Business Exit

~~On August 17, 2021,~~In February 2023, we ~~acquired~~announced our planned exit from the ~~remaining 60% interest in Kindred at Home,~~Employer Group Commercial Medical Products business, which includes all fully insured, self-funded and Federal Employee Health Benefit medical plans, as well as associated wellness and rewards programs. No other Humana health plan offerings are materially affected. Following a strategic review, we determined the Employer Group Commercial Medical Products business was no longer positioned to sustainably meet the needs of commercial members over the long term or ~~KAH,~~support our long-term strategic plans. The exit from this line of business will be phased over the nation’s largest home health and hospice provider, from TPG Capital, or TPG, and Welsh, Carson, Anderson & Stowe, or WCAS, two private equity funds for an enterprise value of $8.2 billion, which included18 to 24 months following our equity value of $2.4 billion associated with our 40% minority ownership interest. We paid the approximate $5.8 billion transaction price (net of our existing equity stake) through a combination of debt financing, the assumption of existing KAH indebtedness and parent company cash.

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February 2023 announcement.

Sale of Hospice and Personal Care Divisions

On August 11, 2022, we completed the sale of a 60% interest ~~of Humana’s Kindred at Home Hospice subsidiary, or KAH~~in Gentiva Hospice to Clayton, Dubilier & Rice, or CD&R, for cash proceeds of approximately $2.7 billion, net of cash disposed, including debt repayments from ~~KAH~~Gentiva Hospice to Humana of $1.9 billion. In connection with the sale we recognized a pre-tax gain, net of transaction costs, of $240 ~~million which is reported as a gain on sale of KAH Hospice in the accompanying condensed consolidated statements of income for the three and nine months ended September 30, 2022.~~million.

COVID-19

The emergence and spread of the novel coronavirus, or COVID-19, beginning in the first quarter of 2020 has impacted our business. ~~During~~Initially during periods of increased incidences of COVID-19, a reduction in non-COVID-19 hospital admissions for non-emergent and elective medical care have resulted in lower overall healthcare system

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utilization. At the same time, COVID-19 treatment and testing costs increased utilization. During 2022, we experienced lower overall utilization of the healthcare system than anticipated, as the reduction in COVID-19 utilization following the increased incidence associated with the Omicron variant outpaced the increase in non-COVID-19 utilization. The significant disruption in utilization during 2020 also impacted our ability to implement clinical initiatives to manage health care costs and chronic conditions of our members, and appropriately document their risk profiles, and, as such, significantly affected our 2021 revenue under the risk adjustment payment model for Medicare Advantage plans. Finally, changes in utilization patterns and actions taken in 2021 as a result of the COVID-19 pandemic, including the suspension of certain financial recovery programs for a period of time and shifting the timing of claim payments and provider capitation surplus payments, impacted our claim reserve development and operating cash flows for 2021.

The COVID-19 National Emergency declared in 2020 was terminated on April 10, 2023 and the Public Health Emergency expired on May 11, 2023.

Value Creation Initiatives

During 2022, in order to create capacity to fund growth and investment in our Medicare Advantage business and further expansion of our ~~Healthcare Services~~healthcare services capabilities beginning in 2023, we committed to drive additional value for the enterprise through cost saving, productivity initiatives, and value acceleration from previous investments. As a result of these initiatives, during the three and nine months ended September 30, 2022, we recorded charges of $82 million and $285 million, ~~respectively, primarily related to asset and software impairment and abandonment in the amount of $4 million and $144 million for~~respectively. For the three and nine months ended September 30, 2022, ~~respectively. Also included~~these charges primarily relate to $4 million and $144 million, respectively, in ~~this charge was~~asset impairments, including software and abandonment, and $44 million and $65 million, ~~for~~respectively, of severance charges in connection with workforce optimization. The remainder of the charges primarily relate to external consulting fees. During the three ~~and nine~~ months ended September 30, ~~2022, respectively,~~2023, we recorded charges of $52 million primarily in ~~future severance payments in~~asset impairments relating to software and abandonment. In connection with these initiatives, we expect to incur additional charges through the ~~optimization~~end of our workforce to increase speed, agility, and the pace at which Humana must work as a large, integrated healthcare organization. We expect this liability to be primarily paid within the next 12 months and classified it as a current liability, included in trade accounts payable and accrued expenses.2024. These charges are ~~included within operating costs in the condensed consolidated statements of income for the three and nine months ended September 30, 2022, and were~~ recorded at the corporate level and not allocated to the segments. ~~We anticipate additional charges in the remainder of the year across these same categories as additional cost saving, productivity initiatives, and value acceleration opportunities are identified.~~

Business Segments

~~We manage~~During December 2022, we realigned our ~~business with three reportable~~businesses into two distinct segments: Insurance and CenterWell. The Insurance segment includes the businesses that were previously included in the Retail and Group and Specialty segments, as well as the Pharmacy Benefit Manager, or PBM, business which was previously included in the Healthcare Services segment. The CenterWell segment (formerly Healthcare Services) represents our payor-agnostic healthcare services offerings, including pharmacy dispensing services, primary care, and ~~Healthcare Services. The~~home services. In addition to the new segment classifications being utilized to assess performance and allocate resources, we believe this simpler structure will create greater collaboration across the Insurance and CenterWell businesses and will accelerate work that is underway to centralize and integrate operations within the organization.Prior period segment financial information has been recast to conform to the 2023 presentation. For a recast of prior period segment financial information, refer to Note 14 to the unaudited Consolidated Financial Statements included in Part I, Item 1, "Financial Statements" of this Form 10-Q.

Our two reportable segments, Insurance and CenterWell, are based on a combination of the type of health plan customer and adjacent businesses centered on well-being solutions for our health plans and other customers, as described below. These segment groupings are consistent with information used by our Chief Executive Officer, the Chief Operating Decision Maker, to assess performance and allocate resources.

The ~~Retail~~Insurance segment consists of Medicare benefits, marketed to individuals or directly via group Medicare ~~accounts. In addition, the Retail segment also includes~~accounts, as well as our contract with CMS to administer the Limited Income Newly Eligible Transition, or LI-NET, prescription drug plan program and contracts with various states to provide Medicaid, ~~including Temporary Assistance for Needy Families, or TANF,~~ dual eligible demonstration, and ~~Long-~~

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~~Term~~Long-Term Support Services benefits, which we refer to collectively as our state-based contracts. ~~The Group and Specialty~~This segment ~~consists~~also includes products consisting of employer group commercial fully-insured medical and specialty health insurance benefits marketed to individuals and employer groups, including dental, vision, and other supplemental health benefits, as well as administrative services only, or ~~ASO products.~~ASO. In addition, our ~~Group and Specialty~~Insurance segment includes our ~~military services~~Military business, primarily our ~~TRICARE T2017~~T-2017 East Region ~~contract.~~ contract, as well as the operations of our PBM business.

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The ~~Healthcare Services~~CenterWell segment includes our pharmacy, ~~provider,~~primary care, and home ~~services, along with other services and capabilities to promote wellness and advance population health.~~solutions operations. The segment also includes ~~the company's~~our strategic partnerships with WCAS to develop and operate senior-focused, payor-agnostic, primary care ~~centers.~~centers, as well as our minority ownership interest in hospice operations. Services offered by this segment are designed to enhance the overall healthcare experience. These services may lead to lower utilization associated with improved member health and/or lower drug costs.

The results of each segment are measured by ~~segment earnings, and for our Retail and Healthcare Services segments, also include equity in net earnings~~income (loss) from ~~our equity method investees.~~operations. Transactions between reportable segments primarily consist of sales of products and services rendered by our ~~Healthcare Services~~CenterWell segment, primarily pharmacy, ~~provider,~~primary care, and home ~~solutions~~ services, to our ~~Retail and Group and Specialty~~Insurance segment customers. Intersegment sales and expenses are recorded at fair value and eliminated in consolidation. Members served by our segments often use the same provider networks, enabling us in some instances to obtain more favorable contract terms with providers. Our segments also share indirect costs and assets. As a result, the profitability of each segment is interdependent. We allocate most operating expenses to our segments. Assets and certain corporate income and expenses are not allocated to the segments, including the portion of investment income not supporting segment operations, interest expense on corporate debt, and certain other corporate expenses. These items are managed at a corporate level. These corporate amounts are reported separately from our reportable segments and are included with intersegment eliminations.

Seasonality

COVID-19 disrupted the pattern of our quarterly earnings and operating cash flows largely due to the temporary deferral of non-essential care which resulted in reductions in non-COVID-19 hospital admissions and lower overall healthcare system utilization during higher levels of COVID-19 hospital admissions. ~~Likewise,~~At the same time, during periods of increased incidences of COVID-19, COVID-19 treatment and testing costs ~~increase.~~increased. Similar impacts and seasonal disruptions from either higher or lower utilization are expected to persist as we ~~respond to and~~ recover from the COVID-19 global health crisis.

One of the product offerings of our ~~Retail~~Insurance segment is Medicare stand-alone prescription drug plans, or ~~PDPs,~~PDP, under the Medicare Part D program. Our quarterly ~~Retail~~Insurance segment earnings and operating cash flows are impacted by the Medicare Part D benefit design and changes in the composition of our 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. These plan designs generally result in us sharing a greater portion of the responsibility for total prescription drug costs in the early stages and less in the latter stages. As a result, the PDP benefit ratio generally decreases as the year progresses. 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.

~~In addition,~~The Insurance segment also experiences seasonality in the ~~Retail~~commercial fully-insured product offering. The effect on the Insurance segment benefit ratio is opposite of the Medicare stand-alone PDP impact, with the benefit ratio increasing as fully-insured members progress through their annual deductible and maximum out-of-pocket expenses. The Employer Group Commercial Fully-Insured business increased the Insurance segment benefit ratio by 20 basis points and increased the Insurance segment benefit ratio by 30 basis points for the three months ended September 30, 2023 and 2022, respectively. The Employer Group Commercial Fully-Insured business did not impact the Insurance segment benefit ratio for the nine months ended September 30, 2023 and increased the Insurance segment benefit ratio by 10 basis points for the nine months ended 2022.

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.

~~Our Group and Specialty~~ The Insurance segment ~~also experiences seasonality~~may experience adverse impacts in the ~~benefit~~operating cost ratio ~~pattern. However,~~as a result of our Employer Group Commercial Medical Products exit phased over the ~~effect is opposite~~18-24 months following our February 2023 announcement. The Employer Group Commercial Fully-Insured business increased the Insurance segment operating cost ratio by 40 basis points and increased the Insurance segment operating cost ratio by 50 basis points for the three months ended September 30, 2023 and 2022, respectively. The Employer Group Commercial Fully-Insured business increased the Insurance segment operating

Table of ~~Medicare stand-alone PDP in~~Contents

cost ratio by 40 basis points and increased the ~~Retail~~Insurance segment ~~with~~operating cost ratio by 50 basis points for the ~~Group~~nine months ended September 30, 2023 and ~~Specialty segment’s benefit ratio increasing as fully-insured members progress through their annual deductible and maximum out-of-pocket expenses.~~2022, respectively.

~~2022~~2023 Highlights

•Our strategy offers our members affordable health care combined with a positive consumer experience in growing markets. At the core of this strategy is our integrated care delivery model, which unites quality care, high member engagement, and sophisticated data analytics. Our approach to primary, ~~physician-~~

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~~directed~~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, ~~2022,~~2023, approximately ~~3,145,200~~3,727,500 members, or 69%, of our individual Medicare Advantage members were in value-based relationships under our integrated care delivery model, as compared to ~~2,979,800~~3,145,200 members, or ~~68%~~69%, at September 30, ~~2021.~~

•In October 2022, the Centers for Medicare and Medicaid Services, or CMS, published its updated Medicare Star Ratings for bonus year 2024 (plan year 2023). We have 4.9 million members, or 96%, of our existing Medicare Advantage membership, in contracts rated 4-stars or higher, with more than 3.0 million members in plans rated 4.5 stars or higher. Three of our contracts received a 5-star rating on CMS's 5-star rating system, including HMO plans in Louisiana, Tennessee, and Kentucky, covering approximately 356,000 members. More than 99% of retirees in our group Medicare Advantage rated plans remain in 4-star or above contracts for 2023.2022.

•Net income attributable to Humana was ~~$1.2~~$0.8 billion, or ~~$9.39~~$6.71 per diluted common share, and ~~$1.5~~$1.2 billion, or ~~$11.84~~$9.39 per diluted common share, for the three months ended September 30, ~~2022,~~2023 and ~~2021,~~2022, respectively. Net income attributable to Humana was ~~$2.8~~$3.0 billion, or ~~$22.16~~$24.26 per diluted common share, and ~~$2.9~~$2.8 billion, or ~~$22.77~~$22.16 per diluted common share, for the nine months ended September 30, ~~2022,~~2023 and ~~2021,~~2022, respectively. These comparisons were significantly impacted by ~~the gain on KAH equity method investment recognized in August 2021,~~ put/call valuation adjustments associated with non-consolidating minority interest investments, transaction and integration costs, charges associated with value creation initiatives, the change in the fair value of publicly-traded equity securities, ~~charges associated with productivity initiatives~~the gain on sale of Gentiva Hospice and accrual related to ~~previously disclosed $1 billion value creation plan and the net gain on the sale of KAH Hospice.~~certain anticipated litigation expenses. The impact of these adjustments to our consolidated income before income taxes and equity in net earnings and diluted earnings per common share was as follows for the ~~2022~~2023 and ~~2021~~2022 quarter and period:

3839

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		For the three months ended September 30,				For the nine months ended September 30,					For the three months ended September 30,				For the nine months ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Consolidated income before income taxes and equity in net earnings:	Consolidated income before income taxes and equity in net earnings:									Consolidated income before income taxes and equity in net earnings:
Gain on Kindred at Home equity method investment		$	—	$	(1,129)	$	—	$	(1,129)
Gain on sale of Gentiva Hospice										Gain on sale of Gentiva Hospice	$	—	$	(240)	$	—	$	(240)
Put/call valuation adjustments associated with our non consolidating minority interest investments	Put/call valuation adjustments associated with our non consolidating minority interest investments	13		33		(16)		567		Put/call valuation adjustments associated with our non consolidating minority interest investments	35		13		141		(16)
Transaction and integration costs	Transaction and integration costs	17		71		70		93		Transaction and integration costs	—		17		(47)		70
Change in the fair value of publicly-traded equity securities	Change in the fair value of publicly-traded equity securities	(51)		174		119		197		Change in the fair value of publicly-traded equity securities	—		(51)		(1)		119
Charges associated with productivity initiatives related to the previously disclosed $1 billion value creation plan		82		—		285		—
Gain on sale of KAH Hospice		(240)		—		(240)		—
Value creation initiatives										Value creation initiatives	52		82		52		285
Accrual related to certain anticipated litigation expenses										Accrual related to certain anticipated litigation expenses	15		—		105		—
Total	Total	$	(179)	$	(851)	$	218	$	(272)	Total	$	102	$	(179)	$	250	$	218

		For the three months ended September 30,				For the nine months ended September 30,					For the three months ended September 30,				For the nine months ended September 30,
		2022 (1)		2021 (2)		2022 (1)		2021 (2)			2023		2022		2023		2022
Diluted earnings per common share:	Diluted earnings per common share:									Diluted earnings per common share:
Gain on Kindred at Home equity method investment		$	—	$	(8.74)	$	—	$	(8.73)
Gain on sale of Gentiva Hospice										Gain on sale of Gentiva Hospice	$	—	$	(1.89)	$	—	$	(1.89)
Put/call valuation adjustments associated with our non consolidating minority interest investments	Put/call valuation adjustments associated with our non consolidating minority interest investments	0.08		0.20		(0.10)		3.38		Put/call valuation adjustments associated with our non consolidating minority interest investments	0.28		0.10		1.13		(0.13)
Transaction and integration costs	Transaction and integration costs	0.10		0.39		0.42		0.52		Transaction and integration costs	—		0.13		(0.38)		0.55
Change in the fair value of publicly-traded equity securities	Change in the fair value of publicly-traded equity securities	(0.31)		1.04		0.72		1.18		Change in the fair value of publicly-traded equity securities	—		(0.40)		(0.01)		0.94
Charges associated with productivity initiatives related to the previously disclosed $1 billion value creation plan		0.50		—		1.73		—
Net gain on sale of KAH Hospice		(3.03)		—		(1.72)		—
Value creation initiatives										Value creation initiatives	0.42		0.65		0.42		2.24
Accrual related to certain anticipated litigation expenses										Accrual related to certain anticipated litigation expenses	0.12		—		0.84		—
Net tax impact of transactions										Net tax impact of transactions	(0.18)		(1.25)		$	(0.57)	$	(0.66)
Total	Total	$	(2.66)	$	(7.11)	$	1.05	$	(3.65)	Total	$	0.64	$	(2.66)	$	1.43	$	1.05

(1) The net gain on sale of KAH Hospice impact of $3.03 per diluted common share and $1.72 per diluted common share for the three and nine months ended September 30, 2022, respectively, include the $240 million pretax gain recorded on sale of KAH Hospice in August 2022 and the related income tax effects of the transaction. The 2022 period income tax impact was $0.17 per diluted common share, reflective of the $1.31 per diluted common share related to the recognition of a deferred tax liability in the second quarter of 2022 in connection with the held-for-sale classification resulting from the pending transaction, partially offset by the $1.14 per diluted common share benefit recognized in the third quarter of 2022 associated with the increase to our tax basis in both the shares sold and the shares retained at the time of the completion of the sale in August 2022. The remaining significant adjustments for the three and nine months ended September 30, 2022 include a total cumulative net tax benefit of approximately $0.11 per diluted common share and $0.83 per diluted common share, respectively.

(2) The significant adjustments for the three and nine months ended September 30, 2021 include a total cumulative net tax benefit of approximately $0.53 per diluted common share and $1.55 per diluted common share, respectively.

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Health Care Reform

We are and will continue to be regularly subject to new laws and regulations, changes to existing laws and regulations, and judicial determinations that impact the interpretation and applicability of those laws and regulations. The Health Care Reform Law, the Families First Act, the CARES Act, and the Inflation Reduction Act, and related regulations, are examples of laws which have enacted significant reforms to various aspects of the U.S. health insurance ~~industry. Certain significant provisions of the Health Care Reform Law include,~~industry, including, among others, mandated coverage requirements, mandated benefits and guarantee issuance associated with commercial medical insurance, rebates to policyholders based on minimum benefit ratios, adjustments to Medicare Advantage premiums, the establishment of federally facilitated or state-based exchanges coupled with programs designed to spread risk among insurers, and the introduction of plan designs based on set actuarial ~~values. In addition,~~values, and changes to the Health Care Reform Law established insurance industry assessments, including an annual health insurance industry fee. The annual health insurance industry fee, which was not deductible for income tax purposes and significantly increased our effective tax rate, was in effect for 2020, but was permanently repealed beginning in calendar year 2021.Part D prescription drug benefit design.

It is reasonably possible that ~~the Health Care Reform Law~~these laws and ~~related~~ regulations, as well as other current or future legislative, judicial or regulatory changes such as the Families First Coronavirus Response Act, or the Families First Act, the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, and other legislative or regulatory action taken in response to COVID-19 including restrictions on our ability to manage our provider network or otherwise operate our business, or restrictions on profitability, including reviews by regulatory bodies that may compare our Medicare Advantage profitability to our non-Medicare Advantage business profitability, or compare the profitability of various products within our Medicare Advantage business, and require that they remain within certain ranges of each other, increases in member benefits or changes to member eligibility criteria without corresponding increases in premium payments to us, or increases in regulation of our prescription drug benefit businesses, in the aggregate may have a material adverse effect on our results of operations (including restricting revenue, enrollment and premium growth in certain products and market segments, restricting our ability to expand into new markets, increasing our medical and operating costs, further lowering our Medicare payment rates and increasing our expenses associated with assessments); our financial position (including our ability to maintain the value of our goodwill); and our cash flows.

We intend for the discussion of our financial condition and results of operations that follows to assist in the understanding of our financial statements and related changes in certain key items in those financial statements from year to year, including the primary factors that accounted for those changes. Transactions between reportable segments primarily consist of sales of products and services rendered by our ~~Healthcare Services~~CenterWell segment, primarily pharmacy, ~~provider,~~primary care, and home ~~solutions~~ services, to our ~~Retail and Group and Specialty~~Insurance segment customers and are described in Note 14 to the condensed consolidated financial statements included in this report.

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Comparison of Results of Operations for ~~2022~~2023 and ~~2021~~2022

The following discussion primarily ~~deals with~~details our results of operations for the three months ended September 30, 2023, or the 2023 quarter, the three months ended September 30, 2022, or the 2022 quarter, the ~~three~~nine months ended September 30, ~~2021,~~2023, or the ~~2021 quarter,~~2023 period, and the nine months ended September 30, 2022, or the 2022 ~~period, and the nine months ended September 30, 2021, or the 2021~~ period.

Consolidated


														Change																					Change
		Three months ended September 30,						Nine months ended September 30,						Three months ended September 30, 2022 vs 2021				Nine months ended September 30, 2022 vs 2021					Three months ended September 30,						Nine Months Ended September 30,						Three months ended September 30, 2023 vs 2022				Nine Months Ended September 30, 2023 vs 2022
		2022			2021			2022			2021			$		%		$		%			2023			2022			2023			2022			$		%		$		%
		($ in millions, except per common share results)																					($ in millions, except per common share results)
Revenues:	Revenues:																					Revenues:
Premiums:
Retail		$	20,131		$	18,401		$	62,329		$	55,460		$	1,730	9.4	%	$	6,869	12.4	%
Group and Specialty		1,337			1,484			4,108			4,527			(147)		(9.9)	%	(419)		(9.3)	%

Total premiums		21,468			19,885			66,437			59,987			1,583		8.0	%	6,450		10.8	%
Insurance premiums																						Insurance premiums	$	25,099		$	21,468		$	76,144		$	66,437		$	3,631	16.9	%	$	9,707	14.6	%

Services:	Services:																					Services:
Retail		10			—			24			17			10		100.0	%	7		41.2	%
Group and Specialty		197			198			588			582			(1)		(0.5)	%	6		1.0	%
Healthcare Services		952			647			3,160			1,203			305		47.1	%	1,957		162.7	%
Total services		1,159			845			3,772			1,802			314		37.2	%	1,970		109.3	%
Investment income (loss)		172			(33)			222			221			205		621.2	%	1		0.5	%
Insurance																						Insurance	257			210			730			620			47		22.4	%	110		17.7	%
CenterWell																						CenterWell	759			949			2,263			3,152			(190)		(20.0)	%	(889)		(28.2)	%
Total services revenue																						Total services revenue	1,016			1,159			2,993			3,772			(143)		(12.3)	%	(779)		(20.7)	%
Investment income																						Investment income	308			172			775			222			136		79.1	%	553		249.1	%
Total revenues	Total revenues	22,799			20,697			70,431			62,010			2,102		10.2	%	8,421		13.6	%	Total revenues	26,423			22,799			79,912			70,431			3,624		15.9	%	9,481		13.5	%
Operating expenses:	Operating expenses:																					Operating expenses:
Benefits	Benefits	18,384			17,316			57,108			51,761			1,068		6.2	%	5,347		10.3	%	Benefits	21,745			18,384			65,612			57,108			3,361		18.3	%	8,504		14.9	%
Operating costs	Operating costs	3,061			2,603			9,120			6,726			458		17.6	%	2,394		35.6	%	Operating costs	3,271			3,061			9,361			9,120			210		6.9	%	241		2.6	%
Depreciation and amortization	Depreciation and amortization	182			150			527			436			32		21.3	%	91		20.9	%	Depreciation and amortization	201			182			578			527			19		10.4	%	51		9.7	%
Total operating expenses	Total operating expenses	21,627			20,069			66,755			58,923			1,558		7.8	%	7,832		13.3	%	Total operating expenses	25,217			21,627			75,551			66,755			3,590		16.6	%	8,796		13.2	%
Income from operations	Income from operations	1,172			628			3,676			3,087			544		86.6	%	589		19.1	%	Income from operations	1,206			1,172			4,361			3,676			34		2.9	%	685		18.6	%
Gain on sale of KAH Hospice		(240)			—			(240)			—			240		100.0	%	240		100.0	%
Gain on sale of Gentiva Hospice																						Gain on sale of Gentiva Hospice	—			(240)			—			(240)			(240)		(100.0)	%	(240)		(100.0)	%
Interest expense	Interest expense	102			88			293			235			14		15.9	%	58		24.7	%	Interest expense	114			102			347			293			12		11.8	%	54		18.4	%
Other expense (income), net		13			(1,096)			(16)			(562)			(1,109)		(101.2)	%	(546)		(97.2)	%
Other (income) expense, net																						Other (income) expense, net	(6)			13			40			(16)			19		146.2	%	56		350.0	%
Income before income taxes and equity in net earnings	Income before income taxes and equity in net earnings	1,297			1,636			3,639			3,414			(339)		(20.7)	%	225		6.6	%	Income before income taxes and equity in net earnings	1,098			1,297			3,974			3,639			(199)		(15.3)	%	335		9.2	%
Provision for income taxes	Provision for income taxes	107			120			820			536			(13)		(10.8)	%	284		53.0	%	Provision for income taxes	256			107			911			820			149		139.3	%	91		11.1	%
Equity in net earnings		3			15			1			69			(12)		(80.0)	%	(68)		(98.6)	%
Equity in net (losses) earnings																						Equity in net (losses) earnings	(12)			3			(39)			1			15		500.0	%	40		nm
Net income	Net income	$	1,193		$	1,531		$	2,820		$	2,947		$	(338)	(22.1)	%	$	(127)	(4.3)	%	Net income	$	830		$	1,193		$	3,024		$	2,820		$	(363)	(30.4)	%	$	204	7.2	%
Diluted earnings per common share	Diluted earnings per common share	$	9.39		$	11.84		$	22.16		$	22.77		$	(2.45)	(20.7)	%	$	(0.61)	(2.7)	%	Diluted earnings per common share	$	6.71		$	9.39		$	24.26		$	22.16		$	(2.68)	(28.5)	%	$	2.10	9.5	%
Benefit ratio (a)	Benefit ratio (a)	85.6		%	87.1		%	86.0		%	86.3		%			(1.5)	%			(0.3)	%	Benefit ratio (a)	86.6		%	85.6		%	86.2		%	86.0		%			1.0	%			0.2	%
Operating cost ratio (b)	Operating cost ratio (b)	13.5		%	12.6		%	13.0		%	10.9		%			0.9	%			2.1	%	Operating cost ratio (b)	12.5		%	13.5		%	11.8		%	13.0		%			(1.0)	%			(1.2)	%
Effective tax rate	Effective tax rate	8.2		%	7.2		%	22.5		%	15.4		%			1.0	%			7.1	%	Effective tax rate	23.5		%	8.2		%	23.1		%	22.5		%			15.3	%			0.6	%

(a)Represents benefits expense as a percentage of premiums revenue.

(b)Represents operating costs as a percentage of total revenues less investment income.

nm - not meaningful

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Premiums Revenue

Consolidated premiums revenue increased ~~$1.6~~$3.6 billion, or ~~8.0%~~16.9%, from ~~$19.9 billion in the 2021 quarter to~~ $21.5 billion in the 2022 quarter ~~and increased $6.5 billion, or 10.8%, from $60.0~~to $25.1 billion in the ~~2021 period to~~2023 quarter and increased $9.7 billion, or 14.6%, from $66.4 billion in the 2022 period to $76.1 billion in the 2023 period primarily due to individual Medicare Advantage and state-based contracts membership growth and higher per member individual Medicare Advantage ~~premiums,~~premiums. These factors were partially offset by ~~declining~~the year-over-year decline in membership associated with ~~the~~ group commercial medical, ~~products~~group Medicare Advantage and stand-alone PDP products. In addition, the period was negatively impacted by the phase-out of COVID-19 sequestration relief in ~~the 2022 period.~~2022.

Services Revenue

Consolidated services revenue ~~increased $314 million,~~decreased $0.1 billion, or ~~37.2%~~12.3%, from ~~$845 million in the 2021 quarter to~~ $1.2 billion in the 2022 quarter ~~and increased $2.0 billion, or 109.3%, from $1.8~~to $1.0 billion in the ~~2021 period to~~2023 quarter and decreased $0.8 billion, or 20.7%, from $3.8 billion in the 2022 period to $3.0 billion in the 2023 period primarily due to ~~the impact of home solutions revenues which reflects the acquisition of the remaining 60% interest in KAH during August 2021 partially offset by~~ the divestiture of the 60% ownership of ~~KAH~~Gentiva Hospice ~~during~~in August 2022.

Investment Income

Investment income increased ~~$205~~$136 million, or ~~621.2%~~79.1%, from ~~a $33 million loss in the 2021 quarter to~~ $172 million ~~of income~~ in the 2022 quarter to $308 million in the 2023 quarter primarily due to ~~lower~~an increase in interest income on our debt securities partially offset by the net favorable mark to market ~~losses on~~impact of our publicly traded equity securities investments during the 2022 ~~quarter compared~~quarter. Investment income increased $553 million, or 249.1%, from $222 million in the 2022 period to $775 million in the ~~2021 quarter and higher~~2023 period primarily due to an increase in interest income on our debt ~~securities. Investment income increased $1 million, or 0.5%, from $221 million in~~securities as well as the ~~2021 period~~net unfavorable mark to ~~$222 million in~~market impact of our publicly traded equity securities during the 2022 period.

Benefit Expense

Consolidated benefits expense increased ~~$1.1~~$3.4 billion, or ~~6.2%~~18.3%, from ~~$17.3 billion in the 2021 quarter to~~ $18.4 billion in the 2022 quarter ~~and increased $5.3 billion, or 10.3%, from $51.8~~to $21.7 billion in the ~~2021 period to~~2023 quarter and increased $8.5 billion, or 14.9%, from $57.1 billion in the 2022 period to $65.6 billion in the 2023 period. The consolidated benefit ratio ~~decreased 150~~increased 100 basis points from ~~87.1% for the 2021 quarter to~~ 85.6% for the 2022 quarter to 86.6% for the 2023 quarter and ~~decreased 30~~increased 20 basis points from ~~86.3% for the 2021 period to~~ 86.0% for the 2022 period to 86.2% for the 2023 period primarily due to investments in the benefit design of our Medicare Advantage products for 2023, the continuation of elevated Medicare Advantage utilization trends initially discussed in the second quarter of 2023, combined with higher ~~per member~~COVID-19 admissions in the 2023 quarter, without the offsetting impact of lower non-COVID care, as well as the impact of continued individual Medicare Advantage growth following the previous Annual Election Period, or AEP, including a high proportion of age-ins, which typically have a higher benefits expense ratio initially than the average new member. These increases were partially offset by increased individual Medicare Advantage premiums and ~~lower inpatient utilization associated with~~decreased average unit costs given the ~~individual Medicare Advantage business. These factors were partially offset~~additional 20% payment on COVID-19 admissions during the Public Health Emergency, which expired on May 11, 2023. In addition, the period was favorably impacted by ~~lower~~higher favorable prior-period medical claims reserve development. Further, the ~~2022~~2023 quarter and period ratios continue to reflect a shift in line of business mix, with ~~continued~~ growth in ~~certain government programs,~~individual Medicare Advantage and state-based contracts and other membership, which can carry a higher benefits expense ~~ratio, combined with a decline in Medicare stand-alone PDP, which has a lower benefits expense~~ ratio.

Consolidated benefits expense included $7$4 million of favorable prior-period medical claims reserve development in the ~~2022~~2023 quarter and ~~$49~~$7 million of favorable prior-period medical claims development in the ~~2021~~2022 quarter. Consolidated benefits expense included $758 million of favorable prior-period medical claims reserve development in the 2023 period and $404 million of favorable prior-period medical claims reserve development in the 2022 ~~period and $768 million of favorable prior-period medical claims reserve development in the 2021~~ period. Prior-period medical claims reserve development did not impact the ~~consolidated~~Insurance segment benefit ratio in the ~~2022~~2023 quarter ~~and decreased~~or the ~~consolidated benefit ratio by approximately 20 basis points in the 2021~~2022 quarter. Prior-period medical claims reserve development decreased the consolidated benefit ratio by approximately 60100 basis points in the ~~2022~~2023 period and decreased the consolidated benefit ratio by approximately ~~130~~60 basis points in the ~~2021~~2022 period.

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Operating Costs

Our segments incur both direct and shared indirect operating costs. We allocate the indirect costs shared by the segments primarily as a function of revenues. As a result, the profitability of each segment is interdependent.

Consolidated operating costs increased ~~$458 million,~~$0.2 billion, or ~~17.6%~~6.9%, from ~~$2.6 billion in the 2021 quarter to~~ $3.1 billion in the 2022 quarter ~~and increased $2.4 billion, or 35.6%, from $6.7~~to $3.3 billion in the ~~2021 period to~~2023 quarter and increased $0.2 billion, or 2.6%, from $9.1 billion in the 2022 period to $9.4 billion in the 2023 period. The consolidated operating cost ratio ~~increased 90~~decreased 100 basis points from ~~12.6% for the 2021 quarter~~

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to 13.5% for the 2022 quarter to 12.5% for the 2023 quarter and ~~increased 210~~decreased 120 basis points from ~~10.9% for the 2021 period to~~ 13.0% for the 2022 period to 11.8% for the 2023 period primarily due to the ~~impact~~divestiture of the ~~consolidation~~60% ownership of ~~KAH operations,~~Gentiva Hospice in August 2022, which ~~have~~carried a significantly higher operating cost ratio ~~than our~~compared to the historical consolidated operating cost ratio,~~as well as the~~ ~~$285 million~~ ~~in charges related to productivity initiatives in the 2022 period, primarily related to asset and software impairment and abandonment and severance. These increases were partially offset by~~ scale efficiencies associated with growth in individual Medicare Advantage ~~membership.~~membership, as well as administrative cost efficiencies that resulted as part of the our value creation initiatives, combined with a lesser impact from accelerated charges related to value-creation initiatives in 2023 compared to 2022. These factors were partially offset by an increase in commissions for brokers related to the individual Medicare Advantage membership growth in 2023 and an accrual related to certain anticipated litigation expenses in the 2023 quarter and period. In addition, the 2023 period was negatively impacted by the phase-out of COVID-19 sequestration relief in 2022.

Depreciation and Amortization

Depreciation and amortization increased ~~$32~~$19 million, or ~~21.3%~~10.4%, from ~~$150 million in the 2021 quarter to~~ $182 million in the 2022 quarter ~~and increased $91 million, or 20.9%, from $436~~to $201 million in the ~~2021 period to~~2023 quarter and increased $51 million, or 9.7%, from $527 million in the 2022 period to $578 million in the 2023 period primarily due to capital expenditures.

Interest Expense

Interest expense increased ~~$14~~$12 million, or ~~15.9%~~11.8%, from ~~$88 million in the 2021 quarter to~~ $102 million in the 2022 quarter ~~and increased $58 million, or 24.7%, from $235~~to $114 million in the ~~2021 period to~~2023 quarter and increased $54 million, or 18.4%, from $293 million in the 2022 period ~~from borrowings~~ to ~~finance~~$347 million in the ~~KAH acquisition.~~2023 period due to higher rates on higher average debt balances.

Income Taxes

The effective income tax rate was ~~8.2%~~23.5% and ~~7.2%~~8.2% for the three months ended September 30, ~~2022,~~2023, and ~~2021,~~2022, respectively, and ~~22.5%~~23.1% and ~~15.4%~~22.5% for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The year-over-year increase in the effective income tax ~~rates~~rate is primarily due to the impact of the August 2021 acquisition of the remaining 60% interest in KAH. In that period, we recognized a $1.1 billion mark-to-market gain related to our previously held 40% investment in KAH. This unrealized gain was not taxable, thereby reducing the effective income tax rate for the three and nine months ended September 30, 2021. The increase is partially offset by the August 2022 disposition of our 60% interest in ~~KAH~~Gentiva Hospice, which resulted in an increase to our tax basis in both the shares sold and the shares retained, thereby reducing the effective income tax rate for the three and nine months ended September 30, 2022.

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~~Retail Segment~~

September 30, Change
2022 2021 Members %
Membership:
Medical membership:
Individual Medicare Advantage 4,564,200 4,397,300 166,900 3.8 %
Group Medicare Advantage 564,600 559,800 4,800 0.9 %
Medicare stand-alone PDP 3,569,100 3,638,400 (69,300) (1.9) %
Total Retail Medicare 8,697,900 8,595,500 102,400 1.2 %
State-based Medicaid and other 1,098,900 909,100 189,800 20.9 %
Medicare Supplement 316,500 332,000 (15,500) (4.7) %
Total Retail medical members 10,113,300 9,836,600 276,700 2.8 %
Change
Three months ended September 30, Nine months ended September 30, Three months ended September 30, 2022 vs 2021 Nine months ended September 30, 2022 vs 2021
2022 2021 2022 2021 $ % $ %
($ in millions)
Premiums and Services Revenue:
Premiums:
Individual Medicare Advantage $ 16,007 $ 14,642 $ 49,751 $ 44,042 $ 1,365 9.3 % $ 5,709 13.0 %
Group Medicare Advantage 1,792 1,737 5,524 5,267 55 3.2 % 257 4.9 %
Medicare stand-alone PDP 534 541 1,779 1,867 (7) (1.3) % (88) (4.7) %
Total Retail Medicare 18,333 16,920 57,054 51,176 1,413 8.4 % 5,878 11.5 %
State-based Medicaid and other 1,610 1,296 4,720 3,739 314 24.2 % 981 26.2 %
Medicare Supplement 188 185 555 545 3 1.6 % 10 1.8 %
Total premiums 20,131 18,401 62,329 55,460 1,730 9.4 % 6,869 12.4 %
Services 10 — 24 17 10 100.0 % 7 41.2 %
Total premiums and services revenue $ 20,141 $ 18,401 $ 62,353 $ 55,477 $ 1,740 9.5 % $ 6,876 12.4 %
Segment earnings $ 737 $ 456 $ 2,450 $ 2,086 $ 281 61.6 % $ 364 17.4 %
Benefit ratio 86.5 % 88.1 % 87.2 % 87.6 % (1.6) % (0.4) %
Operating cost ratio 9.4 % 9.1 % 8.5 % 8.4 % 0.3 % 0.1 %

~~Segment Earnings~~

Retail segment earnings increased $281 million, or 61.6%, from $456 million in the 2021 quarter to $737 million in the 2022 quarter and increased $364 million, or 17.4%, from $2.1 billion in the 2021 period to $2.5 billion in the 2022 period primarily due to the same factors impacting the segment's lower benefit ratio offset by the same factors impacting the segment's higher operating cost ratio as more fully described below.

~~Enrollment~~

Individual Medicare Advantage membership increased 166,900 members, or 3.8%, from September 30, 2021 to September 30, 2022 primarily due to membership additions associated with the previous Annual Election Period, or AEP. The year-over-year growth was further impacted by continued enrollment resulting from special elections, age-ins, and Dual Eligible Special Need Plans, or D-SNP, membership. Individual Medicare Advantage membership

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~~includes 667,000 D-SNP members as of September 30, 2022, a net increase of 105,700, or 18.8%, from 561,300 as of September 30, 2021.~~

Group Medicare Advantage membership increased 4,800 members, or 0.9%, from September 30, 2021 to September 30, 2022 reflecting smaller account sales and organic growth in concurrent accounts with no large accounts won or lost for the period.

Medicare stand-alone PDP membership decreased 69,300 members, or 1.9%, from September 30, 2021 to September 30, 2022 primarily due to continued intensified competition for Medicare stand-alone PDP offerings.

~~State-based Medicaid membership increased~~ 189,800 members, or 20.9%, from September 30, 2021 to September 30, 2022 reflecting the suspension of state eligibility redetermination efforts due to the currently enacted public health emergency, or PHE.

~~Premiums Revenue~~

Retail segment premiums revenue increased $1.7 billion, or 9.4%, from $18.4 billion in the 2021 quarter to $20.1 billion in the 2022 quarter and increased $6.9 billion, or 12.4%, from $55.5 billion in the 2021 period to $62.3 billion in the 2022 period primarily due to individual Medicare Advantage and state-based contracts membership growth and ~~higher per member individual Medicare Advantage premiums partially offset by the phase-out of COVID-19 sequestration relief in the 2022 period.~~

~~Benefits Expense~~

The Retail segment benefit ratio decreased 160 basis points from 88.1% for the 2021 quarter to 86.5% for the 2022 quarter and decreased 40 basis points from 87.6% for the 2021 period to 87.2% for the 2022 period primarily due to the favorable impact of higher per member individual Medicare Advantage premiums and lower inpatient utilization associated with the individual Medicare Advantage business. These factors were partially offset by lower favorable prior-period medical claims reserve development. Further, the 2022 quarter and period ratios reflect a shift in line of business mix within the segment, with growth in individual Medicare Advantage and state-based contracts and other membership, which carry a higher benefits expense ratio, combined with a decline in Medicare stand-alone PDP, which has a lower benefits expense ratio.

~~The Retail segment's benefits expense included $12 million~~ ~~of favorable~~ prior-period medical claims reserve development in the 2022 quarter and $54 million of favorable prior-period medical claims reserve development in the 2021 quarter. The Retail segment’s benefit expense included $379 million of favorable prior-period medical claims reserve development in the 2022 period and $673 million of favorable prior-period medical claims reserve development in the 2021 period. Prior-period medical claims reserve development decreased the Retail segment's benefit ratio by approximately 10 basis points in the 2022 quarter and decreased the Retail segment's benefit ratio by approximately 30 basis points in the 2021 quarter. Prior-period medical claims reserve development decreased the Retail segment benefit ratio by approximately 60 basis points in the 2022 period and decreased the Retail segment benefit ratio by approximately 120 basis points in the 2021 period.

~~Operating Costs~~

~~The Retail segment operating cost ratio increased 30 basis points from 9.1% for the 2021 quarter to 9.4% for the 2022 quarter~~ ~~and~~ increased 10 basis points from 8.4% for the 2021 period to 8.5% for the 2022 period primarily due to strategic investments to position the segment for long-term success, including the impact of higher marketing spend in the 2022 period to support individual Medicare Advantage growth. These factors were partially offset by scale efficiencies associated with growth in the individual Medicare Advantage membership.

~~Table of Contents~~

~~Group and Specialty~~Insurance Segment

September 30, Change
2022 2021 Members %
Membership:
Medical membership:
Fully-insured commercial group 574,500 690,000 (115,500) (16.7) %
ASO 438,600 496,500 (57,900) (11.7) %
Military services 5,977,900 6,051,700 (73,800) (1.2) %
Total group medical members 6,991,000 7,238,200 (247,200) (3.4) %
Specialty membership (a) 5,210,100 5,313,100 (103,000) (1.9) %


	September 30,		Change
	2023	2022	Members	%
Membership:
Individual Medicare Advantage	5,374,400	4,564,200	810,200	17.8	%
Group Medicare Advantage	510,300	564,600	(54,300)	(9.6)	%
Medicare stand-alone PDP	2,885,800	3,569,100	(683,300)	(19.1)	%
Total Medicare	8,770,500	8,697,900	72,600	0.8	%
Medicare Supplement	299,400	316,500	(17,100)	(5.4)	%
Commercial fully-insured	409,300	574,500	(165,200)	(28.8)	%
State-based contracts and other	1,264,600	1,098,900	165,700	15.1	%
Military	5,935,400	5,977,900	(42,500)	(0.7)	%
Commercial ASO	284,300	438,600	(154,300)	(35.2)	%
Total Medical Membership	16,963,500	17,104,300	(140,800)	(0.8)	%
Total Specialty Membership (a)	4,964,300	5,210,100	(245,800)	(4.7)	%

(a)We provide a full range of insured specialty products including dental, vision, and life insurance benefits marketed to individuals and groups. Members included in these products may not be unique to each product since members have the ability to enroll in a medical product and one or more specialty products.


														Change																					Change
		Three months ended September 30,						Nine months ended September 30,						Three months ended September 30, 2022 vs 2021				Nine months ended September 30, 2022 vs 2021					Three months ended September 30,						Nine Months Ended September 30,						Three months ended September 30, 2023 vs 2022				Nine Months Ended September 30, 2023 vs 2022
		2022			2021			2022			2021			$		%		$		%			2023			2022			2023			2022			$		%		$		%
		($ in millions)																					($ in millions)
Premiums and Services Revenue:	Premiums and Services Revenue:																					Premiums and Services Revenue:
Premiums:	Premiums:																					Premiums:
Fully-insured commercial group		$	912		$	1,052		$	2,827		$	3,229		$	(140)	(13.3)	%	$	(402)	(12.4)	%
Group specialty		425			432			1,281			1,298			(7)		(1.6)	%	(17)		(1.3)	%
Total premiums		1,337			1,484			4,108			4,527			(147)		(9.9)	%	(419)		(9.3)	%
Services		197			198			588			582			(1)		(0.5)	%	6		1.0	%
Individual Medicare Advantage																						Individual Medicare Advantage	$	19,637		$	16,007		$	59,195		$	49,751		$	3,630	22.7	%	$	9,444	19.0	%
Group Medicare Advantage																						Group Medicare Advantage	1,695			1,792			5,192			5,524			(97)		(5.4)	%	(332)		(6.0)	%
Medicare stand-alone PDP																						Medicare stand-alone PDP	493			534			1,677			1,779			(41)		(7.7)	%	(102)		(5.7)	%
Total Medicare																						Total Medicare	21,825			18,333			66,064			57,054			3,492		19.0	%	9,010		15.8	%
Commercial fully-insured																						Commercial fully-insured	842			1,075			2,810			3,324			(233)		(21.7)	%	(514)		(15.5)	%
Specialty benefits																						Specialty benefits	252			262			758			784			(10)		(3.8)	%	(26)		(3.3)	%
Medicare Supplement																						Medicare Supplement	185			188			546			555			(3)		(1.6)	%	(9)		(1.6)	%
State-based contracts and other																						State-based contracts and other	1,995			1,610			5,966			4,720			385		23.9	%	1,246		26.4	%
Total premiums revenue																						Total premiums revenue	25,099			21,468			76,144			66,437			3,631		16.9	%	9,707		14.6	%
Commercial ASO																						Commercial ASO	55			73			190			225			(18)		(24.7)	%	(35)		(15.6)	%
Military and other																						Military and other	202			137			540			395			65		47.4	%	145		36.7	%
Services revenue																						Services revenue	257			210			730			620			47		22.4	%	110		17.7	%
Total premiums and services revenue	Total premiums and services revenue	$	1,534		$	1,682		$	4,696		$	5,109		$	(148)	(8.8)	%	$	(413)	(8.1)	%	Total premiums and services revenue	$	25,356		$	21,678		$	76,874		$	67,057		$	3,678	17.0	%	$	9,817	14.6	%
Segment earnings (loss)		$	49		$	(28)		$	282		$	186		$	77	275.0	%	$	96	51.6	%
Income from operations																						Income from operations	$	722		$	873		$	3,080		$	2,976		$	(151)	(17.3)	%	$	104	3.5	%
Benefit ratio	Benefit ratio	78.7		%	86.4		%	76.5		%	81.2		%			(7.7)	%			(4.7)	%	Benefit ratio	87.6		%	85.8		%	86.8		%	86.3		%			1.8	%			0.5	%
Operating cost ratio	Operating cost ratio	27.6		%	24.9		%	26.5		%	23.9		%			2.7	%			2.6	%	Operating cost ratio	10.4		%	10.6		%	9.9		%	9.7		%			(0.2)	%			0.2	%

~~Segment Earnings~~45

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~~Group and Specialty~~Income from operations

Insurance segment ~~earnings increased $77 million,~~income from operations decreased $0.2 billion, or ~~275.0%~~17.3%, from ~~a $28 million loss in the 2021 quarter to $49 million in earnings~~$0.9 billion in the 2022 quarter ~~and increased $96 million, or 51.6%, from $186 million~~to $0.7 billion in the ~~2021 period to $282 million in the 2022 period~~2023 quarter primarily due to the same factors impacting the segment's ~~lower~~higher benefit ratio ~~partially~~ offset by the ~~same factors impacting the~~ segment's ~~higher~~lower operating cost ratio as more fully described below. Insurance segment income from operations increased $0.1 billion, or 3.5%, from $3.0 billion in the 2022 period to $3.1 billion in the 2023 period primarily due to growth in individual Medicare Advantage membership in 2023.

Enrollment

~~Fully-insured commercial group medical~~Individual Medicare Advantage membership ~~decreased 115,500~~increased 810,200 members, or ~~16.7%~~17.8%, from September 30, ~~2021~~2022 to September 30, 2023primarily due to membership additions associated with the previous AEP and continued growth in 2023. The year-over-year growth was further impacted by continued enrollment resulting from special elections, age-ins, and Dual Eligible Special Need Plans, or D-SNP, membership. Individual Medicare Advantage membership includes 868,000 D-SNP members as of September 30, 2023, a net increase of 201,000 members, or 30.1%, from 667,000 members as of September 30, 2022.

Group Medicare Advantage membership decreased 54,300 members, or 9.6%, from September 30, 2022 to September 30, 2023 reflecting the net loss of certain large accounts partially offset by continued growth in small group accounts.

Medicare stand-alone PDP membership decreased 683,300 members, or 19.1%, from September 30, 2022 to September 30, 2023 primarily due to continued intensified competition for Medicare stand-alone PDP offerings.

State-based contracts and other membership increased 165,700 members, or 15.1%, from September 30, 2022 to September 30, 2023 reflecting the impact of ~~pricing discipline~~membership additions associated with the implementation of the Louisiana and Ohio contracts effective January 2023 and February 2023, respectively, partially offset by ending the suspension of state eligibility redetermination efforts previously enacted as part of the Public Health Emergency.

Commercial fully-insured medical membership decreased 165,200 members, or 28.8%, from September 30, 2022 to ~~address COVID-19~~September 30, 2023 and ~~improve profitability.~~

commercial ~~Group~~ ASO ~~commercial~~ medical membership decreased ~~57,900~~154,300 members, or ~~11.7%~~35.2%, from September 30, ~~2021~~2022 to September 30, ~~2022 reflecting continued intensified competition for small group accounts, partially offset by strong retention among large group accounts.~~

~~Table~~2023. These decreases reflect our planned exit of ~~Contents~~the Employer Group Commercial Medical Products business, which includes all fully insured, self-funded and Federal Employee Health Benefit medical plans, as well as associated wellness and rewards programs. The exit from this line of business will be phased over the 18 to 24 months following our February 2023 announcement.

Military ~~services~~ membership decreased ~~73,800~~42,500 members, or ~~1.2%~~0.7%, from September 30, ~~2021~~2022 to September 30, ~~2022.~~2023. Membership includes military service members, retirees, and their families to whom we are providing healthcare services under the current TRICARE East Region contract.

Sp~~ecialty~~Specialty membership decreased ~~103,000~~245,800 members, or ~~1.9%~~4.7%, from September 30, ~~2021~~2022 to September 30, ~~2022 primarily~~2023 reflecting the decline in membership associated with our Optional Supplemental Benefit products as a result of enhanced mandatory dental and vision supplemental benefits on Medicare Advantage plans. In addition, the decline reflects loss of dental and vision individuals due to ~~the~~terminations as well as loss of dental and vision groups cross-sold with ~~medical, as reflected in the loss of group fully-insured~~ commercial medical ~~membership above. In addition, current membership reflects the economic impact of the COVID-19 pandemic.~~products.

Premiums Revenue

~~Group and Specialty~~Insurance segment premiums revenue ~~decreased $147 million,~~increased $3.6 billion, or ~~9.9%~~16.9%, from ~~$1.5 billion in the 2021 quarter to $1.3~~$21.5 billion in the 2022 quarter ~~and decreased $419 million, or 9.3%, from $4.5~~to $25.1 billion in the ~~2021 period to $4.1~~2023 quarter and increased $9.7 billion, or 14.6%, from $66.4 billion in the 2022 period ~~primarily due~~ to ~~the decline in our fully-insured commercial medical and ASO commercial membership, partially offset by higher per member premiums across the fully-insured commercial business.~~

~~Services Revenue~~

Group and Specialty segment services revenue decreased $1 million, or 0.5%, from $198 million in the 2021 quarter to $197 million in the 2022 quarter and increased $6 million, or 1.0%, from $582 million in the 2021 period to $588 million in the 2022 period.

~~Benefits Expense~~

The Group and Specialty segment benefit ratio decreased 770 basis points from 86.4% in the 2021 quarter to 78.7% in the 2022 quarter and decreased 470 basis points from 81.2% in the 2021 period to 76.5% in the 2022 period primarily due to the impact of the specialty product's lower benefit ratio, as the segment results now reflect a higher mix of the specialty business, pricing and benefit design efforts to address COVID-19 and increase profitability, a less severe COVID-19 impact in the 2022 period compared to the elevated impact in the 2021 period, including the Delta variant in the 2021 quarter, and the enrolled population's higher vaccination rate in 2022 compared to 2021. These factors were ~~partially offset by lower prior-period medical claims reserve development.~~

~~The Group and Specialty segment's benefits expense included $5 million of unfavorable prior-period~~ ~~medical claims reserve development in the 2022 quarter and $5 million of unfavorable prior-period medical claims reserve development in the 2021 quarter.~~ The Group and Specialty segment's benefits expense included $25 million of favorable prior-period medical claims reserve development in the 2022 period and $95 million of favorable prior-period medical claims reserve development in the 2021 period. ~~Prior-period medical claims reserve development increased the Group and Specialty segment benefit ratio by~~ approximately 40 basis points in the 2022 quarter and increased the Group Specialty segment benefit ratio by approximately 30 basis points in the 2021 quarter. Prior-period medical claims reserve development decreased the Group and Specialty segment benefit ratio by approximately 60 basis points in the 2022 period and decreased the Group and Specialty segment benefit ratio by approximately 210 basis points in the 2021 period.

~~Operating Costs~~

The Group and Specialty segment operating cost ratio increased 270 basis points from 24.9% for the 2021 quarter to 27.6% for the 2022 quarter and increased 260 basis points from 23.9% in the 2021 period to 26.5% in the 2022 periodprimarily due to the impact of membership declining at a greater rate than the decline in absolute administrative expenses, as well as a greater proportion of membership associated with our ASO commercial, Military services, and specialty businesses, each of which have a higher operating cost ratio than the fully-insured commercial product. The increase further reflects investments in the Military services business across demonstration programs, partners service contracts and in preparation for the next generation of the United States Department of Defense's TRICARE contracts, as well as investments in the specialty business to promote growth.

~~Table of Contents~~

~~Healthcare Services Segment~~

Change
Three months ended September 30, Nine months ended September 30, Three months ended September 30, 2022 vs 2021 Nine months ended September 30, 2022 vs 2021
2022 2021 2022 2021 $ % $ %
($ in millions)
Revenues:
Services:
Home solutions $ 519 $ 374 $ 1,997 $ 423 $ 145 38.8 % $ 1,574 372.1 %
Pharmacy solutions 274 163 754 482 111 68.1 % 272 56.4 %
Provider services 159 110 409 298 49 44.5 % 111 37.2 %
Total services revenue 952 647 3,160 1,203 305 47.1 % 1,957 162.7 %
Intersegment revenues:
Home solutions 223 191 639 452 32 16.8 % 187 41.4 %
Pharmacy solutions 6,966 6,569 20,464 19,244 397 6.0 % 1,220 6.3 %
Provider services 736 630 2,261 1,858 106 16.8 % 403 21.7 %
Total intersegment revenues 7,925 7,390 23,364 21,554 535 7.2 % 1,810 8.4 %
Total services and intersegment revenues $ 8,877 $ 8,037 $ 26,524 $ 22,757 $ 840 10.5 % $ 3,767 16.6 %
Segment earnings $ 630 $ 373 $ 1,513 $ 953 $ 257 68.9 % $ 560 58.8 %
Operating cost ratio 95.0 % 95.0 % 94.6 % 95.6 % — % (1.0) %

~~Segment Earnings~~

Healthcare Services segment earnings increased $257 million, or 68.9%, from $373 million in the 2021 quarter to $630 million in the 2022 quarter and increased $560 million, or 58.8%, from $953 million in the 2021 period to $1.5$76.1 billion in the ~~2022 period~~primarily due to the same factors impacting the increase in services revenue and intersegment revenues as well as the same factors impacting the segment's lower operating cost ratio in the 2022 period as more fully described below.

~~Script Volume~~

Humana Pharmacy Solutions script volumes on an adjusted 30-day equivalent basis increased to approximately 134 million in the 2022 quarter, up 3.1%, versus scripts of approximately 130 million in the 2021 quarter and increased to approximately 398 million in the 2022 period, up 3.7%, versus scripts of approximately 384 million in the 2021 period primarily due to individual Medicare Advantage membership growth and higher utilization in PDP offset by the decline in fully-insured commercial and ASO membership.

~~Services Revenue~~

Services revenue increased $305 million, or 47.1%, from $647 million in the 2021 quarter to $952 million in the 2022 quarter and increased $2.0 billion, or 162.7%, from $1.2 billion in the 2021 period to $3.2 billion in the 2022 periodprimarily due to the impact of home solutions revenues which reflects the acquisition of the remaining 60% interest in KAH during August 2021 partially offset by the divestiture of the 60% ownership of KAH Hospice during August 2022.

~~Intersegment Revenues~~

Intersegment revenues increased $535 million, or 7.2%, from $7.4 billion in the 2021 quarter to $7.9 billion in the 2022 quarter and increased $1.8 billion, or 8.4%, from $21.6 billion in the 2021 period to $23.4 billion in the

~~Table of Contents~~

~~2022~~2023 period primarily due to individual Medicare Advantage and state-based contracts membership growth ~~leading~~and higher per member individual Medicare Advantage premiums. These factors were partially offset by the year-over-year decline in membership associated with group commercial medical, group Medicare Advantage and stand-alone PDP products. In addition, the period was negatively impacted by the phase-out of COVID-19 sequestration relief in 2022.

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Services Revenue

Insurance segment services revenue increased $47 million, or 22.4%, from $210 million in the 2022 quarter to $257 million in the 2023 quarter and increased $110 million, or 17.7%, from $620 million in the 2022 period to $730 million in the 2023 period.

Benefits Expense

The Insurance segment benefit ratio increased 180 basis points from 85.8% for the 2022 quarter to 87.6% for the 2023 quarter and increased 50 basis points from 86.3% for the 2022 period to 86.8% for the 2023 period primarily due to investments in the benefit design of our Medicare Advantage products for 2023, the continuation of elevated Medicare Advantage utilization trends initially discussed in the second quarter of 2023, combined with higher ~~pharmacy revenues,~~ COVID-19 admissions in the 2023 quarter, without the offsetting impact of lower non-COVID care, as well as the impact of ~~greater mail-order pharmacy penetration, as well as~~continued individual Medicare Advantage growth following the previous Annual Election Period, or AEP, including a high proportion of age-ins, which typically have a higher ~~revenues~~benefits expense ratio initially than the average new member. These increases were partially offset by increased individual Medicare Advantage premiums and decreased average unit costs given the additional 20% payment on COVID-19 admissions during the Public Health Emergency, which expired on May 11, 2023. In addition, the period was favorably impacted by higher favorable prior-period medical claims reserve development. Further, the 2023 quarter and period ratios continue to reflect a~~ssociated~~ shift in line of business mix, with growth in ~~our provider business.~~individual Medicare Advantage and state-based contracts and other membership, which can carry a higher benefits expense ratio.

The Insurance segment benefits expense included $4 million of favorable prior-period medical claims reserve development in the 2023 quarter and $7 million of favorable prior-period medical claims reserve development in the 2022 quarter. The Insurance segment benefit expense included $758 million of favorable prior-period medical claims reserve development in the 2023 period and $404 million of favorable prior-period medical claims reserve development in the 2022 period. Prior-period medical claims reserve development did not impact the Insurance segment benefit ratio in the 2023 quarter or the 2022 quarter. Prior-period medical claims reserve development decreased the Insurance segment benefit ratio by approximately 100 basis points in the 2023 period and decreased the Insurance segment benefit ratio by approximately 60 basis points in the 2022 period.

Operating Costs

The ~~Healthcare Services~~Insurance segment operating cost ratio ~~was unchanged at 95.0%~~decreased 20 basis points from 10.6% for ~~the 2021 quarter and~~ the 2022 quarter to 10.4% for the 2023 quarter primarily due to scale efficiencies associated with growth in the individual Medicare Advantage membership and ~~decreased 100~~administrative cost efficiencies as a result of our value creation initiatives. These factors were partially offset by an increase in commissions for brokers related to the individual Medicare Advantage membership growth in 2023 and an accrual related to certain anticipated litigation expenses in the 2023 quarter. The Insurance segment operating cost ratio increased 20 basis points from ~~95.6%~~9.7% for the ~~2021~~2022 period to ~~94.6%~~9.9% for the ~~2022~~2023 period primarily due to the ~~consolidation~~net unfavorable impact of ~~KAH~~the 2023 quarter operating cost ratio factors. In addition, the period was negatively impacted by the phase-out of COVID-19 sequestration relief in 2022.

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CenterWell Segment




													Change
	Three months ended September 30,						Nine Months Ended September 30,						Three months ended September 30, 2023 vs 2022				Nine Months Ended September 30, 2023 vs 2022
	2023			2022			2023			2022			$		%		$		%
	($ in millions)
Revenues:
Services:


Home solutions	$	342		$	519		$	997		$	1,997		$	(177)	(34.1)	%	$	(1,000)	(50.1)	%
Pharmacy solutions	203			271			661			746			(68)		(25.1)	%	(85)		(11.4)	%
Primary care	214			159			605			409			55		34.6	%	196		47.9	%
Total services revenue	759			949			2,263			3,152			(190)		(20.0)	%	(889)		(28.2)	%
Intersegment revenues:


Home solutions	453			126			1,088			352			327		259.5	%	736		209.1	%
Pharmacy solutions	2,594			2,459			7,848			7,394			135		5.5	%	454		6.1	%
Primary care	854			737			2,496			2,262			117		15.9	%	234		10.3	%
Total intersegment revenues	3,901			3,322			11,432			10,008			579		17.4	%	1,424		14.2	%
Total services and intersegment revenues	$	4,660		$	4,271		$	13,695		$	13,160		$	389	9.1	%	$	535	4.1	%
Income from operations	$	400		$	300		$	1,017		$	1,028		$	100	33.3	%	$	(11)	(1.1)	%
Operating cost ratio	90.3		%	92.0		%	91.5		%	91.2		%			(1.7)	%			0.3	%

Income from operations

CenterWell income from operations increased $0.1 billion, or 33.3%, from $0.3 billion in the 2022 quarter to $0.4 billion in the 2023 quarter and decreased $0.01 billion, or 1.1%, from $1.03 billion in the 2022 period to $1.02 billion in the 2023 period primarily due to the same factors impacting the segment's operating cost ratio as more fully described below.

Services Revenue

CenterWell services revenue decreased $0.2 billion, or 20.0%, from $0.9 billion in the 2022 quarter to $0.8 billion in the 2023 quarter and decreased $0.9 billion, or 28.2%, from $3.2 billion in the 2022 period to $2.3 billion in the 2023 period primarily due to the divestiture of the 60% ownership of Gentiva Hospice in August 2022.

Intersegment Revenues

CenterWell intersegment revenues increased $0.6 billion, or 17.4%, from $3.3 billion in the 2022 quarter to $3.9 billion in the 2023 quarter and increased $1.4 billion, or 14.2%, from $10.0 billion in the 2022 period to $11.4 billion in the 2023 period primarily due to individual Medicare Advantage membership growth, which led to higher pharmacy revenues, higher revenues associated with growth in the primary care business, and greater revenues associated with the home solutions business as a result of the expansion of the value-based care home model in 2023 compared to 2022.

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Operating Costs

The CenterWell segment operating cost ratio decreased 170 basis points from 92.0% for the ~~entire~~ 2022 ~~period compared~~quarter to 90.3% for the 2023 quarter primarily due to an improving ratio in the primary care business driven by year-over-year medical costs favorability and administrative cost efficiencies related to the ~~partial 2021 period due to timing~~pharmacy solutions business. These factors were partially offset by the divestiture of the ~~previously disclosed transaction. The KAH operations have~~60% ownership of Gentiva Hospice in August 2022, which carried a lower operating cost ratio ~~than~~compared to other businesses within the ~~segment. The decrease further reflects favorability~~segment, the expansion of the value-based care model within the home solutions business, which carries a higher operating cost ratio compared to the core fee-for-service business, along with growth in ~~our pharmacy operations partially offset by~~Medicare Advantage episodes in the core fee-for-service business, as well as continued investments ~~in KAH~~within the home solutions business to abate the pressures of the current nursing labor environment. The CenterWell segment operating cost ratio increased 30 basis points from 91.2% for the 2022 period to 91.5% for the 2023 period primarily due the unfavorable impact of the 2023 quarter operating cost ratio factors.

Liquidity

Historically, our primary sources of cash have included receipts of premiums, services revenue, and investment and other income, as well as proceeds from the sale or maturity of our investment securities, and borrowings. Our primary uses of cash historically have included disbursements for claims payments, operating costs, interest on borrowings, taxes, purchases of investment securities, acquisitions, capital expenditures, repayments on borrowings, dividends, and share repurchases. As premiums generally are collected in advance of claim payments by a period of up to several months, our business normally should produce positive cash flows during periods of increasing premiums and enrollment. Conversely, cash flows would be negatively impacted during periods of decreasing premiums and enrollment. From period to period, our cash flows may also be affected by the timing of working capital items including premiums receivable, benefits payable, and other receivables and payables. Our cash flows are impacted by the timing of payments to and receipts from CMS associated with Medicare Part D subsidies for which we do not assume risk. The use of cash flows may be limited by regulatory requirements of state departments of insurance (or comparable state regulators) which require, among other items, that our regulated subsidiaries maintain minimum levels of capital and seek approval before paying dividends from the subsidiaries to the parent. Our use of cash flows derived from our non-insurance subsidiaries, such as in our ~~Healthcare Services~~CenterWell segment, is generally not restricted by state departments of insurance (or comparable state regulators).

For additional information regarding our liquidity risk, refer to Part I, Item 1A, "Risk Factors" in our ~~2021~~2022 Form 10-K and Part II, Item 1A, "Risk Factors" of this Form 10-Q.

Cash and cash equivalents increased to approximately ~~$13.6~~$15.1 billion at September 30, ~~2022~~2023 from ~~$3.4~~$5.1 billion at December 31, ~~2021.~~2022. The change in cash and cash equivalents for the nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 is summarized as follows:


		Nine Months Ended					Nine Months Ended
		2022		2021			2023		2022
		(in millions)					(in millions)
Net cash provided by operating activities	Net cash provided by operating activities	$	9,714	$	2,358	Net cash provided by operating activities	$	11,115	$	9,714
Net cash provided by (used in) investing activities		6		(6,454)
Net cash (used in) provided by investing activities						Net cash (used in) provided by investing activities	(2,610)		6
Net cash provided by financing activities	Net cash provided by financing activities	444		3,727		Net cash provided by financing activities	1,582		444
Increase (decrease) in cash and cash equivalents		$	10,164	$	(369)
Increase in cash and cash equivalents						Increase in cash and cash equivalents	$	10,087	$	10,164

Cash Flow from Operating Activities

Cash flows provided by operations of ~~$9.7~~$11.1 billion in the ~~2022~~2023 period increased ~~$7.4~~$1.4 billion from cash flows provided by operations of ~~$2.4~~$9.7 billion in the ~~2021~~2022 period. Our operating cash flows for the 2023 period and the 2022 period ~~was~~were significantly impacted by the early receipt of the Medicare premium remittance of $7.1 billion in September 2023 and $5.8 billion in September 2022, because the payment date for October 2023 and 2022, respectively, fell on a weekend. Generally, when the first day of a month falls on a weekend or holiday, with the

Table of Contents

exception of January 1 (New Year's Day), we receive this payment at the end of the previous month. This also resulted in an increase to unearned revenues in our condensed consolidated balance sheet

~~Table of Contents~~

at September 30, 2023 and 2022. Our operating cash flows for the ~~2022~~2023 period ~~were positively impacted by~~also reflect higher earnings ~~exclusive of the gain on the sale of KAH Hospice recognized in~~compared to the 2022 period and the gain on the KAH equity method investment recognized in the 2021 period, combined with the 2021 period impact associated with the pay down of claims inventory and capitation for provider surplus amounts earned in 2020 and additional provider support.period.

The most significant drivers of changes in our working capital are typically the timing of payments of benefits expense and receipts for premiums. Benefits expense includes claim payments, capitation payments, pharmacy costs net of rebates, allocations of certain centralized expenses and various other costs incurred to provide health insurance coverage to members, as well as estimates of future payments to hospitals and others for medical care and other supplemental benefits provided on or prior to the balance sheet date. For additional information regarding our benefits payable and benefits expense recognition, refer to Note 2 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" in our ~~2021~~2022 Form 10-K.

The detail of total net receivables at September 30, ~~2022~~2023 and December 31, ~~2021~~2022 and reconciliation to cash flow for the nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 was as follows:


		September 30, 2022		December 31, 2021		2022 Period Change		2021 Period Change			September 30, 2023		December 31, 2022		2023 Period Change		2022 Period Change
		(in millions)									(in millions)
Medicare	Medicare	$	1,218	$	1,214	$	4	$	254	Medicare	$	1,293	$	1,260	$	33	$	4
Commercial and other	Commercial and other	354		579		(225)		490		Commercial and other	479		383		96		(225)
Military services		108		104		4		7
Military										Military	125		101		24		4
Allowances	Allowances	(71)		(83)		12		(10)		Allowances	(73)		(70)		(3)		12
Total net receivables	Total net receivables	$	1,609	$	1,814	$	(205)	$	741	Total net receivables	$	1,824	$	1,674	$	150	$	(205)
Reconciliation to cash flow statement:	Reconciliation to cash flow statement:									Reconciliation to cash flow statement:
Receivables from acquisition	Receivables from acquisition					—		(447)		Receivables from acquisition					(24)		—
Receivables disposed	Receivables disposed					194				Receivables disposed					—		194
Change in receivables per cash flow statement	Change in receivables per cash flow statement					$	(11)	$	294	Change in receivables per cash flow statement					$	126	$	(11)


Delaware						61-0647538
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, $0.16 2/3 par value	HUM	New York Stock Exchange


Class of Common Stock			Outstanding at September 30, ~~2022~~2023
$0.16 2/3 par value			~~126,600,318~~123,110,720 shares


		Page
Part I: Financial Information
Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets (Unaudited) (~~Unaudited)~~at September 30, ~~2022~~2023 and December 31, ~~2021~~2022	3

	Condensed Consolidated Statements of Income (Unaudited)~~(Unaudited~~) for the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022	4

	Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022	5

	Condensed Consolidated Statements of Stockholders' Equity (Unaudited) for the three and nine months ended September 30, 2023 and 2022	6

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, ~~2022~~2023 and ~~2021~~2022	8

	Notes to Condensed Consolidated Financial Statements (Unaudited)	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Resultsof Operations	3536

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	54

Item 4.	Controls and Procedures	54

Part II: Other Information

Item 1.	Legal Proceedings	55

Item 1A.	Risk Factors	55

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55

Item 3.	Defaults Upon Senior Securities	5655

Item 4.	Mine Safety Disclosures	5655

Item 5.	Other Information	56

Item 6.	Exhibits	57

	Signatures	58

	Certifications


		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
		(in millions, except share amounts)					(in millions, except share amounts)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	13,558	$	3,394	Cash and cash equivalents	$	15,148	$	5,061
Investment securities	Investment securities	13,124		13,192		Investment securities	15,145		13,881
Receivables, net of allowances of $71 in 2022 and $83 in 2021		1,609		1,814
Receivables, net of allowances of $73 in 2023 and $70 in 2022						Receivables, net of allowances of $73 in 2023 and $70 in 2022	1,824		1,674
Other current assets	Other current assets	5,420		6,493		Other current assets	6,136		5,567

Total current assets	Total current assets	33,711		24,893		Total current assets	38,253		26,183
Property and equipment, net	Property and equipment, net	3,218		3,073		Property and equipment, net	3,342		3,221
Long-term investment securities	Long-term investment securities	375		780		Long-term investment securities	370		380
Equity method investments	Equity method investments	738		141		Equity method investments	762		749
Goodwill	Goodwill	9,096		11,092		Goodwill	9,540		9,142
Other long-term assets	Other long-term assets	3,627		4,379		Other long-term assets	3,638		3,380

Total assets	Total assets	$	50,765	$	44,358	Total assets	$	55,905	$	43,055
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Benefits payable	Benefits payable	$	9,237	$	8,289	Benefits payable	$	10,196	$	9,264
Trade accounts payable and accrued expenses	Trade accounts payable and accrued expenses	6,766		4,509		Trade accounts payable and accrued expenses	7,600		5,238
Book overdraft	Book overdraft	237		326		Book overdraft	246		298
Unearned revenues	Unearned revenues	6,012		254		Unearned revenues	7,536		286
Short-term debt	Short-term debt	2,799		1,953		Short-term debt	2,245		2,092

Total current liabilities	Total current liabilities	25,051		15,331		Total current liabilities	27,823		17,178
Long-term debt	Long-term debt	7,798		10,541		Long-term debt	9,483		9,034
Other long-term liabilities	Other long-term liabilities	1,599		2,383		Other long-term liabilities	1,595		1,473

Total liabilities	Total liabilities	34,448		28,255		Total liabilities	38,901		27,685

Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, $1 par; 10,000,000 shares authorized; none issued	Preferred stock, $1 par; 10,000,000 shares authorized; none issued	—		—		Preferred stock, $1 par; 10,000,000 shares authorized; none issued	—		—
Common stock, $0.16 2/3 par; 300,000,000 shares authorized; 198,666,598 shares issued at September 30, 2022 and 198,648,742 shares at December 31, 2021		33		33
Common stock, $0.16 2/3 par; 300,000,000 shares authorized; 198,690,082 shares issued at September 30, 2023 and 198,666,598 shares issued at December 31, 2022						Common stock, $0.16 2/3 par; 300,000,000 shares authorized; 198,690,082 shares issued at September 30, 2023 and 198,666,598 shares issued at December 31, 2022	33		33
Capital in excess of par value	Capital in excess of par value	3,234		3,082		Capital in excess of par value	3,362		3,246
Retained earnings	Retained earnings	25,606		23,086		Retained earnings	28,191		25,492
Accumulated other comprehensive (loss) income		(1,467)		42
Treasury stock, at cost, 72,066,280 shares at September 30, 2022 and 69,846,758 shares at December 31, 2021		(11,152)		(10,163)
Accumulated other comprehensive loss						Accumulated other comprehensive loss	(1,503)		(1,304)
Treasury stock, at cost, 75,579,362 shares at September 30, 2023 and 73,691,955 shares at December 31, 2022						Treasury stock, at cost, 75,579,362 shares at September 30, 2023 and 73,691,955 shares at December 31, 2022	(13,134)		(12,156)
Total stockholders' equity						Total stockholders' equity	16,949		15,311
Noncontrolling interests	Noncontrolling interests	63		23		Noncontrolling interests	55		59
Total stockholders’ equity		16,317		16,103
Total liabilities and stockholders’ equity		$	50,765	$	44,358
Total equity						Total equity	17,004		15,370
Total liabilities and equity						Total liabilities and equity	$	55,905	$	43,055


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934


		Common Stock			Capital In Excess of Par Value				Retained Earnings		Accumulated Other Comprehensive Income (loss)					Treasury Stock			Noncontrolling Interests				Total Stockholders’ Equity			Common Stock						Capital In Excess of Par Value					Retained Earnings				Accumulated Other Comprehensive Loss				Treasury Stock				Total Stockholders' Equity				Noncontrolling Interests				Total Equity
		Issued Shares	Amount												Issued Shares						Amount
																										(dollars in millions, share amounts in thousands)
Three months ended September 30, 2023																									Three months ended September 30, 2023
Balances, June 30, 2023																									Balances, June 30, 2023	198,690		$	33					$	3,313				$	27,468			$	(1,226)			$	(12,754)			$	16,834			$	57			$	16,891
Net income																									Net income												832												832				(2)				830

Other comprehensive loss																									Other comprehensive loss																(277)								(277)								(277)
Common stock repurchases																									Common stock repurchases							—													(383)				(383)								(383)
Dividends and dividend equivalents																									Dividends and dividend equivalents							—					(109)												(109)								(109)
Stock-based compensation																									Stock-based compensation							53																	53								53
Restricted stock unit vesting																									Restricted stock unit vesting	—		—				(3)													3				—								—
Stock option exercises																									Stock option exercises	—		—				(1)													—				(1)								(1)
Balances, September 30, 2023																									Balances, September 30, 2023	198,690		$	33			$	3,362				$	28,191			$	(1,503)			$	(13,134)			$	16,949			$	55			$	17,004
		(dollars in millions, share amounts in thousands)
Three months ended September 30, 2022	Three months ended September 30, 2022																								Three months ended September 30, 2022
Balances, June 30, 2022	Balances, June 30, 2022	198,667	$	33			$	3,153					$	24,511				$	(1,051)			$	(11,156)			$	20	$	15,510	Balances, June 30, 2022	198,667					$	33			$	3,153			$	24,511			$	(1,051)			$	(11,156)			$	15,490			$	20	$	15,510
Net income	Net income								1,195										(2)				1,193		Net income												1,195												1,195				(2)				1,193
Distribution from noncontrolling interest holders, net	Distribution from noncontrolling interest holders, net																		3				3		Distribution from noncontrolling interest holders, net																												3				3
Sale of KAH Hospice																			(11)				(11)
Sale of Gentiva Hospice																									Sale of Gentiva Hospice																												(11)				(11)
Acquisition	Acquisition																		53				53		Acquisition																												53				53
Other comprehensive loss	Other comprehensive loss										(416)												(416)		Other comprehensive loss																(416)								(416)								(416)
Common stock repurchases	Common stock repurchases				—											(4)							(4)		Common stock repurchases							—													(4)				(4)								(4)
Dividends and dividend equivalents	Dividends and dividend equivalents				—				(100)														(100)		Dividends and dividend equivalents							—					(100)												(100)								(100)
Stock-based compensation	Stock-based compensation				80																		80		Stock-based compensation							80																	80								80
Restricted stock unit vesting	Restricted stock unit vesting	—	—		(3)											3							—		Restricted stock unit vesting	—		—				(3)													3				—								—
Stock option exercises	Stock option exercises	—	—		4											5							9		Stock option exercises	—		—				4													5				9								9
Balances, September 30, 2022	Balances, September 30, 2022	198,667	$	33	$	3,234			$	25,606	$	(1,467)				$	(11,152)		$	63			$	16,317	Balances, September 30, 2022	198,667		$	33			$	3,234				$	25,606			$	(1,467)			$	(11,152)			$	16,254			$	63			$	16,317

Three months ended September 30, 2021
Balances, June 30, 2021		198,649	$	33	$	3,018			$	21,751	$	216				$	(10,175)		$	—			$	14,843
Net income									1,531										—				1,531

Acquisition																			22				22
Other comprehensive loss											(71)												(71)
Common stock repurchases					—											(3)							(3)
Dividends and dividend equivalents					—				(91)														(91)
Stock-based compensation					48																		48
Restricted stock unit vesting		—	—		(3)											3							—
Stock option exercises		—	—		1											2							3
Balances, September 30, 2021		198,649	$	33	$	3,064			$	23,191	$	145				$	(10,173)		$	22			$	16,282


	~~August 11, 2022~~
	~~(in millions)~~
~~Assets~~
~~Cash and cash equivalents~~	$	66
~~Receivables, net of allowances~~	~~194~~
~~Other current assets~~	20
~~Property and equipment, net~~	44
~~Goodwill~~	~~2,331~~
~~Other assets~~	~~960~~
~~Total assets~~	$	~~3,615~~
~~Liabilities~~
~~Trade accounts payable and accrued expenses~~	$	~~245~~
~~Other long-term liabilities~~	~~281~~
~~Total liabilities~~	$	~~526~~
~~Noncontrolling interest~~	$	11


		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
		(in millions)									(in millions)
September 30, 2022
September 30, 2023										September 30, 2023
U.S. Treasury and other U.S. government corporations and agencies:	U.S. Treasury and other U.S. government corporations and agencies:									U.S. Treasury and other U.S. government corporations and agencies:
U.S. Treasury and agency obligations	U.S. Treasury and agency obligations	$	657	$	—	$	(58)	$	599	U.S. Treasury and agency obligations	$	2,043	$	—	$	(105)	$	1,938
Mortgage-backed securities	Mortgage-backed securities	3,589		1		(550)		3,040		Mortgage-backed securities	3,890		—		(637)		3,253
Tax-exempt municipal securities	Tax-exempt municipal securities	769		—		(54)		715		Tax-exempt municipal securities	848		—		(50)		798
Mortgage-backed securities:	Mortgage-backed securities:									Mortgage-backed securities:
Residential	Residential	482		—		(78)		404		Residential	497		—		(85)		412
Commercial	Commercial	1,562		—		(154)		1,408		Commercial	1,475		—		(155)		1,320
Asset-backed securities	Asset-backed securities	1,915		—		(81)		1,834		Asset-backed securities	1,849		—		(65)		1,784
Corporate debt securities	Corporate debt securities	6,418		—		(931)		5,487		Corporate debt securities	6,864		14		(868)		6,010
Total debt securities	Total debt securities	$	15,392	$	1	$	(1,906)	13,487		Total debt securities	$	17,466	$	14	$	(1,965)	15,515
Common stock	Common stock							12		Common stock							—
Total investment securities	Total investment securities							$	13,499	Total investment securities							$	15,515

December 31, 2021
December 31, 2022										December 31, 2022
U.S. Treasury and other U.S. government corporations and agencies:	U.S. Treasury and other U.S. government corporations and agencies:									U.S. Treasury and other U.S. government corporations and agencies:
U.S. Treasury and agency obligations	U.S. Treasury and agency obligations	$	611	$	1	$	(10)	$	602	U.S. Treasury and agency obligations	$	1,093	$	1	$	(55)	$	1,039
Mortgage-backed securities	Mortgage-backed securities	3,265		33		(69)		3,229		Mortgage-backed securities	3,697		4		(471)		3,230
Tax-exempt municipal securities	Tax-exempt municipal securities	810		33		(2)		841		Tax-exempt municipal securities	765		—		(37)		728
Mortgage-backed securities:	Mortgage-backed securities:									Mortgage-backed securities:
Residential	Residential	373		—		(6)		367		Residential	477		—		(76)		401
Commercial	Commercial	1,394		27		(11)		1,410		Commercial	1,554		—		(155)		1,399
Asset-backed securities	Asset-backed securities	1,346		6		(4)		1,348		Asset-backed securities	1,809		1		(79)		1,731
Corporate debt securities	Corporate debt securities	5,641		118		(59)		5,700		Corporate debt securities	6,551		3		(828)		5,726
Total debt securities	Total debt securities	$	13,440	$	218	$	(161)	13,497		Total debt securities	$	15,946	$	9	$	(1,701)	14,254
Common stock	Common stock							475		Common stock							7
Total investment securities	Total investment securities							$	13,972	Total investment securities							$	14,261


		Less than 12 months				12 months or more				Total					Less than 12 months				12 months or more				Total
		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
		(in millions)													(in millions)
September 30, 2022
September 30, 2023														September 30, 2023
U.S. Treasury and other U.S. government corporations and agencies:	U.S. Treasury and other U.S. government corporations and agencies:													U.S. Treasury and other U.S. government corporations and agencies:
U.S. Treasury and agency obligations	U.S. Treasury and agency obligations	$	146	$	(6)	$	380	$	(52)	$	526	$	(58)	U.S. Treasury and agency obligations	$	1,483	$	(51)	$	407	$	(54)	$	1,890	$	(105)
Mortgage-backed securities	Mortgage-backed securities	1,114		(131)		1,802		(419)		2,916		(550)		Mortgage-backed securities	1,084		(66)		2,169		(571)		3,253		(637)
Tax-exempt municipal securities	Tax-exempt municipal securities	79		(3)		625		(51)		704		(54)		Tax-exempt municipal securities	278		(6)		515		(44)		793		(50)
Mortgage-backed securities:	Mortgage-backed securities:													Mortgage-backed securities:
Residential	Residential	127		(15)		277		(63)		404		(78)		Residential	48		(1)		363		(84)		411		(85)
Commercial	Commercial	252		(13)		1,156		(141)		1,408		(154)		Commercial	15		—		1,304		(155)		1,319		(155)
Asset-backed securities	Asset-backed securities	598		(30)		1,226		(51)		1,824		(81)		Asset-backed securities	343		(6)		1,430		(59)		1,773		(65)
Corporate debt securities	Corporate debt securities	1,909		(191)		3,484		(740)		5,393		(931)		Corporate debt securities	961		(35)		4,648		(833)		5,609		(868)
Total debt securities	Total debt securities	$	4,225	$	(389)	$	8,950	$	(1,517)	$	13,175	$	(1,906)	Total debt securities	$	4,212	$	(165)	$	10,836	$	(1,800)	$	15,048	$	(1,965)

December 31, 2021
December 31, 2022														December 31, 2022
U.S. Treasury and other U.S. government corporations and agencies:	U.S. Treasury and other U.S. government corporations and agencies:													U.S. Treasury and other U.S. government corporations and agencies:
U.S. Treasury and agency obligations	U.S. Treasury and agency obligations	$	201	$	(3)	$	355	$	(7)	$	556	$	(10)	U.S. Treasury and agency obligations	$	512	$	(5)	$	397	$	(50)	$	909	$	(55)
Mortgage-backed securities	Mortgage-backed securities	2,082		(49)		556		(20)		2,638		(69)		Mortgage-backed securities	1,231		(104)		1,683		(367)		2,914		(471)
Tax-exempt municipal securities	Tax-exempt municipal securities	68		(1)		34		(1)		102		(2)		Tax-exempt municipal securities	64		(2)		615		(36)		679		(38)
Mortgage-backed securities:	Mortgage-backed securities:													Mortgage-backed securities:
Residential	Residential	358		(6)		8		—		366		(6)		Residential	124		(16)		274		(60)		398		(76)
Commercial	Commercial	295		(4)		400		(7)		695		(11)		Commercial	243		(13)		1,157		(142)		1,400		(155)
Asset-backed securities	Asset-backed securities	530		(3)		425		(1)		955		(4)		Asset-backed securities	620		(32)		1,011		(46)		1,631		(78)
Corporate debt securities	Corporate debt securities	1,456		(28)		769		(31)		2,225		(59)		Corporate debt securities	1,625		(98)		3,825		(730)		5,450		(828)
Total debt securities	Total debt securities	$	4,990	$	(94)	$	2,547	$	(67)	$	7,537	$	(161)	Total debt securities	$	4,419	$	(270)	$	8,962	$	(1,431)	$	13,381	$	(1,701)


		Fair Value Measurements Using									Fair Value Measurements Using
		Fair Value		Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)			Fair Value		Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
		(in millions)									(in millions)
September 30, 2022
September 30, 2023										September 30, 2023
Cash equivalents										Cash equivalents	$	15,035	$	15,035	$	—	$	—
Debt securities:										Debt securities:
U.S. Treasury and other U.S. government corporations and agencies:										U.S. Treasury and other U.S. government corporations and agencies:
U.S. Treasury and agency obligations										U.S. Treasury and agency obligations	1,938		—		1,938		—
Mortgage-backed securities										Mortgage-backed securities	3,253		—		3,253		—
Tax-exempt municipal securities										Tax-exempt municipal securities	798		—		798		—
Mortgage-backed securities:										Mortgage-backed securities:
Residential										Residential	412		—		412		—
Commercial										Commercial	1,320		—		1,320		—
Asset-backed securities										Asset-backed securities	1,784		—		1,784		—
Corporate debt securities										Corporate debt securities	6,010		—		5,905		105
Total debt securities										Total debt securities	15,515		—		15,410		105

Total invested assets										Total invested assets	$	30,550	$	15,035	$	15,410	$	105

December 31, 2022										December 31, 2022
Cash equivalents	Cash equivalents	$	13,357	$	13,357	$	—	$	—	Cash equivalents	$	4,832	$	4,832	$	—	$	—
Debt securities:	Debt securities:									Debt securities:
U.S. Treasury and other U.S. government corporations and agencies:	U.S. Treasury and other U.S. government corporations and agencies:									U.S. Treasury and other U.S. government corporations and agencies:
U.S. Treasury and agency obligations	U.S. Treasury and agency obligations	599		—		599		—		U.S. Treasury and agency obligations	1,039		—		1,039		—
Mortgage-backed securities	Mortgage-backed securities	3,040		—		3,040		—		Mortgage-backed securities	3,230		—		3,230		—
Tax-exempt municipal securities	Tax-exempt municipal securities	715		—		715		—		Tax-exempt municipal securities	728		—		728		—
Mortgage-backed securities:	Mortgage-backed securities:									Mortgage-backed securities:
Residential	Residential	404		—		404		—		Residential	401		—		401		—
Commercial	Commercial	1,408		—		1,408		—		Commercial	1,399		—		1,399		—
Asset-backed securities	Asset-backed securities	1,834		—		1,834		—		Asset-backed securities	1,731		—		1,731		—
Corporate debt securities	Corporate debt securities	5,487		—		5,387		100		Corporate debt securities	5,726		—		5,625		101
Total debt securities	Total debt securities	13,487		—		13,387		100		Total debt securities	14,254		—		14,153		101
Common stock	Common stock	12		12		—		—		Common stock	7		7		—		—
Total invested assets	Total invested assets	$	26,856	$	13,369	$	13,387	$	100	Total invested assets	$	19,093	$	4,839	$	14,153	$	101

December 31, 2021
Cash equivalents		$	3,322	$	3,322	$	—	$	—
Debt securities:
U.S. Treasury and other U.S. government corporations and agencies:
U.S. Treasury and agency obligations		602		—		602		—
Mortgage-backed securities		3,229		—		3,229		—
Tax-exempt municipal securities		841		—		841		—
Mortgage-backed securities:
Residential		367		—		367		—
Commercial		1,410		—		1,410		—
Asset-backed securities		1,348		—		1,348		—
Corporate debt securities		5,700		—		5,632		68
Total debt securities		13,497		—		13,429		68
Common stock		475		475		—		—
Total invested assets		$	17,294	$	3,797	$	13,429	$	68


	For the nine months ended September 30, 2023		For the nine months ended September 30, 2022
	Private Placements
	(in millions)
Beginning balance at January 1	$	101	$	68
Total gains or losses:
Realized in earnings	—		—
Unrealized in other comprehensive income	(1)		—
Purchases	13		(12)
Sales	—		44
Maturities	(4)		—
Transfer out	(4)
Balance at September 30	$	105	$	100


	September 30, 2023		December 31, 2022
Annualized volatility	16.6% - 19.6%		16.7% - 20.8%
Credit spread	0.9% - 1.4%		1.3% - 1.5%
Revenue exit multiple	1.5x - 2.5x		1.5x - 2.5x
Weighted average cost of capital	12.0% - 13.0%		11.5% - 12.5%
Long term growth rate	3.0	%	3.0	%


		(in millions)			(in millions)
For the years ending December 31,	For the years ending December 31,			For the years ending December 31,
2022		$	19
2023	2023	63		2023	$	15
2024	2024	55		2024	60
2025	2025	53		2025	58
2026	2026	40		2026	44
2027	2027	31		2027	34
2028				2028	29


(Exact name of registrant as specified in its charter)


Record Date	Payment Date	Amount per Share		Total Amount
				(in millions)






12/31/2021	1/28/2022	$	0.7000	$	90
3/31/2022	4/29/2022	$	0.7875	$	100
6/30/2022	7/29/2022	$	0.7875	$	100
9/30/2022	10/28/2022	$	0.7875	$	100


Record Date	Payment Date	Amount per Share		Total Amount
				(in millions)






12/30/2022	1/27/2023	$	0.7875	$	98
03/31/2023	04/28/2023	$	0.8850	$	111
06/30/2023	07/28/2023	$	0.8850	$	110
9/29/2023	10/27/2023	$	0.8850	$	109


		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
		(in millions)					(in millions)
Short-term debt:	Short-term debt:					Short-term debt:
Commercial paper	Commercial paper	$	303	$	955	Commercial paper	$	2,245	$	595

Senior notes:	Senior notes:					Senior notes:
$1.5 billion, 0.650% due August 3, 2023	$1.5 billion, 0.650% due August 3, 2023	1,496		—		$1.5 billion, 0.650% due August 3, 2023	—		1,497
$600 million, 3.150% due December 1, 2022		600		599
$400 million, 2.900% due December 15, 2022		400		399
Total senior notes	Total senior notes	2,496		998		Total senior notes	—		1,497
Total short-term debt	Total short-term debt	$	2,799	$	1,953	Total short-term debt	$	2,245	$	2,092
Long-term debt:	Long-term debt:					Long-term debt:
Senior notes:	Senior notes:					Senior notes:
$1.5 billion, 0.650% due August 3, 2023		$	—	$	1,492
$600 million, 3.850% due October 1, 2024	$600 million, 3.850% due October 1, 2024	599		598		$600 million, 3.850% due October 1, 2024	$	572	$	599
$600 million, 4.500% due April 1, 2025	$600 million, 4.500% due April 1, 2025	597		596		$600 million, 4.500% due April 1, 2025	598		597
$500 million, 5.700% due March 13, 2026						$500 million, 5.700% due March 13, 2026	497		—
$750 million, 1.350% due February 3, 2027	$750 million, 1.350% due February 3, 2027	744		742		$750 million, 1.350% due February 3, 2027	688		745
$600 million, 3.950% due March 15, 2027	$600 million, 3.950% due March 15, 2027	597		596		$600 million, 3.950% due March 15, 2027	537		597
$500 million, 5.750% due March 1, 2028						$500 million, 5.750% due March 1, 2028	495		494
$750 million, 3.700% due March 23, 2029	$750 million, 3.700% due March 23, 2029	742		—		$750 million, 3.700% due March 23, 2029	689		743
$500 million, 3.125% due August 15, 2029	$500 million, 3.125% due August 15, 2029	496		496		$500 million, 3.125% due August 15, 2029	458		496
$500 million, 4.875% due April 1, 2030	$500 million, 4.875% due April 1, 2030	495		495		$500 million, 4.875% due April 1, 2030	496		495
$750 million, 2.150% due February 3, 2032	$750 million, 2.150% due February 3, 2032	742		741		$750 million, 2.150% due February 3, 2032	743		743
$750 million, 5.875% due March 1, 2033						$750 million, 5.875% due March 1, 2033	715		739
$250 million, 8.150% due June 15, 2038	$250 million, 8.150% due June 15, 2038	261		261		$250 million, 8.150% due June 15, 2038	261		261
$400 million, 4.625% due December 1, 2042	$400 million, 4.625% due December 1, 2042	396		396		$400 million, 4.625% due December 1, 2042	396		396
$750 million, 4.950% due October 1, 2044	$750 million, 4.950% due October 1, 2044	740		740		$750 million, 4.950% due October 1, 2044	740		740
$400 million, 4.800% due March 15, 2047	$400 million, 4.800% due March 15, 2047	396		395		$400 million, 4.800% due March 15, 2047	396		396
$500 million, 3.950% due August 15, 2049	$500 million, 3.950% due August 15, 2049	493		493		$500 million, 3.950% due August 15, 2049	493		493
$750 million, 5.500% due March 15, 2053						$750 million, 5.500% due March 15, 2053	709		—
Total senior notes	Total senior notes	7,298		8,041		Total senior notes	9,483		8,534
Term loans:	Term loans:					Term loans:
Term loan, due October 29, 2023		—		2,000
Delayed draw term loan, due May 28, 2024	Delayed draw term loan, due May 28, 2024	500		500		Delayed draw term loan, due May 28, 2024	—		500
Total term loans	Total term loans	500		2,500		Total term loans	—		500
Total long-term debt	Total long-term debt	$	7,798	$	10,541	Total long-term debt	$	9,483	$	9,034


Period	Total Number of Shares Purchased (1)(2)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)(2)	Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) (2)
July 2023	368,823	$	442.65	368,823	$	2,241,914,412
August 2023	287,179	484.30		287,179	2,102,834,796
September 2023	154,886	473.51		154,886	2,029,494,351
Total	810,888	$	—	810,888


3(i)			Restated Certificate of Incorporation of Humana Inc. filed with the Secretary of State of Delaware on November 9, 1989, as restated to incorporate the amendment of January 9, 1992, and the correction of March 23, 1992 (incorporated herein by reference to Exhibit 4(i) to Humana Inc.’s Post-Effective Amendment No. 1 to the Registration Statement on Form S-8 (Reg. No. 33-49305) filed February 2, 1994).
3(ii)			~~By-Laws~~Humana Inc. Amended and Restated By-laws, effective as of ~~Humana Inc., as amended on~~ December ~~14, 2017~~8, 2022 (incorporated herein by reference to Exhibit 3(b) to Humana Inc.’s Current Report on Form 8-K filed on December ~~14, 2017)~~8, 2022).
31.1			Principal Executive Officer certification pursuant to Section 302 of Sarbanes–Oxley Act of 2002.
31.2			Principal Financial Officer certification pursuant to Section 302 of Sarbanes–Oxley Act of 2002.
32			Principal Executive Officer and Principal Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101			The following materials from Humana Inc.'s Quarterly Report on Form 10-Q formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets at September 30, ~~2022~~2023 and December 31, ~~2021;~~2022; (ii) the Condensed Consolidated Statements of Income for the three and nine months ended September 30, ~~2022~~2023 and ~~2021;~~2022; (iii) the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, ~~2022~~2023 and ~~2021;~~2022; (iv) the Consolidated Statements of Stockholders' Equity for the three and nine months ended September 30, ~~2022~~2023 and ~~2021;~~2022; (v) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2022~~2023 and ~~2021;~~2022; and (vi) Notes to Condensed Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
104			Cover Page Interactive Data File formatted in Inline XBRL and contained in Exhibit 101.


			HUMANA INC.
			(Registrant)

Date:	November ~~2, 2022~~1, 2023	By:	/s/ JOHN-PAUL W. FELTER
			John-Paul W. Felter
			Senior Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)