UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended ~~June 30, 2023~~March 31, 2024


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

For the transition period from to

Commission file number 1-5975

HUMANA INC.


(Exact name of registrant as specified in its charter)


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

500 West Main Street

Louisville, Kentucky 40202

(Address of principal executive offices, including zip code)

(502) 580-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”,~~filer,” “smaller reporting ~~company”~~company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.


Class of Common Stock			Outstanding at ~~June 30, 2023~~March 31, 2024
$0.16 2/3 par value			~~123,906,750~~120,500,635 shares

Table of Contents

Humana Inc.

FORM 10-Q

~~JUNE 30, 2023~~MARCH 31, 2024

INDEX


		Page
Part I: Financial Information
Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets (Unaudited) at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023	3

	Condensed Consolidated Statements of Income (Unaudited) for the three ~~and six~~ months ended ~~June 30~~,March 31, 2024 and 2023 ~~and 2022~~	4

	Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three ~~and six~~ months ended ~~June 30~~,March 31, 2024 and 2023 ~~and 2022~~	5

	Condensed Consolidated Statements of Stockholders' Equity (Unaudited) for the three ~~and six~~months ended ~~June 30~~,March 31, 2024 and 2023 ~~and 2022~~	6

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the ~~six~~ three months ended ~~June 30~~,March 31, 2024 and 2023 ~~and 2022~~	87

	Notes to Condensed Consolidated Financial Statements (Unaudited)	109

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3531

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	5346

Item 4.	Controls and Procedures	5346

Part II: Other Information

Item 1.	Legal Proceedings	5447

Item 1A.	Risk Factors	5447

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5447

Item 3.	Defaults Upon Senior Securities	5447

Item 4.	Mine Safety Disclosures	5447

Item 5.	Other Information	5548

Item 6.	Exhibits	5649

	Signatures	5750

	Certifications

Humana Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


		June 30, 2023		December 31, 2022
		(in millions, except share amounts)
	March 31, 2024					March 31, 2024		December 31, 2023
	(in millions, except share amounts)						(in millions, except share amounts)
ASSETS	ASSETS
Current assets:	Current assets:
Current assets:
Current assets:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents	$	16,214	$	5,061
Investment securities	Investment securities	15,251		13,881
Receivables, net of allowances of $72 in 2023 and $70 in 2022		1,429		1,674
Receivables, net of allowances of $85 in 2024 and $88 in 2023
Other current assets	Other current assets	5,865		5,567

Total current assets
Total current assets
Total current assets	Total current assets	38,759		26,183
Property and equipment, net	Property and equipment, net	3,309		3,221
Long-term investment securities	Long-term investment securities	389		380
Equity method investments	Equity method investments	733		749
Goodwill	Goodwill	9,539		9,142
Other long-term assets	Other long-term assets	3,726		3,380

Total assets	Total assets	$	56,455	$	43,055
Total assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:
Current liabilities:
Current liabilities:
Benefits payable
Benefits payable
Benefits payable	Benefits payable	$	10,304	$	9,264
Trade accounts payable and accrued expenses	Trade accounts payable and accrued expenses	8,118		5,238
Book overdraft	Book overdraft	457		298
Unearned revenues	Unearned revenues	7,378		286
Short-term debt	Short-term debt	2,022		2,092

Total current liabilities	Total current liabilities	28,279		17,178
Total current liabilities
Total current liabilities
Long-term debt	Long-term debt	9,722		9,034
Other long-term liabilities	Other long-term liabilities	1,563		1,473

Total liabilities	Total liabilities	39,564		27,685
Total liabilities
Total liabilities

Commitments and Contingencies (Note 13)
Commitments and Contingencies (Note 13)
Commitments and Contingencies (Note 13)
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	—		—
Common stock, $0.16 2/3 par; 300,000,000 shares authorized; 198,690,082 shares issued at June 30, 2023 and 198,666,598 shares issued at December 31, 2022		33		33
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; 198,690,593 shares issued at March 31, 2024 and 198,690,082 shares issued at December 31, 2023
Capital in excess of par value	Capital in excess of par value	3,313		3,246
Retained earnings	Retained earnings	27,468		25,492
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(1,226)		(1,304)
Treasury stock, at cost, 74,783,332 shares at June 30, 2023 and 73,691,955 shares at December 31, 2022		(12,754)		(12,156)
Treasury stock, at cost, 78,189,958 shares at March 31, 2024 and 76,465,862 shares at December 31, 2023
Total stockholders' equity	Total stockholders' equity	16,834		15,311
Noncontrolling interests	Noncontrolling interests	57		59
Total equity	Total equity	16,891		15,370
Total liabilities and equity	Total liabilities and equity	$	56,455	$	43,055

See accompanying notes to condensed consolidated financial statements.

Humana Inc.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


		Three months ended June 30,				Six months ended June 30,
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
		2023		2022		2023		2022		2024	2023
		(in millions, except per share results)								(in millions, except per share results)
Revenues:	Revenues:
Premiums
Premiums
Premiums	Premiums	$	25,495	$	22,266	$	51,045	$	44,969
Services	Services	978		1,349		1,977		2,613
Investment income	Investment income	274		47		467		50
Total revenues	Total revenues	26,747		23,662		53,489		47,632
Operating expenses:	Operating expenses:
Benefits
Benefits
Benefits	Benefits	22,009		19,099		43,867		38,724
Operating costs	Operating costs	3,111		3,173		6,090		6,059
Depreciation and amortization	Depreciation and amortization	191		175		377		345
Total operating expenses	Total operating expenses	25,311		22,447		50,334		45,128
Income from operations	Income from operations	1,436		1,215		3,155		2,504

Interest expense	Interest expense	120		101		233		191
Interest expense
Interest expense
Other expense (income), net	Other expense (income), net	54		(8)		46		(29)
Income before income taxes and equity in net losses	Income before income taxes and equity in net losses	1,262		1,122		2,876		2,342
Provision for income taxes	Provision for income taxes	296		427		655		713
Equity in net (losses) earnings		(10)		2		(27)		(2)
Equity in net losses
Net income	Net income	$	956	$	697	$	2,194	$	1,627
Net loss (income) attributable to noncontrolling interests		3		(1)		4		(1)
Net loss attributable to noncontrolling interests
Net income attributable to Humana	Net income attributable to Humana	$	959	$	696	$	2,198	$	1,626
Basic earnings per common share	Basic earnings per common share	$	7.70	$	5.50	$	17.62	$	12.83
Diluted earnings per common share	Diluted earnings per common share	$	7.66	$	5.48	$	17.54	$	12.77

See accompanying notes to condensed consolidated financial statements.

Humana Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


		Three months ended June 30,				Six months ended June 30,
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
		2023		2022		2023		2022		2024	2023
		(in millions)								(in millions)
Net income attributable to Humana	Net income attributable to Humana	$	959	$	696	$	2,198	$	1,626
Other comprehensive income (loss):	Other comprehensive income (loss):
Change in gross unrealized investment gains (losses)		(137)		(623)		51		(1,392)
Change in gross unrealized investment (losses) gains
Change in gross unrealized investment (losses) gains
Change in gross unrealized investment (losses) gains
Effect of income taxes	Effect of income taxes	31		144		(12)		320
Total change in unrealized investment gains (losses), net of tax		(106)		(479)		39		(1,072)
Reclassification adjustment for net realized losses (gains)		(8)		—		53		(27)
Total change in unrealized investment (losses) gains, net of tax
Reclassification adjustment for net realized (gains) losses
Effect of income taxes	Effect of income taxes	1		—		(14)		6
Total reclassification adjustment, net of tax	Total reclassification adjustment, net of tax	(7)		—		39		(21)
Other comprehensive income (loss), net of tax		(113)		(479)		78		(1,093)
Other comprehensive (loss) income, net of tax

Comprehensive income attributable to Humana	Comprehensive income attributable to Humana	$	846	$	217	$	2,276	$	533

Comprehensive income attributable to Humana

Comprehensive income attributable to Humana

See accompanying notes to condensed consolidated financial statements.

Humana Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)


		Common Stock			Capital In Excess of Par Value				Retained Earnings		Accumulated Other Comprehensive Loss				Treasury Stock				Total Stockholders' Equity				Noncontrolling Interests				Total Equity				Common Stock			Capital In Excess of Par Value	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock	Total Stockholders' Equity	Noncontrolling Interests	Total Equity
		Issued Shares	Amount
		(dollars in millions, share amounts in thousands)
Three months ended June 30, 2023
Balances, March 31, 2023		198,667	$	33			$	3,262					$	26,619			$	(1,113)			$	(12,224)			$	16,577			$	57		$	16,634
		(dollars in millions, share amounts in thousands)
		(dollars in millions, share amounts in thousands)
		(dollars in millions, share amounts in thousands)
Three months ended March 31, 2024																													Three months ended March 31, 2024
Balances, December 31, 2023
Net income	Net income								959										959				(3)				956
Distribution from noncontrolling interest holders, net	Distribution from noncontrolling interest holders, net																						3				3

Other comprehensive loss

Other comprehensive loss

Other comprehensive loss	Other comprehensive loss										(113)								(113)								(113)
Common stock repurchases	Common stock repurchases				—										(534)				(534)								(534)
Dividends and dividend equivalents	Dividends and dividend equivalents				—				(110)										(110)								(110)
Stock-based compensation	Stock-based compensation				51														51								51
Restricted stock unit vesting	Restricted stock unit vesting	23	—		(3)										3				—								—
Stock option exercises		—	—		3										1				4								4
Balances, June 30, 2023		198,690	$	33	$	3,313			$	27,468	$	(1,226)			$	(12,754)			$	16,834			$	57			$	16,891
																													Three months ended June 30, 2022
Balances, March 31, 2022		198,649	$	33	$	3,103			$	23,915	$	(572)			$	(11,160)			$	15,319			$	23			$	15,342
Balances, March 31, 2024
Balances, March 31, 2024
Balances, March 31, 2024

Three months ended March 31, 2023
Three months ended March 31, 2023
Three months ended March 31, 2023
Balances, December 31, 2022
Net income	Net income								696										696				1				697
Distribution to noncontrolling interest holders, net																							(4)				(4)
Distribution from noncontrolling interest holders, net

Other comprehensive loss											(479)								(479)								(479)
Acquisition
Acquisition
Acquisition
Other comprehensive income
Common stock repurchases	Common stock repurchases				—										(4)				(4)								(4)
Dividends and dividend equivalents	Dividends and dividend equivalents				—				(100)										(100)								(100)
Stock-based compensation	Stock-based compensation				50														50								50
Restricted stock unit vesting	Restricted stock unit vesting	18	—		(4)										4				—								—
Stock option exercises	Stock option exercises	—	—		4										4				8								8
Balances, June 30, 2022		198,667	$	33	$	3,153			$	24,511	$	(1,051)			$	(11,156)			$	15,490			$	20			$	15,510
Balances, March 31, 2023

See accompanying notes to condensed consolidated financial statements.

Common Stock Capital In
Excess of
Par Value Retained
Earnings Accumulated
Other
Comprehensive
Income (loss) Treasury
Stock Total Stockholders' Equity Noncontrolling Interests Total
Stockholders’
Equity
Issued
Shares Amount
(dollars in millions, share amounts in thousands)
Six months ended June 30, 2023
Balances, December 31, 2022 198,667 $ 33 $ 3,246 $ 25,492 $ (1,304) $ (12,156) $ 15,311 $ 59 $ 15,370
Net income 2,198 2,198 (4) 2,194
Distribution from noncontrolling interest holders, net — 7 7
Acquisition — (5) (5)
Other comprehensive income 78 78 78
Common stock repurchases — (628) (628) (628)
Dividends and dividend
equivalents — (222) (222) (222)
Stock-based compensation 89 89 89
Restricted stock unit vesting 23 — (27) 27 — —
Stock option exercises — — 5 3 8 8
Balances, June 30, 2023 198,690 $ 33 $ 3,313 $ 27,468 $ (1,226) $ (12,754) $ 16,834 $ 57 $ 16,891
Six months ended June 30, 2022
Balances, December 31, 2021 198,649 $ 33 $ 3,082 $ 23,086 $ 42 $ (10,163) $ 16,080 $ 23 $ 16,103
Net income 1,626 1,626 1 1,627
Distribution to noncontrolling interest holders, net — (4) (4)
Other comprehensive loss (1,093) (1,093) (1,093)
Common stock repurchases — (1,028) (1,028) (1,028)
Dividends and dividend
equivalents — (201) (201) (201)
Stock-based compensation 93 93 93
Restricted stock unit vesting 18 — (28) 28 — —
Stock option exercises — — 6 7 13 13
Balances, June 30, 2022 198,667 $ 33 $ 3,153 $ 24,511 $ (1,051) $ (11,156) $ 15,490 $ 20 $ 15,510

Humana Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


		For the six months ended June 30,				For the three months ended March 31,
		2023		2022		2024	2023
		(in millions)				(in millions)
Cash flows from operating activities	Cash flows from operating activities
Net income	Net income	$	2,194	$	1,627
Net income
Net income
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:

Loss on investment securities, net		45		137
(Gain) loss on investment securities, net

(Gain) loss on investment securities, net

(Gain) loss on investment securities, net

Equity in net losses
Equity in net losses
Equity in net losses	Equity in net losses	27		2
Stock-based compensation	Stock-based compensation	89		93
Depreciation	Depreciation	410		369
Amortization	Amortization	34		45
Impairment on property and equipment		—		140
Deferred income taxes		—		167
Impairment of property and equipment

Changes in operating assets and liabilities, net of effect of businesses acquired and disposed:	Changes in operating assets and liabilities, net of effect of businesses acquired and disposed:

Changes in operating assets and liabilities, net of effect of businesses acquired and disposed:

Changes in operating assets and liabilities, net of effect of businesses acquired and disposed:
Receivables
Receivables
Receivables	Receivables	269		(1,733)
Other assets	Other assets	(1,141)		(655)
Benefits payable	Benefits payable	978		1,361
Other liabilities	Other liabilities	(170)		(333)
Unearned revenues	Unearned revenues	7,092		10
Other	Other	36		31
Net cash provided by operating activities	Net cash provided by operating activities	9,863		1,261
Cash flows from investing activities	Cash flows from investing activities

Acquisitions, net of cash and cash equivalents acquired	Acquisitions, net of cash and cash equivalents acquired	(189)		(167)

Acquisitions, net of cash and cash equivalents acquired

Acquisitions, net of cash and cash equivalents acquired
Purchases of property and equipment, net	Purchases of property and equipment, net	(487)		(574)
Purchases of investment securities	Purchases of investment securities	(2,737)		(3,239)
Proceeds from maturities of investment securities	Proceeds from maturities of investment securities	577		947
Proceeds from sales of investment securities	Proceeds from sales of investment securities	811		1,363
Net cash used in investing activities	Net cash used in investing activities	(2,025)		(1,670)
Cash flows from financing activities	Cash flows from financing activities
Receipts from contract deposits, net	Receipts from contract deposits, net	3,510		3,076
Receipts from contract deposits, net
Receipts from contract deposits, net
Proceeds from issuance of senior notes, net	Proceeds from issuance of senior notes, net	1,215		744
Repayments of senior notes	Repayments of senior notes	(349)		—
Repayments from issuance of commercial paper, net		238		(418)
Repayments of commercial paper, net

Repayment of term loan

Repayment of term loan

Repayment of term loan	Repayment of term loan	(500)		—
Debt issue costs	Debt issue costs	(4)		(2)
Change in book overdraft	Change in book overdraft	159		65
Common stock repurchases	Common stock repurchases	(623)		(1,028)
Dividends paid	Dividends paid	(211)		(191)
Other	Other	(120)		(11)
Net cash provided by financing activities	Net cash provided by financing activities	3,315		2,235
Increase in cash and cash equivalents	Increase in cash and cash equivalents	11,153		1,826
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	5,061		3,394
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	16,214	$	5,220

Humana Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)

(Unaudited)


		For the six months ended June 30,
		2023		2022
		(in millions)
	For the three months ended March 31,						For the three months ended March 31,
	2024					2024		2023
	(in millions)						(in millions)
Supplemental cash flow disclosures:	Supplemental cash flow disclosures:
Interest payments
Interest payments
Interest payments	Interest payments	$	175	$	171
Income tax payments, net	Income tax payments, net	$	681	$	373
Details of businesses acquired in purchase transactions:	Details of businesses acquired in purchase transactions:
Fair value of assets acquired, net of cash and cash equivalents acquired
Fair value of assets acquired, net of cash and cash equivalents acquired
Fair value of assets acquired, net of cash and cash equivalents acquired	Fair value of assets acquired, net of cash and cash equivalents acquired	$	346	$	190
Less: Fair value of liabilities assumed	Less: Fair value of liabilities assumed	(162)		(23)
Less: Noncontrolling interests acquired	Less: Noncontrolling interests acquired	5		—

Cash paid for acquired businesses, net of cash and cash equivalents acquired	Cash paid for acquired businesses, net of cash and cash equivalents acquired	$	189	$	167
Cash paid for acquired businesses, net of cash and cash equivalents acquired
Cash paid for acquired businesses, net of cash and cash equivalents acquired

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Humana Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION AND SIGNIFICANT EVENTS

The accompanying unaudited condensed consolidated financial statements are presented in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures normally required by accounting principles generally accepted in the United States of America, or GAAP, or those normally made in an Annual Report on Form 10-K. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. For further information, the reader of this Form 10-Q should refer to our Form 10-K for the year ended December 31, ~~2022,~~2023, that was filed with the Securities and Exchange Commission, or the SEC, on February ~~16, 2023.~~15, 2024. We refer to this Form 10-K as the ~~“2022~~“2023 Form 10-K” in this document. References throughout this document to “we,” “us,” “our,” “Company,” and “Humana” mean Humana Inc. and its subsidiaries.

The preparation of our condensed consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. The areas involving the most significant use of estimates are the estimation of benefits payable, the impact of risk adjustment provisions related to our Medicare contracts, the valuation and related impairment recognition of investment securities, and the valuation and related impairment recognition of long-lived assets, including goodwill and indefinite-lived intangible assets. These estimates are based on knowledge of current events and anticipated future events, and accordingly, actual results may ultimately differ materially from those estimates. For additional information regarding accounting policies considered in preparing our consolidated financial statements, refer to Note 2 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" in our ~~2022~~2023 Form 10-K.

The financial information has been prepared in accordance with our customary accounting practices and has not been audited. In our opinion, the information presented reflects all adjustments necessary for a fair statement of interim results. All such adjustments are of a normal and recurring nature.

Employer Group Commercial Medical Products Business Exit

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

Value Creation ~~Initiatives~~Initiatives

~~During~~Beginning in 2022, in order to create capacity to fund growth and investment in our Medicare Advantage business and further expansion of our healthcare services capabilities, ~~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 second quarter of 2022,~~ we recorded charges, ~~of $203 million. These charges~~ primarily ~~relate to $140 million~~ in asset impairments, ~~including software and abandonment, and $21~~of $29 million for the three months ended March 31, 2024 within operating costs in the consolidated statements of ~~severance charges in connection with workforce optimization. The remainder of the charges primarily relate to external consulting fees.~~income. These charges were recorded at the corporate level and not allocated to the segments. ~~There were no recurring~~We expect to incur additional charges ~~in 2023.~~

~~Table~~through the end of ~~Contents~~

~~Humana Inc.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~(Unaudited)~~

~~COVID-19~~

~~The emergence and spread of~~2024. We did not record any charges for the novel coronavirus, or COVID-19, beginning in the first quarter of 2020 has impacted our business. 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 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,~~three months ended March 31, 2023.

Revenue Recognition

Our revenues include premiums and services revenue. Services revenue includes administrative service fees that are recorded based upon established per member per month rates and the number of members for the month and are recognized as services are provided for the month. Additionally, services revenue includes net patient services revenue that are recorded based upon established billing rates, less allowances for contractual adjustments, and are

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

recognized as services are provided. For additional information regarding our revenues, refer to Note 2 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" in our ~~2022~~2023 Form 10-K. For additional information regarding disaggregation of revenue by segment and type, refer to Note 14 to the unaudited Condensed Consolidated Financial Statements included in Part I, Item 1, "Financial Statements" of this Form 10-Q.

At ~~June 30, 2023,~~March 31, 2024, accounts receivable related to services were ~~$311~~$390 million. For the three ~~and six~~ months ended ~~June 30, 2023,~~March 31, 2024, we had no material bad-debt expense and there were no material contract assets, contract liabilities or deferred contract costs recorded on the condensed consolidated balance sheet at ~~June 30, 2023.~~March 31, 2024.

For the three ~~and six~~ months ended ~~June 30, 2023,~~March 31, 2024, services revenue recognized from performance obligations related to prior periods, such as due to changes in transaction price, was not material. Further, services revenue expected to be recognized in any future year related to remaining performance obligations was not material.

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Accounting Pronouncements Effective in Future Periods

In ~~November 2020,~~December 2023, the FASB issued Accounting Standards Update No. ~~2020-11, Financial Services—Insurance (Topic 944): Effective Date~~2023-07, Segment Reporting — Improvements to Reportable Segment Disclosures. The new guidance requires incremental disclosures related to a public entity’s reportable segments but does not change the definition of a segment, the method for determining segments, or the criteria for aggregating operating segments into reportable segments. The new guidance requires a public entity to disclose its significant segment expense categories and ~~Early Application (“ASU 2020-11”).~~amounts for each reportable segment. The ~~amendments in ASU 2020-11 make changes to~~new guidance will be effective for us beginning with our annual 2024 year-end financial statements. We are currently evaluating the ~~effective date and early application of~~impact on our segment information footnote disclosures.

In December 2023, the FASB issued Accounting Standards Update No. ~~2018-12, Financial Services—Insurance~~2023-09 — Income Taxes (Topic ~~944)~~740): ~~Targeted~~ Improvements to the Accounting for Long-Duration Contracts (“ASU 2018-12”), which was issued in November 2018. The amendments in ASU 2020-11 have extended the original effective date by one year, and now the amendments are required for our interim and annual reporting periods beginning after December 15, 2022.Income Tax Disclosures. The new guidance ~~relates to accounting for long-duration contracts~~requires significant additional disclosures about income taxes, primarily focused on the disclosure of insurers which revises key elements of the measurement models and disclosure requirements for long-duration contracts issued by insurers, including the amortization of deferred contract acquisition costsincome taxes paid and the ~~measurement of liabilities for future policy benefits using current, rather than locked-in, assumptions.~~rate reconciliation table. The new guidance ~~limited to our Medicare Supplement product which represents less than 1% of consolidated premiums and services revenue, became~~requires prospective application (with retrospective application permitted). The new guidance will be effective for us beginning ~~January 1, 2023 and is to be applied to contracts in force on~~with our annual 2025 year-end financial statements, with early adoption permitted. We are currently evaluating the ~~basis of their existing carrying value amounts at the beginning of the earliest period presented. The adoption of the new standard in 2023 did not have a material~~ impact on our ~~consolidated results of operations, financial position or cash flows.~~

~~Table of Contents~~income tax footnote disclosures.

~~Humana Inc.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~(Unaudited)~~

There are no other recently issued accounting standards that apply to us or that are expected to have a material impact on our results of operations, financial condition, or cash flows.

3. ACQUISITIONS ~~AND DIVESTITURES~~

~~On August 11, 2022, we completed~~ ~~the sale of a 60% i~~nterest in Gentiva, formerly Kindred, Hospice to Clayton, Dubilier & Rice, or CD&R, for cash proceeds of approximately $2.7 billion, net of cash disposed, including debt repayments from Gentiva Hospice to Humana of ~~$1.9 billion.~~ In connection with the sale we recognized a pre-tax gain, net of transaction costs, of $237 million. For the three and six months ended June 30, 2022, the accompanying condensed consolidated statement of income includes revenues related to Gentiva Hospice of $399 million and $781 million, respectively, and pretax earnings of $64 million and $126 million, respectively.

During the first quarter of 2024 and 2023, ~~and 2022,~~respectively, we acquired various health and wellness related businesses which, individually or in the aggregate, have not had a material impact on our results of operations, financial condition, or cash flows. The results of operations and financial condition of these businesses acquired in the first quarter of 2024 and 2023, ~~and 2022~~respectively, have been included in our condensed consolidated statements of income and condensed consolidated balance sheets from the respective acquisition dates. Acquisition-related costs recognized in ~~2023~~the first quarter of 2024 and ~~2022~~2023, were not material to our results of operations. For asset acquisitions, the goodwill acquired is partially amortizable as deductible expenses for tax purposes. The pro forma financial information assuming the acquisitions had occurred as of the beginning of the calendar year prior to the year of acquisition, as well as the revenues and earnings generated during the ~~year~~quarter of acquisition, were not material for disclosure purposes.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

4. INVESTMENT SECURITIES

Investment securities classified as current and long-term were as follows at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively:


	Amortized Cost										Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		(in millions)
		(in millions)
June 30, 2023
March 31, 2024
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 other U.S. government corporations and agencies:
U.S. Treasury and agency obligations
U.S. Treasury and agency obligations
U.S. Treasury and agency obligations	U.S. Treasury and agency obligations	$	1,807	$	—	$	(65)	$	1,742
Mortgage-backed securities	Mortgage-backed securities	3,961		1		(468)		3,494
Tax-exempt municipal securities	Tax-exempt municipal securities	793		—		(31)		762
Mortgage-backed securities:	Mortgage-backed securities:
Residential	Residential	470		—		(75)		395
Residential
Residential
Commercial	Commercial	1,551		—		(160)		1,391
Asset-backed securities	Asset-backed securities	1,894		—		(67)		1,827
Corporate debt securities	Corporate debt securities	6,754		12		(737)		6,029
Total debt securities	Total debt securities	$	17,230	$	13	$	(1,603)	15,640
Common stock								—
Total investment securities								$	15,640

December 31, 2022

December 31, 2023

December 31, 2023

December 31, 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 other U.S. government corporations and agencies:
U.S. Treasury and agency obligations
U.S. Treasury and agency obligations
U.S. Treasury and agency obligations	U.S. Treasury and agency obligations	$	1,093	$	1	$	(55)	$	1,039
Mortgage-backed securities	Mortgage-backed securities	3,697		4		(471)		3,230
Tax-exempt municipal securities	Tax-exempt municipal securities	765		—		(37)		728
Mortgage-backed securities:	Mortgage-backed securities:
Residential	Residential	477		—		(76)		401
Residential
Residential
Commercial	Commercial	1,554		—		(155)		1,399
Asset-backed securities	Asset-backed securities	1,809		1		(79)		1,731
Corporate debt securities	Corporate debt securities	6,551		3		(828)		5,726
Total debt securities	Total debt securities	$	15,946	$	9	$	(1,701)	14,254
Common stock								7
Total investment securities								$	14,261

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

We ~~held~~own certain corporate debt securities of Gentiva ~~Hospice at June 30, 2023 with amortized cost~~Hospice. The book value and fair value ~~of approximately $281~~are $379 million and ~~$292~~$397 million, ~~respectively.~~respectively, at March 31, 2024. The book value and fair value were $379 million and $398 million, respectively, at December 31, 2023.

Gross unrealized losses and fair values aggregated by investment category and length of time of individual debt securities that have been in a continuous unrealized loss position for which no allowances for credit loss has been recorded were as follows at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively:


		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)
June 30, 2023
March 31, 2024
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 other U.S. government corporations and agencies:
U.S. Treasury and agency obligations
U.S. Treasury and agency obligations
U.S. Treasury and agency obligations	U.S. Treasury and agency obligations	$	1,334	$	(17)	$	408	$	(48)	$	1,742	$	(65)
Mortgage-backed securities	Mortgage-backed securities	1,349		(36)		2,086		(432)		3,435		(468)
Tax-exempt municipal securities	Tax-exempt municipal securities	337		(5)		373		(26)		710		(31)
Mortgage-backed securities:	Mortgage-backed securities:
Residential
Residential
Residential	Residential	17		(1)		374		(74)		391		(75)
Commercial	Commercial	26		(1)		1,365		(159)		1,391		(160)
Asset-backed securities	Asset-backed securities	535		(12)		1,263		(55)		1,798		(67)
Corporate debt securities	Corporate debt securities	1,391		(31)		4,112		(706)		5,503		(737)
Total debt securities	Total debt securities	$	4,989	$	(103)	$	9,981	$	(1,500)	$	14,970	$	(1,603)

December 31, 2022
December 31, 2023
December 31, 2023
December 31, 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 other U.S. government corporations and agencies:
U.S. Treasury and agency obligations
U.S. Treasury and agency obligations
U.S. Treasury and agency obligations	U.S. Treasury and agency obligations	$	512	$	(5)	$	397	$	(50)	$	909	$	(55)
Mortgage-backed securities	Mortgage-backed securities	1,231		(104)		1,683		(367)		2,914		(471)
Tax-exempt municipal securities	Tax-exempt municipal securities	64		(2)		615		(36)		679		(38)
Mortgage-backed securities:	Mortgage-backed securities:
Residential	Residential	124		(16)		274		(60)		398		(76)
Residential
Residential
Commercial	Commercial	243		(13)		1,157		(142)		1,400		(155)
Asset-backed securities	Asset-backed securities	620		(32)		1,011		(46)		1,631		(78)
Corporate debt securities	Corporate debt securities	1,625		(98)		3,825		(730)		5,450		(828)
Total debt securities	Total debt securities	$	4,419	$	(270)	$	8,962	$	(1,431)	$	13,381	$	(1,701)

Approximately ~~98%~~97% of our debt securities were investment-grade quality, with a weighted average credit rating of AAAA- by Standard & Poor's Rating Service, or S&P, at ~~June 30, 2023. Most of the~~March 31, 2024. Our remaining debt securities ~~that were~~ below investment-grade were primarily rated ~~BB-~~B+, the higher end of the below investment-grade rating scale. Tax-exempt municipal securities were diversified among general obligation bonds of states and local municipalities in the United States as well as special revenue bonds issued by municipalities to finance specific public works projects such as utilities, water and sewer, transportation, or education. Our general obligation bonds are diversified across the United States with no individual state exceeding approximately 1% of our total debt securities. Our investment policy limits investments in a single issuer and requires diversification among various asset types.

Our unrealized losses from all debt securities were generated from approximately ~~1,740~~1,685 positions out of a total of approximately ~~2,055~~2,100 positions at ~~June 30, 2023.~~March 31, 2024. All issuers of debt securities we own that were trading at an ~~unrealized loss at June 30, 2023 remain current on all contractual payments. After taking into account these and~~

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

unrealized loss at March 31, 2024 remain current on all contractual payments. After taking into account these and other factors previously described, we believe these unrealized losses primarily were caused by an increase in market interest rates in the current markets since the time these debt securities were purchased. At ~~June 30, 2023,~~March 31, 2024, we did not intend to sell any debt securities with an unrealized loss position in accumulated other comprehensive income, and it is not likely that we will be required to sell these debt securities before recovery of their amortized cost basis. Additionally, we did not record any material credit allowances for debt securities that were in an unrealized loss position for the three ~~and six~~ months ended ~~June 30, 2023~~March 31, 2024 or ~~2022.~~2023.

The detail of gains (losses) related to investment securities and included within investment income was as follows for the three ~~and six~~ months ended ~~June 30, 2023~~March 31, 2024 and ~~2022:~~2023:




		Three months ended June 30,				Six months ended June 30,				Three Months Ended March 31,
		2023		2022		2023		2022				2024	2023
		(in millions)				(in millions)					(in millions)
Gross gains on investment securities	Gross gains on investment securities	$	15	$	6	$	15	$	39
Gross losses on investment securities	Gross losses on investment securities	—		(5)		(61)		(6)
Gross gains on equity securities	Gross gains on equity securities	—		—		1		—
Gross losses on equity securities	Gross losses on equity securities	—		(62)		—		(170)
Net recognized gains (losses) on investment securities	Net recognized gains (losses) on investment securities	$	15	$	(61)	$	(45)	$	(137)

The gains and losses related to equity securities for the three ~~and six~~ months ended ~~June 30,~~March 31, 2024 and 2023 ~~and 2022~~ was as follows:

Three months ended June 30, Six months ended June 30,
2023 2022 2023 2022
(in millions) (in millions)
Net (losses) gains recognized on equity securities during the period $ — $ (62) $ 1 $ (170)
Less: Net (losses) gains recognized on equity securities sold during the period — (2) 1 (61)
Unrealized losses recognized on equity securities still held at the end of the period $ — $ (60) $ — $ (109)


	Three Months Ended March 31,
		2024		2023
	(in millions)
Net gains (losses) recognized on equity securities during the period		$	—	$	1
Less: Net gains (losses) recognized on equity securities sold during the period		—		1
Unrealized gains (losses) recognized on equity securities still held at the end of the period		$	—	$	—

The contractual maturities of debt securities available for sale at ~~June 30, 2023,~~March 31, 2024, regardless of their balance sheet classification, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


		Amortized Cost		Fair Value
	Amortized Cost						Amortized Cost	Fair Value
		(in millions)				(in millions)
Due within one year	Due within one year	$	561	$	557
Due after one year through five years	Due after one year through five years	4,453		4,225
Due after five years through ten years	Due after five years through ten years	3,109		2,727
Due after ten years	Due after ten years	1,231		1,024
Mortgage and asset-backed securities	Mortgage and asset-backed securities	7,876		7,107
Total debt securities	Total debt securities	$	17,230	$	15,640

For additional information regarding our investment securities, refer to Note 2 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" in our ~~2022~~2023 Form 10-K.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

5. FAIR VALUE

Financial Assets

The following table summarizes our fair value measurements at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively, for financial assets measured at fair value on a recurring basis:


		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)
June 30, 2023
March 31, 2024
Cash equivalents
Cash equivalents
Cash equivalents	Cash equivalents	$	16,209	$	16,209	$	—	$	—
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 other U.S. government corporations and agencies:
U.S. Treasury and agency obligations
U.S. Treasury and agency obligations
U.S. Treasury and agency obligations	U.S. Treasury and agency obligations	1,742		—		1,742		—
Mortgage-backed securities	Mortgage-backed securities	3,494		—		3,494		—
Tax-exempt municipal securities	Tax-exempt municipal securities	762		—		762		—
Mortgage-backed securities:	Mortgage-backed securities:
Residential
Residential
Residential	Residential	395		—		395		—
Commercial	Commercial	1,391		—		1,391		—
Asset-backed securities	Asset-backed securities	1,827		—		1,827		—
Corporate debt securities	Corporate debt securities	6,029		—		5,935		94
Total debt securities	Total debt securities	15,640		—		15,546		94

Total invested assets	Total invested assets	$	31,849	$	16,209	$	15,546	$	94
Total invested assets
Total invested assets

December 31, 2022
December 31, 2023
December 31, 2023
December 31, 2023
Cash equivalents
Cash equivalents
Cash equivalents	Cash equivalents	$	4,832	$	4,832	$	—	$	—
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 other U.S. government corporations and agencies:
U.S. Treasury and agency obligations
U.S. Treasury and agency obligations
U.S. Treasury and agency obligations	U.S. Treasury and agency obligations	1,039		—		1,039		—
Mortgage-backed securities	Mortgage-backed securities	3,230		—		3,230		—
Tax-exempt municipal securities	Tax-exempt municipal securities	728		—		728		—
Mortgage-backed securities:	Mortgage-backed securities:
Residential	Residential	401		—		401		—
Residential
Residential
Commercial	Commercial	1,399		—		1,399		—
Asset-backed securities	Asset-backed securities	1,731		—		1,731		—
Corporate debt securities	Corporate debt securities	5,726		—		5,625		101
Total debt securities	Total debt securities	14,254		—		14,153		101
Common stock		7		7		—		—

Total invested assets	Total invested assets	$	19,093	$	4,839	$	14,153	$	101
Total invested assets
Total invested assets

Our Level 3 assets had a fair value of $226 million, or 1.0% of total invested assets, and $218 million, or 1.0% or total invested assets, at March 31, 2024 and December 31, 2023, respectively. During the three months ended

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(Unaudited)

~~Our Level 3 assets had a fair value of $94 million at June 30,~~March 31, 2024 and 2023, ~~or 0.3% of our total invested assets. During the six months ended June 30, 2023 and 2022,~~ the changes in the fair value of the assets measured using significant unobservable inputs (Level 3) were comprised of the following:

For the six months ended June 30, 2023

For the six months ended June 30, 2022

Private Placements

(in millions)

For the three months ended March 31, 2024

Private Placements

(in millions)

Beginning balance at January 1

101

Total gains or losses:

Realized in earnings

Unrealized in other comprehensive income

—

(10)

Purchases

Maturities

(4)

—

Purchases

Sales

Settlements

Transfer out

(4)

—

Balance at June 30

102

Transfer out

Balance at March 31

Interest Rate Swaps

We have entered into interest-rate swap agreements with major financial institutions to convert our interest-rate exposure on some of our senior notes payable from fixed rates to variable rates, based on SOFR, to align interest costs more closely with floating interest rates received on our cash equivalents and investment securities. These swap agreements were qualified and designated as a fair value hedge. Our interest rate swaps are recognized in other assets or other liabilities, as appropriate, in our condensed consolidated balance sheets at fair value as of the reporting date. Our interest rate swaps are highly effective at reflecting the fair value of our hedged fixed rate senior notes payable. We utilize market-based financing rates, forward yield curves and discount rates in determining fair value of these swaps at each reporting date, a Level 2 measure within the fair value hierarchy.The cumulative, aggregate adjustment to the carrying value of the senior notes was approximately $17 million at March 31, 2024. The swap asset, included within other long-term assets on our condensed consolidated balance sheets, were approximately $20 million and $68 million at March 31, 2024 and December 31, 2023, respectively. We include the gain or loss on the swap agreements in interest expense on our condensed consolidated income statement, the same line item as the offsetting loss or gain on the related senior notes. The gain or loss due to hedge ineffectiveness was not material for the three months ended March 31, 2024. We did not enter into interest-rate swap agreements for the three months ended March 31, 2023. The following table summarizes the notional amounts at March 31, 2024 and December 31, 2023, respectively, for our senior notes under the swap agreements:


	March 31, 2024		December 31, 2023
	(in millions)
$750 million, 5.875% due March 1, 2033	$	650	$	650
$850 million, 5.950% due March 15, 2034	800		400
$500 million, 3.950% due August 15, 2049	450		450
$750 million, 5.500% due March 15, 2053	700		300
$1,000 million, 5.750% due April 15, 2054	400		—

Financial Liabilities

Our debt is recorded at carrying value in our condensed consolidated balance sheets. The carrying value of our senior notes debt outstanding, net of unamortized debt issuance costs, was ~~$10.9~~$13.0 billion at ~~June 30, 2023~~March 31, 2024 and ~~$10.0~~$10.8 billion at December 31, ~~2022.~~2023. The fair value of our senior notes debt was ~~$10.5~~$12.6 billion at ~~June 30, 2023~~March 31, 2024 and ~~$9.4~~$10.6 billion at December 31, ~~2022.~~2023. The fair value of our senior notes debt is determined based on Level 2 inputs,

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

including quoted market prices for the same or similar debt, or if no quoted market prices are available, on the current prices estimated to be available to us for debt with similar terms and remaining maturities. Carrying value approximates fair value for our ~~term loans and~~ commercial paper borrowings. The commercial paper borrowings were ~~$0.8~~$0.3 billion and $0.9 billion at ~~June 30, 2023. The term loans~~March 31, 2024 and ~~commercial paper borrowings were $1.1 billion at~~ December 31, ~~2022.~~2023, respectively.

Put and Call Options Measured at Fair Value

Our put and call options associated with our equity method investments are measured at fair value each period using a Monte Carlo simulation.

The put and call options fair values associated with our Primary Care Organization strategic partnership with Welsh, Carson, Anderson & Stowe, or WCAS, which are exercisable at a fixed revenue exit multiple and provide a minimum return on WCAS' investment if exercised, are measured at fair value each reporting period using a Monte Carlo simulation. The put and call options fair values, derived from the Monte Carlo simulation, were ~~$373~~$731 million and ~~$10~~$22 million, respectively, at ~~June 30, 2023.~~March 31, 2024. The put and call options fair values, derived from the Monte Carlo simulation, were ~~$267~~$595 million and ~~$10~~$18 million, respectively, at December 31, ~~2022.~~2023. The put liability and call asset are included within other long-term liabilities and other long-term assets, respectively, within our condensed consolidated balance sheets.

The significant unobservable inputs utilized in these Level 3 fair value measurements (and selected values) include the enterprise value, annualized volatility and credit spread. Enterprise value was derived from a discounted cash flow model, which utilized significant unobservable inputs for long-term revenue, to measure underlying cash flows, weighted average cost of capital and long term growth rate. The table below presents the assumptions used for each reporting period.

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~~Humana Inc.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~(Unaudited)~~

June 30, 2023

December 31, 2022

March 31, 2024

Annualized volatility

16.4% - 19.2%

16.7% - 20.8%

Credit spread

1.1% - 1.6%

1.3% - 1.5%

Credit spread

Revenue exit multiple

1.5x - 2.5x

Weighted average cost of capital

12.0% - 13.0%

11.5% - 12.5%

Weighted average cost of capital

Long term growth rate

3.0

The assumptions used for annualized volatility, credit spread and weighted average cost of capital reflect the lowest and highest values where they differ significantly across the series of put and call options due to their expected exercise dates.

Other Assets and Liabilities Measured at Fair Value

Certain assets and liabilities are measured at fair value on a non-recurring basis subject to fair value adjustment only in certain circumstances. As disclosed in Note 3, we acquired various health and wellness related businesses during 2024 and 2023. The net assets acquired and resulting goodwill and other intangible assets were recorded at fair value primarily using Level 3 inputs. The net tangible assets including receivables and accrued liabilities were recorded at their carrying value which approximated their fair value due to their short term nature. The fair value of goodwill and other intangible assets were internally estimated based primarily on the income approach. The income approach estimates fair value based on the present value of cash flow that the assets could be expected to generate in the future. We developed internal estimates for expected cash flows in the present value calculation using inputs and significant assumptions that include historical revenues and earnings, revenue growth rates, the amount and timing of future cash flows, discount rates, contributory asset charges and future tax rates, among others. The excess purchase price over the fair value of assets and liabilities acquired is recorded as goodwill.

As disclosed in Note 3, we completed the sale of Gentiva Hospice on August 11, 2022. The carrying value of the assets and liabilities of Gentiva Hospice disposed approximates fair value. The amount of goodwill included in the carrying value is based on the relative fair value of the Home Solutions reporting unit included within the CenterWell segment.

Other than the assets and liabilities acquired during 2024 and 2023, there were no other material assets or liabilities measured at fair value on a recurring or nonrecurring basis during 2024 and 2023.

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(Unaudited)

For additional information regarding our fair value measurements, refer to Note 2 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" in our ~~2022~~2023 Form 10-K.

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~~(Unaudited)~~

6. MEDICARE PART D

We cover prescription drug benefits in accordance with Medicare Part D under multiple contracts with the Centers for Medicare and Medicaid Services, or CMS. The accompanying condensed consolidated balance sheets include the following amounts associated with Medicare Part D at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023. CMS subsidies/discounts in the table below include the reinsurance and low-income cost subsidies funded by CMS for which we assume no risk as well as brand name prescription drug discounts for Part D plan participants in the coverage gap funded by CMS and pharmaceutical manufacturers. For additional information regarding our prescription drug benefits coverage in accordance with Medicare Part D, refer to Note 2 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" in our ~~2022~~2023 Form 10-K.


		June 30, 2023				December 31, 2022				March 31, 2024		December 31, 2023
		Risk Corridor Settlement		CMS Subsidies/ Discounts		Risk Corridor Settlement		CMS Subsidies/ Discounts		Risk Corridor Settlement	CMS Subsidies/ Discounts		Risk Corridor Settlement	CMS Subsidies/ Discounts
		(in millions)								(in millions)
Other current assets	Other current assets	$	131	$	200	$	240	$	696
Trade accounts payable and accrued expenses	Trade accounts payable and accrued expenses	(157)		(4,277)		(166)		(1,236)
Net current (liability) asset		(26)		(4,077)		74		(540)
Net current liability
Other long-term assets	Other long-term assets	369		—		19		—
Other long-term liabilities	Other long-term liabilities	(112)		—		(78)		—
Net long-term asset (liability)	Net long-term asset (liability)	257		—		(59)		—
Total net asset (liability)	Total net asset (liability)	$	231	$	(4,077)	$	15	$	(540)

7. GOODWILL AND OTHER INTANGIBLE ASSETS

Changes in the carrying amount of goodwill for our reportable segments for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 were as follows:

Insurance CenterWell Total
(in millions)
Balance at January 1, 2023 $ 2,472 $ 6,670 $ 9,142
Acquisitions 191 206 397
Balance at June 30, 2023 $ 2,663 $ 6,876 $ 9,539


	Insurance		CenterWell		Total
	(in millions)
Balance at January 1, 2024	$	2,663	$	6,887	$	9,550
Acquisitions	—		13		13


Balance at March 31, 2024	$	2,663	$	6,900	$	9,563

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(Unaudited)

The following table presents details of our other intangible assets included in other long-term assets in the accompanying condensed consolidated balance sheets at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022:~~2023:


			June 30, 2023						December 31, 2022							March 31, 2024				December 31, 2023
		Weighted Average Life	Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
	Weighted Average Life														Weighted Average Life		Cost	Accumulated Amortization	Net		Cost	Accumulated Amortization	Net
			($ in millions)													($ in millions)
Other intangible assets:	Other intangible assets:
Certificates of need
Certificates of need
Certificates of need	Certificates of need	Indefinite	$	1,132	$	—	$	1,132	$	1,132	$	—	$	1,132
Medicare licenses	Medicare licenses	Indefinite	302		—		302		286		—		286
Customer contracts/ relationships	Customer contracts/ relationships	9.4 years	955		696		259		929		673		256
Trade names and technology	Trade names and technology	6.7 years	139		103		36		142		107		35
Provider contracts	Provider contracts	11.6 years	73		64		9		73		63		10
Noncompetes and other	Noncompetes and other	8.4 years	84		40		44		86		40		46

Total other intangible assets	Total other intangible assets	9.2 years	$	2,685	$	903	$	1,782	$	2,648	$	883	$	1,765
Total other intangible assets
Total other intangible assets

For the three months ended ~~June 30,~~March 31, 2024 and 2023, ~~and 2022,~~ amortization expense for other intangible assets was approximately $16 million and $18 million, respectively. ~~For the six months ended June 30, 2023 and 2022, amortization expense for other intangible assets was approximately $34 million and $36 million, respectively.~~ The following table presents our estimate of amortization expense remaining for ~~2023~~2024 and each of the next five ~~next~~ succeeding years at ~~June 30, 2023:~~March 31, 2024:


		(in millions)		(in millions)
For the years ending December 31,	For the years ending December 31,
2023		$	32
2024
2024
2024	2024	60
2025	2025	58
2026	2026	44
2027	2027	34
2028	2028	29
2029

For additional information regarding our goodwill and intangible assets, refer to Note 2 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" in our ~~2022~~2023 Form 10-K.

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(Unaudited)

8. BENEFITS PAYABLE

On a consolidated basis, which represents our Insurance segment net of eliminations, activity in benefits payable was as follows for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 and ~~2022:~~2023:


		For the three months ended March 31,						For the three months ended March 31,
		2024					2024		2023
		(in millions)						(in millions)
Balances, beginning of period
			For the six months ended June 30,
			2023		2022
			(in millions)
Balances, beginning of period			$	9,264	$	8,289
Acquisitions			62		—
Incurred related to:	Incurred related to:
Incurred related to:
Incurred related to:
Current year
Current year
Current year	Current year		44,621		39,121
Prior years	Prior years		(754)		(397)
Total incurred	Total incurred		43,867		38,724
Paid related to:	Paid related to:
Current year	Current year		(35,279)		(30,356)
Current year
Current year
Prior years	Prior years		(7,610)		(7,007)
Total paid	Total paid		(42,889)		(37,363)
Balances, end of period	Balances, end of period		$	10,304	$	9,650

The total estimate of benefits payable for claims incurred but not reported, or IBNR, is included within the net incurred claims amounts. At ~~June 30, 2023,~~March 31, 2024, benefits payable included IBNR of approximately ~~$6.3~~$7.3 billion, primarily associated with claims incurred in ~~2023.~~2024.

Amounts incurred related to prior periods vary from previously estimated liabilities as the claims ultimately are settled. Negative amounts reported for incurred related to prior years result from claims being ultimately settled for amounts less than originally estimated (favorable development).

Our reserving practice is to consistently recognize the actuarial best estimate of our ultimate liability for claims. Actuarial standards require the use of assumptions based on moderately adverse experience, which generally results in favorable reserve development, or reserves that are considered redundant. 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 ~~2022~~2023 Form 10-K.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

9. EARNINGS PER COMMON SHARE COMPUTATION

Detail supporting the computation of basic and diluted earnings per common share was as follows for the three ~~and six~~ months ended ~~June 30, 2023~~March 31, 2024 and ~~2022:~~2023:


		Three months ended June 30,					Six months ended June 30,
		2023		2022			2023		2022
		(dollars in millions, except per common share results; number of shares in thousands)
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024					2024		2023
						(dollars in millions, except per common share results; number of shares in thousands)						(dollars in millions, except per common share results; number of shares in thousands)
Net income available for common stockholders	Net income available for common stockholders	$	959	$	696		$	2,198	$	1,626
Weighted average outstanding shares of common stock used to compute basic earnings per common share	Weighted average outstanding shares of common stock used to compute basic earnings per common share	124,574		126,523			124,790		126,730
Dilutive effect of:	Dilutive effect of:
Employee stock options
Employee stock options
Employee stock options	Employee stock options	34		47			34		44
Restricted stock	Restricted stock	501		514			512		505
Shares used to compute diluted earnings per common share	Shares used to compute diluted earnings per common share	125,109		127,084			125,336		127,279
Basic earnings per common share	Basic earnings per common share	$	7.70	$	5.50		$	17.62	$	12.83
Diluted earnings per common share	Diluted earnings per common share	$	7.66	$	5.48		$	17.54	$	12.77
Number of antidilutive stock options and restricted stock excluded from computation	Number of antidilutive stock options and restricted stock excluded from computation	78		98			308		362

For additional information regarding earnings per common share, refer to Note 2 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" in our ~~2022~~2023 Form 10-K.

10. STOCKHOLDERS’ EQUITY

Dividends

The following table provides details of dividend payments, excluding dividend equivalent rights for unvested stock awards, during ~~2023~~2024 under our Board approved quarterly cash dividend policy:

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

Record
Date

Payment
Date

Amount
per Share

Total
Amount

(in millions)

2024 payments

12/29/2023

1/26/2024

0.8850

108

In February 2024, the Board declared a cash dividend of $0.885 per share payable on April ~~2023,~~26, 2024 to stockholders of record on March 29, 2024. In April 2024, the Board declared a cash dividend of $0.885 per share payable on July ~~28, 2023~~26, 2024 to stockholders of record as of the close of business on June ~~30, 2023.~~28, 2024. Declaration and payment of future quarterly dividends are at the discretion of our Board and may be adjusted as business needs or market conditions change.

Stock Repurchases

Our Board of Directors may authorize the purchase of our common stock shares. Under the share repurchase authorization, shares may be purchased from time to time at prevailing prices in the open market, by block purchases, through plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as

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(Unaudited)

amended, or in privately-negotiated transactions, including pursuant to accelerated share repurchase agreements with investment banks, subject to certain regulatory restrictions on volume, pricing, and timing.

OnEffective February ~~15, 2023,~~16, 2024, the Board of Directors replaced the ~~previous share~~February 2023 repurchase authorization ~~of up to $3 billion~~ (of which approximately ~~$1 billion~~$824 million remained unused) with a new share repurchase authorization for repurchases of up to

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~(Unaudited)~~

$3 $3 billion of our common shares exclusive of shares repurchased in connection with employee stock plans, expiring as of February 15, ~~2026.~~2027, which we refer to as the 2024 repurchase authorization. During the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, we repurchased ~~1.2~~1.8 million shares in open market transactions for ~~$601~~$702 million at an average price of ~~$488.12~~$388.78 under the ~~current~~February 2023 and 2024 share repurchase ~~authorization.~~authorizations. During the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, we ~~did not repurchase~~repurchased 0.1 million shares in open market ~~transactions.~~transactions for $67 million at an average price of $495.68 under the February 2023 share repurchase authorization.

Our remaining repurchase authorization was ~~$2.2~~$2.96 billion as of ~~August 1, 2023.~~April 23, 2024.

In connection with employee stock plans, we acquired 0.04 million common shares for $15 million and 0.05 million common shares for $27 million ~~and 0.06 million common shares for $28 million~~ during the ~~six~~three months ended ~~June 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively.

For additional information regarding our stockholders' equity, refer to Note 16 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" in our ~~2022~~2023 Form 10-K.

11. INCOME TAXES

The effective income tax rate was ~~23.6%~~25.3% and ~~23.0%~~22.5% for the three ~~and six~~ months ended ~~June 30,~~March 31, 2024 and 2023, ~~respectively, and 38.1% and 30.5% for the three and six months ended June 30, 2022,~~ respectively. The year-over-year ~~decrease~~increase in the effective income tax rate is primarily due to a change in the mix of current year earnings between our Insurance segment and our CenterWell health services segment, as the latter incurs a higher effective domestic tax ~~impact resulting from~~rate than the ~~excess~~former. In addition, the prior year income tax rate was favorably impacted by the recognition of ~~the book basis over the tax basis of Gentiva Hospice in connection with the held-for-sale classification at June 30, 2022.~~a non-taxable gain.

For additional information regarding ~~in come~~income taxes, refer to Note 2 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" in our ~~2022~~2023 Form 10-K.

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(Unaudited)

12. DEBT

The carrying value of debt outstanding, net of unamortized debt issuance costs, was as follows at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022:~~2023:


		June 30, 2023		December 31, 2022
		(in millions)
	March 31, 2024					March 31, 2024		December 31, 2023
	(in millions)						(in millions)
Short-term debt:	Short-term debt:
Commercial paper
Commercial paper
Commercial paper	Commercial paper	$	847	$	595

Senior notes:	Senior notes:
$1.5 billion, 0.650% due August 3, 2023		1,175		1,497
Senior notes:
Senior notes:
$600 million, 3.850% due October 1, 2024
$600 million, 3.850% due October 1, 2024
$600 million, 3.850% due October 1, 2024
Total senior notes	Total senior notes	1,175		1,497
Total short-term debt	Total short-term debt	$	2,022	$	2,092
Long-term debt:	Long-term debt:
Senior notes:	Senior notes:
$600 million, 3.850% due October 1, 2024		$	571	$	599
Senior notes:
Senior notes:
$600 million, 4.500% due April 1, 2025
$600 million, 4.500% due April 1, 2025
$600 million, 4.500% due April 1, 2025	$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	745		745
$600 million, 3.950% due March 15, 2027	$600 million, 3.950% due March 15, 2027	598		597
$500 million, 5.750% due March 1, 2028	$500 million, 5.750% due March 1, 2028	494		494
$500 million, 5.750% due December 1, 2028
$750 million, 3.700% due March 23, 2029	$750 million, 3.700% due March 23, 2029	743		743
$500 million, 3.125% due August 15, 2029	$500 million, 3.125% due August 15, 2029	497		496
$500 million, 4.875% due April 1, 2030	$500 million, 4.875% due April 1, 2030	496		495
$1,250 million, 5.375% due April 15, 2031
$750 million, 2.150% due February 3, 2032	$750 million, 2.150% due February 3, 2032	743		743
$750 million, 5.880% due March 1, 2033		740		739
$750 million, 5.875% due March 1, 2033
$850 million, 5.950% due March 15, 2034
$250 million, 8.150% due June 15, 2038	$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
$750 million, 4.950% due October 1, 2044	$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		396
$500 million, 3.950% due August 15, 2049	$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	714		—
$1,000 million, 5.750% due April 15, 2054
Total senior notes	Total senior notes	9,722		8,534
Term loans:
Delayed draw term loan, due May 28, 2024		—		500
Total term loans		—		500

Total long-term debt	Total long-term debt	$	9,722	$	9,034

Total long-term debt

Total long-term debt

Senior Notes

In March ~~2023,~~2024, we issued ~~$500 million~~$1.3 billion of ~~5.700%~~5.375% unsecured senior notes due ~~March 13, 2026~~April 15, 2031 and ~~$750 million~~$1.0 billion of ~~5.500%~~5.750% unsecured senior notes due ~~March~~April 15, ~~2053.~~2054. Our net proceeds, reduced for the underwriters' discounts and commissions paid, were ~~$1.2~~$2.2 billion. We used the net proceeds ~~to repay outstanding amounts under our $500 million Delayed Draw Term Loan. The remaining net proceeds will be used~~ for general corporate purposes, which include the repayment of existing indebtedness, including borrowings under our commercial paper program.

~~In March 2023, we~~We have entered into ~~a Rule 10b5-1 Repurchase Plan, or the Plan,~~interest-rate swap agreements with major financial institutions to ~~repurchase a portion~~convert our interest-rate exposure on some of our ~~$1.5 billion aggregate principal amount of 0.650%~~ senior notes ~~maturing~~payable from fixed rates to variable rates, based on SOFR, to align interest costs more closely with floating interest rates received on our cash equivalents and investment securities, as further described in ~~August 2023 and our $600 million~~Note 5. As a result, the carrying value of these senior notes has been adjusted to reflect changes in value

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(Unaudited)

caused by an increase or decrease in interest rates. The cumulative, aggregate ~~principal amount~~adjustment to the carrying value of ~~3.850%~~the senior notes ~~maturing in October 2024 during the Plan period beginning on~~was approximately $17 million at March 13, 2023 and ending on July 21, 2023. During the six months ended June 30, 2023, we repurchased $325 million principal amount of our $1.5 billion, 0.650% senior notes for approximately $322 million cash and $28 million principal amount of our $600 million, 3.850% senior notes for approximately $27 million cash.31, 2024.

For additional information regarding our Senior Notes, refer to Note 13 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" in our ~~2022~~2023 Form 10-K.

Revolving Credit Agreements

In June 2023, we entered into an amended and restated 5-year, $2.5 billion unsecured revolving credit agreement (replacing the 5-year, $2.5 billion unsecured revolving credit agreement entered in June 2021) and entered into a 364-day $1.5 billion unsecured revolving credit agreement (replacing the 364-day $1.5 billion unsecured revolving credit agreement entered in June 2022, which expired in accordance with its terms).

Under the credit agreements, at our option, we can borrow on either a competitive advance basis or a revolving credit basis. The revolving credit portion bears interest at Term SOFR or the base rate plus a spread. The competitive advance portion of any borrowings will bear interest at market rates prevailing at the time of borrowing on either a fixed rate or a floating rate based Term SOFR, at our option.

The SOFR spread, currently 114.0 basis points under the 5-year revolving credit agreement and 116.0 basis points under the 364-day revolving credit agreement, varies depending on our credit ratings ranging from 92.0 to 130.0 basis points under the 5-year revolving credit agreement and from 94.0 to 135.0 basis points under the 364-day revolving credit agreement. We also pay an annual facility fee regardless of utilization. This facility fee, currently 11.0 basis points, under the 5-year revolving credit agreement and ~~9.0~~15.0 basis points under the 364-day revolving agreement, varies depending on our credit ratings ranging from 8.0 to 20.0 basis points under the 5-year revolving credit agreement and from 6.0 to 15.0 basis points under the 364-day revolving credit agreement.

Our credit agreements contain customary restrictive covenants and a financial covenant regarding maximum debt to capitalization of 60%, as well as customary events of default. We are in compliance with this financial covenant, with actual debt to capitalization of ~~41.0%~~45.1% as measured in accordance with the revolving credit agreements as of ~~June 30, 2023.~~March 31, 2024.

At ~~June 30, 2023,~~March 31, 2024, we had no borrowings and approximately $18 million of letters of credit outstanding under the revolving credit ~~agreements, including those of KAH.~~agreements. Accordingly, as of ~~June 30, 2023,~~March 31, 2024, we had ~~$2.4~~$2.482 billion of remaining borrowing capacity under the 5-year revolving credit agreement and $1.5 billion of remaining borrowing capacity under the 364-day revolving credit agreement (which excludes the uncommitted $750 million of incremental loan facilities), none of which would be restricted by our financial covenant compliance requirement.

For additional information regarding our Revolving Credit Agreements, refer to Note 13 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" in our ~~2022~~2023 Form 10-K.

Commercial Paper

Under our commercial paper program we may issue short-term, unsecured commercial paper notes privately placed on a discount basis through certain broker dealers at any time. Amounts available under the program may be borrowed, repaid and re-borrowed from time to time. The net proceeds of issuances have been and are expected to be used for general corporate purposes. The maximum principal amount outstanding at any one time during the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 was ~~$850 million,~~$2.7 billion, with ~~$847 million~~$0.3 billion outstanding at ~~June 30, 2023~~March 31, 2024 compared to ~~$595~~$0.9

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(Unaudited)

~~million~~billion outstanding at December 31, ~~2022.~~2023. The outstanding commercial paper at ~~June 30, 2023~~March 31, 2024 had a weighted average annual interest rate of ~~5.53%~~5.46%.

For additional information regarding our Commercial Paper refer to Note 13 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" in our ~~2022~~2023 Form 10-K.

Other Short-term Borrowings

We are a member, through one subsidiary, of the Federal Home Loan Bank of Cincinnati, or FHLB. As a member we have the ability to obtain short-term cash advances, subject to certain minimum collateral requirements. At ~~June 30, 2023~~March 31, 2024 we had no outstanding short-term FHLB borrowings.

13. COMMITMENTS, GUARANTEES AND CONTINGENCIES

Government Contracts

Our Medicare products, which accounted for approximately ~~83%~~86% of our total premiums and services revenue for the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, primarily consisted of products covered under the Medicare Advantage and Medicare Part D Prescription Drug Plan contracts with the federal government. These contracts are renewed generally for a calendar year term unless CMS notifies us of its decision not to renew by May 1 of the calendar year in which the contract would end, or we notify CMS of our decision not to renew by the first Monday in June of the calendar year in which the contract would end. All material contracts between Humana and CMS relating to our Medicare products have been renewed for ~~2023,~~2024, and all of our product offerings filed with CMS for ~~2023~~2024 have been approved.

CMS uses a risk-adjustment model which adjusts premiums paid to Medicare Advantage, or MA, plans according to health status of covered members. The risk-adjustment model, which CMS implemented pursuant to the Balanced Budget Act of 1997, or BBA, and the Benefits Improvement and Protection Act of 2000, or BIPA, generally pays more where a plan's membership has higher expected costs. Under this model, rates paid to MA plans are based on actuarially determined bids, which include a process whereby our prospective payments are based on our estimated cost of providing standard Medicare-covered benefits to an enrollee with a "national average risk profile." That baseline payment amount is adjusted to account for certain demographic characteristics and health status of our enrolled members. Under the risk-adjustment methodology, all MA plans must collect from providers and submit the necessary diagnosis code information to CMS within prescribed deadlines. The CMS risk-adjustment model uses the diagnosis data, collected from providers, to calculate the health status-related risk-adjusted premium payment to MA plans, which CMS further adjusts for coding pattern differences between the health plans and the government fee-for-service, or FFS, program. We generally rely on providers, including certain providers in our network who are our employees, to code their claim submissions with appropriate diagnoses, which we send to CMS as the basis for our health status-adjusted payment received from CMS under the actuarial risk-adjustment model. We also rely on these providers to document appropriately all medical data, including the diagnosis data submitted with claims. In addition, we conduct medical record reviews as part of our data and payment accuracy compliance efforts, to more accurately reflect diagnosis conditions under the risk adjustment model.

CMS and the Office of the Inspector General of Health and Human Services, or HHS-OIG, perform audits of various companies’ risk adjustment diagnosis data submissions. We refer to these audits as Risk-Adjustment Data Validation Audits, or RADV audits. RADV audits review medical records in an attempt to validate provider medical record documentation and coding practices that influence the calculation of health status-related premium payments to MA plans.

In 2012, CMS released an MA contract-level RADV methodology that would extrapolate the results of each CMS RADV audit sample to the audited MA contract’s entire health status-related risk adjusted premium amount for the year under audit. In doing so, CMS recognized “that the documentation standard used in RADV audits to determine a contract’s payment error (medical records) is different from the documentation standard used to develop the Part C risk-adjustment model (FFS claims).” To correct for this difference, CMS stated that it would apply a “Fee-for-Service Adjuster (FFS Adjuster)” as “an offset to the preliminary recovery amount.” This adjuster would

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~~“Fee-for-Service Adjuster (FFS Adjuster)” as “an offset to the preliminary recovery amount.” This adjuster would~~ be “calculated by CMS based on a RADV-like review of records submitted to support FFS claims data.” CMS stated that this methodology would apply to audits beginning with PY 2011. Humana relied on CMS’s 2012 guidance in submitting MA bids to CMS. Humana also launched a “Self-Audits” program in 2013 that applied CMS’s 2012 RADV audit methodology and included an estimated FFS Adjuster. Humana completed Self-Audits for PYs 2011-2016 and reported results to CMS.

In October 2018, however, CMS issued a proposed rule announcing possible changes to the RADV audit methodology, including elimination of the FFS Adjuster. CMS proposed applying its revised methodology, including extrapolated recoveries without application of a FFS Adjuster, to RADV audits dating back to PY 2011. On January 30, 2023, CMS published a final rule related to the RADV audit methodology (Final RADV Rule). The Final RADV Rule confirmed CMS’s decision to eliminate the FFS Adjuster. The Final RADV Rule states CMS’s intention to extrapolate results from CMS and HHS-OIG RADV audits beginning with PY 2018, rather than PY 2011 as proposed. However, CMS’s Final RADV Rule does not adopt a specific sampling, extrapolation or audit methodology. CMS instead stated its general plan to rely on “any statistically valid method . . . that is determined to be well-suited to a particular audit.”

~~Humana is considering its legal options with respect to CMS’s changed position on the FFS Adjuster and seeking clarity regarding our compliance obligations in light of the Final RADV Rule.~~ We believe that the Final RADV Rule fails to address adequately the statutory requirement of actuarial ~~equivalence. Further,~~equivalence and violates the Administrative Procedure Act (“APA”). CMS failed to meet its legal obligations in the federal rulemaking process to give a reasoned justification for the rule or provide a meaningful opportunity for public comment. They also chose to apply the rule retroactively rather than prospectively, as required by law. Humana’s actuarially certified bids through PY 2023 preserved Humana’s position that CMS should apply an FFS Adjuster in any RADV audit that CMS intends to extrapolate. We expect CMS to apply the Final RADV Rule, including the first application of extrapolated audit results to determine audit settlements without a FFS Adjuster, to CMS and HHS-OIG RADV audits conducted for PY 2018 and subsequent years. The Final RADV Rule, including the lack of a FFS Adjuster, and any related regulatory, industry or company reactions, could have a material adverse effect on our results of operations, financial position, or cash flows.

In addition, as part of our internal compliance efforts, we routinely perform ordinary course reviews of our internal business processes related to, among other things, our risk coding and data submissions in connection with the risk adjustment model. These reviews may also result in the identification of errors and the submission of corrections to CMS that may, either individually or in the aggregate, be material. As such, the result of these reviews may have a material adverse effect on our results of operations, financial position, or cash flows.

~~As we explore our legal options~~On September 1, 2023, Humana Inc. and ~~compliance obligations, we~~Humana Benefit Plan of Texas, Inc. filed suit against the United States Department of Health and Human Services, and Xavier Becerra in his official capacity as Secretary, in the United States District Court, Northern District of Texas, Fort Worth Division seeking a determination that the Final RADV Rule violates the APA and should be set aside. We remain committed to working alongside CMS to promote the integrity of the MA program as well as affordability and cost certainty for our members. It is critical that MA plans are paid accurately and that payment model principles, including the application of a FFS Adjuster, are in accordance with the requirements of the Social Security Act, which, if not implemented correctly could have a material adverse effect on our results of operations, financial position, or cash flows.

Our state-based Medicaid business, which accounted for approximately 7% of our total premiums and services revenue for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 primarily consisted of serving members enrolled in Medicaid, and in certain circumstances members who qualify for both Medicaid and Medicare, under contracts with various states.

At ~~June 30, 2023,~~March 31, 2024, our Military services business, which accounted for approximately 1% of our total premiums and services revenue for the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, primarily consisted of the TRICARE T2017 East Region contract. The T2017 East Region contract ~~comprising~~comprises 32 states and approximately 6 million TRICARE beneficiaries, under which delivery of health care services commenced on January 1, 2018. The T2017 East Region contract, which was originally set to expire on December 31, 2022, was subsequently extended by the DoD and is currently scheduled to expire on December 31, ~~2023,~~2024, unless further extended.

In December 2022, we were awarded the next generation of TRICARE Managed Care Support Contracts, or T-5, for the updated TRICARE East Region by the Defense Health Agency of the DoD. The contract is expected to go into effect in 2024. Until then the T2017 contract remains in place. Under the terms of the award, our service area covers approximately 4.6 million beneficiaries in a region consisting of 24 states and Washington, D.C. The length of theDoD.The T-5 East Region

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contract comprises 24 states, and Washington D.C., and covers approximately 4.6 million beneficiaries. The transition period for the T-5 contract began in January 2024 and will overlap the final year of the T2017 contract. The length of the contract is one ~~base~~transition year ~~with~~followed by eight annual option periods, which, if all options are exercised, would result in a total contract length of nine years.

The loss of any of the contracts above or significant changes in these programs as a result of legislative or regulatory action, including reductions in premium payments to us, regulatory 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, or increases in member benefits or member eligibility criteria without corresponding increases in premium payments to us, may have a material adverse effect on our results of operations, financial position, and cash flows.

Legal Proceedings and Certain Regulatory Matters

As previously disclosed, the Civil Division of the United States Department of Justice provided us with an information request in December 2014, concerning our Medicare Part C risk adjustment practices. The request relates to our oversight and submission of risk adjustment data generated by providers in our Medicare Advantage network, as well as to our business and compliance practices related to risk adjustment data generated by our providers and by us, including medical record reviews conducted as part of our data and payment accuracy compliance efforts, the use of health and well-being assessments, and our fraud detection efforts. We believe that this request for information is in connection with a wider review of Medicare Risk Adjustment generally that includes a number of Medicare Advantage plans, providers and vendors. We cooperated with the Department of Justice, and we have not heard from the Department of Justice on this matter since 2020.

As previously disclosed, on January 19, 2016, an individual filed a qui tam suit captioned United States of America ex rel. Steven Scott v. Humana Inc., currently pending in United States District Court, Western District of Kentucky, Louisville division. The complaint alleges certain civil violations by us in connection with the actuarial equivalence of the plan benefits under Humana’s Basic PDP plan, a prescription drug plan offered by us under Medicare Part D. The action seeks damages and penalties on behalf of the United States under the False Claims Act. The court ordered the qui tam action unsealed on September 13, 2017, so that the relator could proceed, following notice from the U.S. Government that it was not intervening at that time. On March 31, 2022, the Court denied the parties' Motions for Summary Judgement. We take seriously our obligations to comply with applicable CMS requirements and actuarial standards of practice, and continue to vigorously defend against these allegations. ~~As of June 30,~~During 2023, we ~~have~~ accrued certain anticipated expenses in connection with this matter.

On September 1, 2023, Humana Inc. and Humana Benefit Plan of Texas, Inc. filed suit against the United States Department of Health and Human Services, and Xavier Becerra in his official capacity as Secretary, in the United States District Court, Northern District of Texas, Fort Worth Division seeking a determination that the Final RADV Rule violates the APA and should be set aside.There is no assurance that we will prevail in the lawsuit. See “Government Contracts” in this footnote to the unaudited Consolidated Financial Statements of this Form 10-Q for additional information regarding this matter.

Other Lawsuits and Regulatory Matters

Our current and past business practices are subject to review or other investigations by various state insurance and health care regulatory authorities and other state and federal regulatory authorities. These authorities regularly scrutinize the business practices of health insurance, health care delivery and benefits companies. These reviews focus on numerous facets of our business, including claims payment practices, statutory capital requirements, provider contracting, risk adjustment, competitive practices, commission payments, privacy issues, utilization management practices, pharmacy benefits, access to care, sales practices, and provision of care by our healthcare services businesses, among others. Some of these reviews have historically resulted in fines imposed on us and some have required changes to some of our practices. We continue to be subject to these reviews, which could result in additional fines or other sanctions being imposed on us or additional changes in some of our practices.

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We also are involved in various other lawsuits that arise, for the most part, in the ordinary course of our business operations, certain of which may be styled as class-action lawsuits. Among other matters, this litigation may include employment matters, claims of medical malpractice, bad faith, nonacceptance or termination of providers, anticompetitive practices, improper rate setting, provider contract rate and payment disputes, including disputes over reimbursement rates required by statute, disputes arising from competitive procurement process, general contractual matters, intellectual property matters, and challenges to subrogation practices. Under state guaranty assessment laws, including those related to state cooperative failures in the industry, we may be assessed

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~~(up~~ (up to prescribed limits) for certain obligations to the policyholders and claimants of insolvent insurance companies that write the same line or lines of business as we do.

As a government contractor, we may also be subject to false claims litigation, such as qui tam lawsuits brought by individuals who seek to sue on behalf of the government, alleging that the government contractor submitted false claims to the government or related overpayments from the government, including, among other allegations, those resulting from coding and review practices under the Medicare risk adjustment model. Qui tam litigation is filed under seal to allow the government an opportunity to investigate and to decide if it wishes to intervene and assume control of the litigation. If the government does not intervene, the individual may continue to prosecute the action on his or her own, on behalf of the government. We also are subject to other allegations of nonperformance of contractual obligations to providers, members, and others, including failure to properly pay claims, improper policy terminations, challenges to our implementation of the Medicare Part D prescription drug program and other litigation.

A limited number of the claims asserted against us are subject to insurance coverage. Personal injury claims, claims for extra contractual damages, care delivery malpractice, and claims arising from medical benefit denials are covered by insurance from our wholly owned captive insurance subsidiary and excess carriers, except to the extent that claimants seek punitive damages, which may not be covered by insurance in certain states in which insurance coverage for punitive damages is not permitted. In addition, insurance coverage for all or certain forms of liability has become increasingly costly and may become unavailable or prohibitively expensive in the future.

We record accruals for the contingencies discussed in the sections above to the extent that we conclude it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. No estimate of the possible loss or range of loss in excess of amounts accrued, if any, can be made at this time regarding the matters specifically described above because of the inherently unpredictable nature of legal proceedings, which also may be exacerbated by various factors, including: (i) the damages sought in the proceedings are unsubstantiated or indeterminate; (ii) discovery is not complete; (iii) the proceeding is in its early stages; (iv) the matters present legal uncertainties; (v) there are significant facts in dispute; (vi) there are a large number of parties (including where it is uncertain how liability, if any, will be shared among multiple defendants); or (vii) there is a wide range of potential outcomes.

The outcome of any current or future litigation or governmental or internal investigations, including the matters described above, cannot be accurately predicted, nor can we predict any resulting judgments, penalties, fines or other sanctions that may be imposed at the discretion of federal or state regulatory authorities or as a result of actions by third parties. Nevertheless, it is reasonably possible that any such outcome of litigation, judgments, penalties, fines or other sanctions could be substantial, and the outcome of these matters may have a material adverse effect on our results of operations, financial position, and cash flows, and may also affect our reputation.

14. SEGMENT INFORMATION

During December 2022, we realigned our 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, provider services, and 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.~~

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.

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and Long-Term Support Services benefits, which we refer to collectively as our state-based contracts. This segment 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. In addition, our Insurance segment includes our Military services business, primarily our T-2017 East Region contract, as well as the operations of our PBM business.

The CenterWell segment includes our pharmacy, ~~provider services,~~primary care, and home solutions operations. The segment also includes our strategic partnerships with WCAS to develop and operate senior-focused, payor-agnostic, primary care 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.

Our CenterWell intersegment revenues primarily relate to the operations of CenterWell Pharmacy (our mail- order pharmacy business), CenterWell Specialty Pharmacy, and retail pharmacies jointly located within CenterWell Senior Primary Care clinics.

In addition, our CenterWell intersegment revenues include revenues earned by certain owned providers derived from certain value-based arrangements with our health plans. Under these value-based arrangements, our owned providers enter into agreements with our health plans to stand ready to deliver, integrate, direct and control the administration and management of certain health care services for our members. In exchange, the owned provider receives a premium that is typically paid on a per-member per-month basis. These value-based arrangements represent a single performance obligation where revenues are recognized in the period in which we are obligated to provide integrated health care services to our members. Fee-for-service revenue is recognized at agreed upon rates, net of contractual allowances, as the performance obligation is completed on the date of service.

We present our condensed consolidated results of operations from the perspective of the health plans. As a result, the cost of providing benefits to our members, whether provided via a third party provider or internally through a stand-alone subsidiary, is classified as benefits expense and excludes the portion of the cost for which the health plans do not bear responsibility, including member co-share amounts and government subsidies of ~~$5.0~~$3.7 billion and ~~$4.8~~$4.0 billion for the three months ended ~~June 30,~~March 31, 2024 and 2023, ~~and 2022, respectively. For the six months ended June 30, 2023 and 2022 these amounts were $9.0 billion and $8.8 billion,~~ respectively. In addition, depreciation and amortization expense associated with certain businesses delivering benefits to our members, primarily associated with our ~~provider services~~primary care and pharmacy operations, are included with benefits expense. The amount of this expense was ~~$34~~$32 million and ~~$29~~$33 million for the three months ended ~~June 30,~~March 31, 2024 and 2023, ~~and 2022, respectively, and $67 million and $59 million for the six months ended June 30, 2023 and 2022,~~ respectively.

Other than those described previously, the accounting policies of each segment are the same. For additional information regarding our accounting policies refer to Note 2 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" in our ~~2022~~2023 Form 10-K. Transactions between reportable segments primarily consist of sales of products and services rendered by our CenterWell segment, primarily pharmacy, ~~provider,~~primary care, and home services, to our Insurance segment customers. Intersegment sales and expenses are recorded primarily 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 in the tables presenting segment results below.

Our segment results were as follows for the three months ended March 31, 2024 and 2023:

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~~Our segment results were as follows for the three and six months ended June 30, 2023 and 2022:~~


		Insurance		CenterWell		Eliminations/ Corporate		Consolidated
Three months ended June 30, 2023		(in millions)
		Insurance
		Insurance
		Insurance										CenterWell	Eliminations/ Corporate	Consolidated
Three months ended March 31, 2024										Three months ended March 31, 2024	(in millions)
External revenues	External revenues
Premiums:	Premiums:
Premiums:
Premiums:
Individual Medicare Advantage
Individual Medicare Advantage
Individual Medicare Advantage	Individual Medicare Advantage	$	19,749	$	—	$	—	$	19,749
Group Medicare Advantage	Group Medicare Advantage	1,732		—		—		1,732
Medicare stand-alone PDP	Medicare stand-alone PDP	568		—		—		568
Total Medicare	Total Medicare	22,049		—		—		22,049
Commercial fully-insured	Commercial fully-insured	950		—		—		950
Specialty benefits	Specialty benefits	252		—		—		252
Medicare Supplement	Medicare Supplement	182		—		—		182
Medicaid and other		2,062		—		—		2,062
State-based contracts and other
Total premiums	Total premiums	25,495		—		—		25,495
Services revenue:	Services revenue:

Home solutions	Home solutions	—		341		—		341
Provider services		—		190		—		190

Home solutions

Home solutions
Primary care
Commercial ASO	Commercial ASO	64		—		—		64
Military and other		167		—		—		167
Military services and other
Pharmacy solutions	Pharmacy solutions	—		216		—		216
Total services revenue	Total services revenue	231		747		—		978
Total external revenues	Total external revenues	25,726		747		—		26,473
Intersegment revenues	Intersegment revenues
Services
Services
Services	Services	15		1,144		(1,159)		—
Products	Products	—		2,639		(2,639)		—
Total intersegment revenues	Total intersegment revenues	15		3,783		(3,798)		—
Investment income	Investment income	134		—		140		274
Total revenues	Total revenues	25,875		4,530		(3,658)		26,747
Operating expenses:	Operating expenses:
Benefits	Benefits	22,127		—		(118)		22,009
Benefits
Benefits
Operating costs	Operating costs	2,545		4,193		(3,627)		3,111

Depreciation and amortization
Depreciation and amortization
Depreciation and amortization	Depreciation and amortization	172		50		(31)		191
Total operating expenses	Total operating expenses	24,844		4,243		(3,776)		25,311
Income from operations	Income from operations	1,031		287		118		1,436

Interest expense	Interest expense	—		1		119		120
Interest expense
Interest expense
Other expense, net	Other expense, net	—		—		54		54
Income (loss) before income taxes and equity in net earnings	Income (loss) before income taxes and equity in net earnings	1,031		286		(55)		1,262
Equity in net earnings (losses)		1		(11)		—		(10)
Equity in net losses
Segment earnings (loss)	Segment earnings (loss)	$	1,032	$	275	$	(55)	$	1,252
Net loss attributable to noncontrolling interests	Net loss attributable to noncontrolling interests	3		—		—		3
Segment earnings (loss) attributable to Humana	Segment earnings (loss) attributable to Humana	$	1,035	$	275	$	(55)	$	1,255

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		Insurance		CenterWell		Eliminations/ Corporate		Consolidated
Three months ended June 30, 2022		(in millions)
		Insurance
		Insurance
		Insurance										CenterWell	Eliminations/ Corporate	Consolidated
Three months ended March 31, 2023										Three months ended March 31, 2023	(in millions)
External revenues	External revenues
Premiums:	Premiums:
Premiums:
Premiums:
Individual Medicare Advantage
Individual Medicare Advantage
Individual Medicare Advantage	Individual Medicare Advantage	$	16,692	$	—	$	—	$	16,692
Group Medicare Advantage	Group Medicare Advantage	1,857		—		—		1,857
Medicare stand-alone PDP	Medicare stand-alone PDP	606		—		—		606
Total Medicare	Total Medicare	19,155		—		—		19,155
Commercial fully-insured	Commercial fully-insured	1,109		—		—		1,109
Specialty benefits	Specialty benefits	261		—		—		261
Medicare Supplement	Medicare Supplement	185		—		—		185
Medicaid and other		1,556		—		—		1,556
State-based contracts and other
Total premiums	Total premiums	22,266		—		—		22,266
Services revenue:	Services revenue:

Home solutions	Home solutions	—		752		—		752
Provider services		—		137		—		137

Home solutions

Home solutions
Primary care
Commercial ASO	Commercial ASO	75		—		—		75
Military and other		131		—		—		131
Military services and other
Pharmacy solutions	Pharmacy solutions	—		254		—		254
Total services revenue	Total services revenue	206		1,143		—		1,349
Total external revenues	Total external revenues	22,472		1,143		—		23,615
Intersegment revenues	Intersegment revenues
Services
Services
Services	Services	14		894		(908)		—
Products	Products	—		2,489		(2,489)		—
Total intersegment revenues	Total intersegment revenues	14		3,383		(3,397)		—
Investment income	Investment income	46		1		—		47
Total revenues	Total revenues	22,532		4,527		(3,397)		23,662
Operating expenses:	Operating expenses:
Benefits	Benefits	19,164		—		(65)		19,099
Benefits
Benefits
Operating costs	Operating costs	2,105		4,125		(3,057)		3,173

Depreciation and amortization	Depreciation and amortization	156		44		(25)		175
Depreciation and amortization
Depreciation and amortization
Total operating expenses	Total operating expenses	21,425		4,169		(3,147)		22,447
Income (loss) from operations		1,107		358		(250)		1,215
Income from operations

Interest expense
Interest expense
Interest expense	Interest expense	—		—		101		101
Other income, net	Other income, net	—		—		(8)		(8)
Income (loss) before income taxes and equity in net earnings	Income (loss) before income taxes and equity in net earnings	1,107		358		(343)		1,122
Equity in net earnings (losses)		8		(6)		—		2
Equity in net losses
Segment earnings (loss)	Segment earnings (loss)	$	1,115	$	352	$	(343)	$	1,124
Net income attributable to noncontrolling interests		—		(1)		—		(1)
Net loss attributable to noncontrolling interests
Segment earnings (loss) attributable to Humana	Segment earnings (loss) attributable to Humana	$	1,115	$	351	$	(343)	$	1,123

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Insurance CenterWell Eliminations/
Corporate Consolidated
Six months ended June 30, 2023 (in millions)
External revenues
Premiums:
Individual Medicare Advantage $ 39,558 $ — $ — $ 39,558
Group Medicare Advantage 3,497 — — 3,497
Medicare stand-alone PDP 1,184 — — 1,184
Total Medicare 44,239 — — 44,239
Commercial fully-insured 1,968 — — 1,968
Specialty benefits 506 — — 506
Medicare Supplement 361 — — 361
Medicaid and other 3,971 — — 3,971
Total premiums 51,045 — — 51,045
Services revenue:
Home solutions — 655 — 655
Provider services — 391 — 391
Commercial ASO 135 — — 135
Military and other 338 — — 338
Pharmacy solutions — 458 — 458
Total services revenue 473 1,504 — 1,977
Total external revenues 51,518 1,504 — 53,022
Intersegment revenues
Services 29 2,277 (2,306) —
Products — 5,254 (5,254) —
Total intersegment revenues 29 7,531 (7,560) —
Investment income 231 — 236 467
Total revenues 51,778 9,035 (7,324) 53,489
Operating expenses:
Benefits 44,120 — (253) 43,867
Operating costs 4,963 8,319 (7,192) 6,090
Depreciation and amortization 337 99 (59) 377
Total operating expenses 49,420 8,418 (7,504) 50,334
Income from operations 2,358 617 180 3,155
Interest expense — 1 232 233
Other expense, net — — 46 46
Income (loss) before income taxes and equity in net losses 2,358 616 (98) 2,876
Equity in net losses (2) (25) — (27)
Segment earnings (loss) $ 2,356 $ 591 $ (98) $ 2,849
Net loss attributable to noncontrolling interests 4 — — 4
Segment earnings (loss) attributable to Humana $ 2,360 $ 591 $ (98) $ 2,853

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Insurance CenterWell Eliminations/
Corporate Consolidated
Six months ended June 30, 2022 (in millions)
External Revenues
Premiums:
Individual Medicare Advantage $ 33,744 $ — $ — $ 33,744
Group Medicare Advantage 3,732 — — 3,732
Medicare stand-alone PDP 1,245 — — 1,245
Total Medicare 38,721 — — 38,721
Commercial fully-insured 2,249 — — 2,249
Specialty benefits 522 — — 522
Medicare Supplement 367 — — 367
Medicaid and other 3,110 — — 3,110
Total premiums 44,969 — — 44,969
Services revenue:
Home solutions — 1,478 — 1,478
Provider services — 250 — 250
Commercial ASO 152 — — 152
Military and other 258 — — 258
Pharmacy solutions — 475 — 475
Total services revenue 410 2,203 — 2,613
Total external revenues 45,379 2,203 — 47,582
Intersegment revenues
Services 28 1,751 (1,779) —
Products — 4,935 (4,935) —
Total intersegment revenues 28 6,686 (6,714) —
Investment income (loss) 92 3 (45) 50
Total revenues 45,499 8,892 (6,759) 47,632
Operating expenses:
Benefits 38,898 — (174) 38,724
Operating costs 4,192 8,073 (6,206) 6,059
Depreciation and amortization 306 91 (52) 345
Total operating expenses 43,396 8,164 (6,432) 45,128
Income (loss) from operations 2,103 728 (327) 2,504
Interest expense — — 191 191
Other income, net — — (29) (29)
Income (loss) before income taxes and equity in net losses 2,103 728 (489) 2,342
Equity in net earnings (losses) 8 (10) — (2)
Segment earnings (loss) $ 2,111 $ 718 $ (489) $ 2,340
Net income attributable to noncontrolling interests — (1) — (1)
Segment earnings (loss) attributable to Humana $ 2,111 $ 717 $ (489) $ 2,339

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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 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 ~~2022~~2023 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 ~~16, 2023,~~15, 2024, 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 statements.

Executive Overview

General

Humana Inc., headquartered in Louisville, Kentucky, is committed to putting health first – for our teammates, our customers, and our company. Through our Humana insurance services, and our CenterWell health care services, we make it easier for the millions of people we serve to achieve their best health – delivering the care and service they need, when they need it. These efforts are leading to a better quality of life for people with Medicare, Medicaid, families, individuals, military service personnel, and communities at large.

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.

Employer Group Commercial Medical Products Business Exit

~~Sale of Hospice and Personal Care Divisions~~

~~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 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 utilization.

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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~~Initiatives

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Business Segments

During December 2022, we realigned our 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, provider services, and 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.

The Insurance segment consists of Medicare benefits, marketed to individuals or directly via group Medicare 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, dual eligible demonstration, and Long-Term Support Services benefits, which we refer to collectively as our state-based contracts. This segment 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. In addition, our Insurance segment includes our Military services business, primarily our T-2017 East Region contract, as well as the operations of our PBM business.

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primary care 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 income (loss) from operations. Transactions between reportable segments primarily consist of sales of products and services rendered by our CenterWell segment, primarily pharmacy, ~~provider,~~primary care, and home services, to our Insurance segment customers. Intersegment sales and expenses are recorded primarily 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. At the same time, during periods of increased incidences of COVID-19, COVID-19 treatment and testing costs increased. Similar impacts and seasonal disruptions from either higher or lower utilization are expected to persist as we recover from the COVID-19 global health crisis.

One of the product offerings of our Insurance segment is Medicare stand-alone prescription drug plans, or PDP, under the Medicare Part D program. Our quarterly Insurance segment earnings and operating cash flows are impacted by the Medicare Part D benefit design and changes in the composition of our 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 ~~standalone~~stand-alone PDP products affects the quarterly benefit ratio pattern.

The Insurance segment also experiences seasonality in the commercial fully-insured product offering. The effect on the Insurance segment benefit ratio is opposite of the Medicare stand-alone PDP impact, with the benefit ratio increasing as fully-insured members progress through their annual deductible and maximum out-of-pocket expenses. The Employer Group Commercial Fully-Insured business ~~increased our Insurance segment benefit ratio by 20 basis points and 10 basis points for~~decreased the ~~three months ended June 30, 2023 and 2022, respectively. The Employer Group Commercial Fully-Insured business decreased our~~ Insurance segment benefit ratio by 10 basis points and decreased the Insurance segment benefit ratio by 30 basis points for the ~~six~~three months ended ~~June 30,~~March 31, 2024 and 2023, ~~and 2022.~~respectively.

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The Insurance segment also experiences seasonality in the operating cost ratio as a result of costs incurred in the second half of the year associated with the Medicare marketing season. The Insurance segment may experience adverse impacts in the operating cost ratio as a result of our Employer Group Commercial Medical Products exit phased over the 18-24 months following our February 2023 announcement. The Employer Group Commercial Fully-Insured business increased ~~our~~the Insurance segment operating cost ratio by 3010 basis points and 60increased the Insurance segment operating cost ratio by 40 basis points for the three months ended ~~June 30,~~March 31, 2024 and 2023, and 2022, respectively. The Employer Group Commercial Fully-Insured business increased our Insurance segment operating cost ratio by 30 basis points and 50 basis points for the six months ended June 30, 2023 and 2022, respectively.

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~~2023~~2024 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-directed care for our members aims to provide quality care that is consistent, integrated, cost-effective, and member-focused, provided by both employed physicians and physicians with network contract arrangements. The model is designed to improve health outcomes and affordability for individuals and for the health system as a whole, while offering our members a simple, seamless healthcare experience. We believe this strategy is positioning us for long-term growth in both membership and earnings. We offer providers a continuum of opportunities to increase the integration of care and offer assistance to providers in transitioning from a fee-for-service to a value-based arrangement. These include performance bonuses, shared savings and shared risk relationships. At ~~June 30, 2023,~~March 31, 2024, approximately ~~3,618,500~~3,837,300 members, or 69%, of our individual Medicare Advantage members were in value-based relationships under our integrated care delivery model, as compared to ~~3,095,300~~3,505,100 members, or 68%, at ~~June 30, 2022.~~March 31, 2023.

•Net income attributable to Humana was ~~$956 million,~~$0.7 billion, or ~~$7.66~~$6.11 per diluted common share, and ~~$697 million,~~$1.2 billion, or ~~$5.48~~$9.87 per diluted common share, for the three months ended ~~June 30,~~March 31, 2024 and 2023, ~~and 2022, respectively.~~ ~~Net income~~ ~~was $2.2 billion, or $17.54 per diluted common share, and $1.6 billion, or $12.77 per diluted common share, for the six months ended June 30, 2023, and 2022,~~ respectively. These comparisons were significantly impacted by put/call valuation adjustments associated with non-consolidating minority interest investments, transaction and integration costs, and charges associated with ~~productivity initiatives in the 2022 quarter, the change in the fair~~ value of publicly-traded equity securities, tax provision related to the pending sale of Kindred at Home's Hospice and Personal Care divisions at June 30, 2022 and accrual related to certain anticipated litigation expenses in the 2023 quarter.creation initiatives. The impact of these adjustments to our consolidated income before income taxes and equity in net earnings and diluted earnings per common share was as follows for the ~~2023~~2024 and ~~2022 quarter and period:~~2023 quarter:

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		For the three months ended June 30,					For the six months ended June 30,
		2023		2022			2023		2022
				For the three months ended March 31,
				For the three months ended March 31,
				For the three months ended March 31,
						2024					2024		2023
						(in millions)						(in millions)
Consolidated income before income taxes and equity in net earnings:	Consolidated income before income taxes and equity in net earnings:

Put/call valuation adjustments associated with our non consolidating minority interest investments	Put/call valuation adjustments associated with our non consolidating minority interest investments	$	53	$	(8)		$	107	$	(29)

Put/call valuation adjustments associated with our non consolidating minority interest investments

Put/call valuation adjustments associated with our non consolidating minority interest investments
Transaction and integration costs	Transaction and integration costs	4		36			(48)		53
Change in the fair value of publicly-traded equity securities		—		62			(1)		170
Charges associated with productivity initiatives related to the previously disclosed $1 billion value creation plan		—		203			—		203
Accrual related to certain anticipated litigation expenses		90		—			90		—

Value creation initiatives
Value creation initiatives
Value creation initiatives

Total
Total
Total	Total	$	147	$	293		$	148	$	397

		For the three months ended June 30,					For the six months ended June 30,
		2023		2022			2023		2022
				For the three months ended March 31,
				For the three months ended March 31,
				For the three months ended March 31,
						2024					2024		2023
Diluted earnings per common share:	Diluted earnings per common share:

Put/call valuation adjustments associated with our non consolidating minority interest investments	Put/call valuation adjustments associated with our non consolidating minority interest investments	$	0.43	$	(0.06)		$	0.85	$	(0.23)

Put/call valuation adjustments associated with our non consolidating minority interest investments

Put/call valuation adjustments associated with our non consolidating minority interest investments
Transaction and integration costs	Transaction and integration costs	0.03		0.28			(0.38)		0.42
Change in the fair value of publicly-traded equity securities		—		0.48			(0.01)		1.33
Charges associated with productivity initiatives related to the previously disclosed $1 billion value creation plan		—		1.60			—		1.60
Accrual related to certain anticipated litigation expenses		0.72		—			0.72		—
Tax impact of all transactions (1)		(0.27)		0.78			$	(0.38)	$	0.59

Value creation initiatives
Value creation initiatives
Value creation initiatives

Net tax impact of transactions
Net tax impact of transactions
Net tax impact of transactions
Total	Total	$	0.91	$	3.08		$	0.80	$	3.71

(1) Includes $1.31 per diluted common share related to the recognition of a deferred tax liability in the 2022 quarter and period in connection with the held-for-sale classification of the KAH Hospice sale at June 30, 2022.

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~~Health Care Reform~~Regulatory Environment

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 haveenacted significant reforms to various aspects of the U.S. health insurance industry, including, among others, mandated coverage requirements, mandated benefits and guarantee issuance associated with ~~commercial medical~~ insurance products, 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, and changes to the Part D prescription drug benefit ~~design.~~design.

It is reasonably possible that these laws and regulations, as well as other current or future legislative, judicial or regulatory changes including restrictions on our ability to manage our provider network, manage and sell our products, 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, or changes to the Part D prescription drug benefit design (and uncertainty arising from the implementation of these changes) 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.

In March 2024, the United States Securities and Exchange Commission issued its final regulation on climate-related disclosures. The regulation requires certain disclosures in registration statements and annual reports, including financial impact and climate-related impact metrics. On April 4, 2024, the SEC exercised its discretion to stay the Final Rules pending the completion of judicial review. The new regulation is effective for us beginning with the annual report for the year ended December 31, 2025. We are evaluating the final rule and its impact on our disclosures.

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 CenterWell segment, primarily pharmacy, ~~provider,~~primary care, and home services, to our 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 ~~2023~~2024 and ~~2022~~2023

The following discussion primarily details our results of operations for the three months ended ~~June 30,~~March 31, 2024, or the 2024 quarter and the three months ended March 31, 2023, or the 2023 ~~quarter, the three months ended June 30, 2022, or the 2022 quarter, the six months ended June 30, 2023, or the 2023 period, and the six months ended June 30, 2022, or the 2022 period.~~quarter.

~~Consolidated~~


																				Change

																				Change

																				Change
					Three Months Ended March 31,																									Three Months Ended March 31,											Three Months Ended March 31, 2024 vs 2023
									2024																											2024	2023													$				%
									($ in millions, except per common share results)																																	($ in millions, except per common share results)
Revenues:

Insurance premiums

Insurance premiums

Insurance premiums																											$	28,261					$	25,550									$	2,711		10.6		%
																Change
		Three months ended June 30,								Six months ended June 30,						Three months ended June 30, 2023 vs 2022					Six months ended June 30, 2023 vs 2022
Services:
		2023				2022				2023			2022			$		%			$		%
Services:
		($ in millions, except per common share results)
Revenues:
Premiums:
Services:
Insurance	Insurance	$	25,495			$	22,266			$	51,045		$	44,969		$	3,229	14.5	%		$	6,076	13.5	%

Total premiums revenue		25,495				22,266				51,045			44,969			3,229		14.5	%		6,076		13.5	%
Services:
Insurance
Insurance	Insurance	231				206				473			410			25		12.1	%		63		15.4	%		275			242			242						33							33				13.6			13.6	%
CenterWell	CenterWell	747				1,143				1,504			2,203			(396)		(34.6)	%		(699)		(31.7)	%	CenterWell		787				757			757						30							30				4.0		4.0	%
Total services revenue	Total services revenue	978				1,349				1,977			2,613			(371)		(27.5)	%		(636)		(24.3)	%	Total services revenue		1,062				999			999						63							63				6.3		6.3	%
Investment income	Investment income	274				47				467			50			227		483.0	%		417		834.0	%	Investment income		288				193			193						95							95				49.2		49.2	%
Total revenues	Total revenues	26,747				23,662				53,489			47,632			3,085		13.0	%		5,857		12.3	%	Total revenues		29,611				26,742			26,742						2,869							2,869				10.7		10.7	%
Operating expenses:	Operating expenses:
Benefits	Benefits	22,009				19,099				43,867			38,724			2,910		15.2	%		5,143		13.3	%
Benefits
Benefits																											25,124						21,858										3,266			14.9		%
Operating costs	Operating costs	3,111				3,173				6,090			6,059			(62)		(2.0)	%		31		0.5	%	Operating costs		3,042				2,979			2,979						63							63				2.1		2.1	%
Depreciation and amortization	Depreciation and amortization	191				175				377			345			16		9.1	%		32		9.3	%	Depreciation and amortization		209				186			186						23							23				12.4		12.4	%
Total operating expenses	Total operating expenses	25,311				22,447				50,334			45,128			2,864		12.8	%		5,206		11.5	%	Total operating expenses		28,375				25,023			25,023						3,352							3,352				13.4		13.4	%
Income from operations	Income from operations	1,436				1,215				3,155			2,504			221		18.2	%		651		26.0	%	Income from operations		1,236				1,719			1,719						(483)							(483)				(28.1)		(28.1)	%

Interest expense	Interest expense	120				101				233			191			19		18.8	%		42		22.0	%
Interest expense
Interest expense																											159						113										46			40.7		%
Other expense (income), net	Other expense (income), net	54				(8)				46			(29)			62		775.0	%		75		258.6	%	Other expense (income), net		63				(8)			(8)						71							71				887.5		887.5	%
Income before income taxes and equity in net earnings	Income before income taxes and equity in net earnings	1,262				1,122				2,876			2,342			140		12.5	%		534		22.8	%	Income before income taxes and equity in net earnings		1,014				1,614			1,614						(600)							(600)				(37.2)		(37.2)	%
Provision for income taxes	Provision for income taxes	296				427				655			713			(131)		(30.7)	%		(58)		(8.1)	%	Provision for income taxes		251				359			359						(108)							(108)				(30.1)		(30.1)	%
Equity in net losses (earnings)		(10)				2				(27)			(2)			12		600.0	%		25		1,250.0	%
Equity in net losses																									Equity in net losses		(24)						(17)										7			41.2		%
Net income	Net income	$	956			$	697			$	2,194		$	1,627		$	259	37.2	%		$	567	34.8	%	Net income		$	739			$		$	1,238					$						$	(499)			(40.3)			(40.3)	%
Diluted earnings per common share	Diluted earnings per common share	$	7.66			$	5.48			$	17.54		$	12.77		$	2.18	39.8	%		$	4.77	37.4	%	Diluted earnings per common share		$	6.11			$		$	9.87					$						$	(3.76)			(38.1)			(38.1)	%
Benefit ratio (a)	Benefit ratio (a)	86.3		%		85.8		%		85.9		%	86.1		%			0.5	%				(0.2)	%	Benefit ratio (a)		88.9		%				85.5		%														3.4		%
Operating cost ratio (b)	Operating cost ratio (b)	11.8		%		13.4		%		11.5		%	12.7		%			(1.6)	%				(1.2)	%	Operating cost ratio (b)		10.4		%				11.2		%														(0.8)		%
Effective tax rate	Effective tax rate	23.6		%		38.0		%		23.0		%	30.5		%			(14.4)	%				(7.5)	%	Effective tax rate		25.3		%				22.5		%														2.8		%

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

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

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Premiums Revenue

Consolidated premiums revenue increased ~~$3.2~~$2.7 billion, or ~~14.5%~~10.6%, from ~~$22.3 billion in the 2022 quarter to $25.5~~$25.6 billion in the 2023 quarter ~~and increased $6.08 billion, or 13.5%, from $44.97~~to $28.3 billion in the ~~2022 period to $51.05 billion in the 2023 period~~2024 quarter primarily due to ~~individual Medicare Advantage and state-based contracts membership growth and~~ higher per member Medicare premiums and individual and group Medicare Advantage ~~premiums.~~membership growth. These factors were partially offset by the ~~phase-out of COVID-19 sequestration relief~~continued decline in ~~2022,~~the our group commercial medical and stand-alone PDP membership, as well as ~~the year-over-year~~a decline in state-based contracts membership ~~associated with group commercial medical, group Medicare Advantage and stand-alone PDP products.~~as a result of the end of the suspension of state eligibility redetermination efforts previously enacted as part of the Public Health Emergency.

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Services Revenue

Consolidated services revenue ~~decreased $0.4~~increased $0.1 billion, or ~~27.5%~~6.3%, from ~~$1.3 billion in the 2022 quarter to~~ $1.0 billion in the 2023 quarter ~~and decreased $0.6 billion, or 24.3%, from $2.6~~to $1.1 billion in the ~~2022 period to $2.0 billion in the 2023 period primarily due to the divestiture of the 60% ownership of Gentiva Hospice in August 2022.~~2024 quarter.

Investment Income

Investment income increased ~~$227~~$95 million, or ~~483.0%~~49.2%, from ~~$47 million in the 2022 quarter to $274~~$193 million in the 2023 quarter ~~and increased $417 million, or 834.0%, from $50~~to $288 million in the ~~2022 period to $467 million in the 2023 period~~2024 quarter primarily due to an increase in interest income on our debt ~~securities as well as the impact of the 2022 quarter and period decrease in the fair value of our publicly traded equity securities investments.~~securities.

Benefit Expense

Consolidated benefits expense increased ~~$2.9~~$3.3 billion, or ~~15.2%~~14.9%, from ~~$19.1 billion in the 2022 quarter to $22.0~~$21.9 billion in the 2023 quarter ~~and increased $5.1 billion, or 13.3%, from $38.7~~to $25.1 billion in the ~~2022 period to $43.9 billion in the 2023 period.~~2024 quarter. The consolidated benefit ratio increased 50340 basis points from ~~85.8% for the 2022 quarter to 86.3%~~85.5% for the 2023 quarter to 88.9% for the 2024 quarter primarily due to ~~investments~~higher Medicare Advantage medical cost trends in the 2024 quarter compared to the 2023 quarter partially offset by the impact of pricing and benefit design of our ~~products for 2023, higher~~2024 Medicare Advantage ~~utilization trends~~ products, which included a reduction in benefits in response to the ~~2023 quarter,~~net impact of the final rate notice and the ~~impact~~initial emergence of continued individual Medicare Advantage growth following the 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 premium yield, higher favorable prior-period~~ medical claims reserve development in the 2023 quarter, and lower COVID-19 inpatient utilization in the 2023 quarter including the corresponding decrease in average unit costs given the additional 20% payment on these admissions during the Public Health Emergency.

~~The consolidated benefit ratio~~ decreased 20 basis points from 86.1% for the 2022 period to 85.9% for the 2023 period primarily due to increased individual Medicare Advantage premium yield, lower COVID-19 inpatient utilization in the 2023 period including the corresponding decrease in average unit cost given the additional 20% payment on these admissions during the Public Health Emergency, and higher favorable prior-period medical claims reserve development in the 2023 period. These factors were partially offset by investments in the benefit design of our products for 2023, higher Medicare Advantage utilization trends in the 2023 quarter, and the impact of individual Medicare Advantage growth in 2023, including a high proportion of age-ins.trends. Further, the ~~2023 quarter and period ratios continue~~year-over-year comparison continues to reflect a shift in line of business mix, with growth in ~~individual~~ Medicare Advantage and state-based contracts and other membership, which can carry a higher ~~benefits expense~~benefit ratio.

Consolidated benefits expense included ~~$232~~$535 million of favorable prior-period medical claims reserve development in the ~~2023~~2024 quarter and ~~$37~~$522 million of favorable prior-period medical claims development in the ~~2022 quarter. Consolidated benefits expense included $754 million of favorable prior-period medical claims reserve development in the~~ 2023 period and $397 million of favorable prior-period medical claims reserve development in the 2022 period. Prior-period medical claims reserve development decreased the consolidated benefit ratio by approximately 90 basis points in the 2023 quarter and decreased the consolidated benefit ratio by approximately 20 basis points in the 2022 quarter. Prior-period medical claims reserve development decreased the consolidated benefit ratio by approximately ~~150~~190 basis points in the ~~2023 period~~2024 quarter and decreased the consolidated benefit ratio by approximately 90200 basis points in the ~~2022 period.~~

~~Table of Contents~~

2023 quarter.

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 ~~$0.1~~$0.06 billion, or ~~2.0%~~2.1%, from ~~$3.2 billion in the 2022 quarter to $3.1~~$2.98 billion in the 2023 quarter ~~and increased $0.03 billion, or 0.5%, from $6.06~~to $3.04 billion in the ~~2022 period to $6.09 billion in the 2023 period.~~2024 quarter. The consolidated operating cost ratio decreased ~~160~~80 basis points from ~~13.4% for the 2022 quarter to 11.8%~~11.2% for the 2023 quarter~~and decreased 120 basis points from 12.7%~~ to 10.4% for the ~~2022 period to 11.5% for the 2023 period~~2024 quarter primarily due to ~~the divestiture of the 60% ownership of Gentiva Hospice in August 2022, which carried a significantly higher operating cost ratio compared to the historical consolidated operating cost ratio,~~ scale efficiencies associated with growth in our individual Medicare Advantage membership, ~~as well as~~administrative cost efficiencies resulting from our value creation initiatives, and lower commission expense for brokers in the ~~impact of initiatives related~~2024 quarter compared to the ~~previously-disclosed value creation plan, including $203 million~~2023 quarter as a result of ~~charges~~significant individual Medicare Advantage membership growth in ~~the 2022 quarter primarily related to asset and software impairment and abandonment.~~2023. These factors were partially offset by ~~an increase in commissions for brokers~~the impact from charges related to the individual Medicare Advantage membership growth in 2023, the favorable impact to revenues in 2022 as a result of sequestration relief, and accrual related to certain anticipated litigation expensesvalue creation initiatives in the ~~2023~~2024 quarter.

Depreciation and Amortization

Depreciation and amortization increased ~~$16~~$23 million, or ~~9.1%~~12.4%, from ~~$175 million in the 2022 quarter to $191~~$186 million in the 2023 quarter ~~and increased $32 million, or 9.3%, from $345~~to $209 million in the ~~2022 period to $377 million in the 2023 period~~2024 quarter primarily due to capital expenditures.

Interest Expense

Interest expense increased ~~$19~~$46 million, or ~~18.8%~~40.7%, from ~~$101 million in the 2022 quarter to $120~~$113 million in the 2023 quarter ~~and increased $42 million, or 22.0%, from $191~~to $159 million in the ~~2022 period to $233 million in the 2023 period~~2024 quarter primarily due to ~~higher~~increase in interest rates ~~on the lower~~and higher average debt balances.

Income Taxes

The effective income tax rate was ~~23.6%~~25.3% and ~~38.1%~~22.5% for the three months ended ~~June 30,~~March 31, 2024, and 2023, ~~and 2022, respectively, and 23.0% and 30.5% for the six months ended June 30, 2023 and 2022,~~ respectively. The year-over-year ~~decrease~~increase in the effective income tax rate is primarily due to a change in the mix of current year earnings between our Insurance segment and our CenterWell health services segment, as the latter incurs a higher effective domestic tax ~~impact resulting from~~rate than the ~~excess~~former. In addition, the prior year income tax rate was favorably impacted by the recognition of ~~the book basis over the tax basis of Gentiva Hospice in connection with the held-for-sale classification at June 30, 2022.~~a non-taxable gain.

4337

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Insurance Segment


		June 30,		Change				March 31,								Change
		2023	2022	Members	%			2024				2023					Members				%
Membership:	Membership:
Individual Medicare Advantage
Individual Medicare Advantage
Individual Medicare Advantage	Individual Medicare Advantage	5,269,100	4,555,100	714,000	15.7	%	5,548,900		5,153,000		5,153,000			395,900			395,900		7.7			7.7		%
Group Medicare Advantage	Group Medicare Advantage	509,500	562,500	(53,000)	(9.4)	%	Group Medicare Advantage	551,500		511,200			511,200		40,300			40,300		7.9				7.9	%
Medicare stand-alone PDP	Medicare stand-alone PDP	2,915,300	3,580,700	(665,400)	(18.6)	%	Medicare stand-alone PDP	2,347,000		2,956,300			2,956,300		(609,300)			(609,300)		(20.6)				(20.6)	%
Total Medicare	Total Medicare	8,693,900	8,698,300	(4,400)	(0.1)	%	Total Medicare	8,447,400		8,620,500			8,620,500		(173,100)			(173,100)		(2.0)				(2.0)	%
Medicare Supplement	Medicare Supplement	294,300	317,400	(23,100)	(7.3)	%	Medicare Supplement	323,200		294,000			294,000		29,200			29,200		9.9				9.9	%
Commercial fully-insured	Commercial fully-insured	475,500	595,400	(119,900)	(20.1)	%	Commercial fully-insured	109,700		522,600			522,600		(412,900)			(412,900)		(79.0)				(79.0)	%
Medicaid and other		1,330,200	1,053,000	277,200	26.3	%
Military		5,939,100	6,017,800	(78,700)	(1.3)	%
State-based contracts and other							State-based contracts and other	1,261,400				1,371,500					(110,100)				(8.0)		%
Military services							Military services	5,955,300				5,930,700					24,600				0.4		%
Commercial ASO	Commercial ASO	395,300	448,100	(52,800)	(11.8)	%	Commercial ASO	77,700		414,800			414,800		(337,100)			(337,100)		(81.3)				(81.3)	%
Total Medical Membership	Total Medical Membership	17,128,300	17,130,000	(1,700)	—	%	Total Medical Membership	16,174,700		17,154,100			17,154,100		(979,400)			(979,400)		(5.7)				(5.7)	%
Total Specialty Membership (a)	Total Specialty Membership (a)	5,041,100	5,156,400	(115,300)	(2.2)	%	Total Specialty Membership (a)	4,653,200		5,114,700			5,114,700		(461,500)			(461,500)		(9.0)				(9.0)	%

(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
																				Change
		Three months ended June 30,								Six months ended June 30,						Three months ended June 30, 2023 vs 2022				Six months ended June 30, 2023 vs 2022
		2023				2022				2023			2022			$		%		$		%
		($ in millions)
																				Change
					Three Months Ended March 31,																									Three Months Ended March 31,												Three Months Ended March 31, 2024 vs 2023
									2024																												2024	2023														$					%
									($ in millions)																																		($ in millions)
Premiums and Services Revenue:	Premiums and Services Revenue:
Premiums:	Premiums:
Premiums:
Premiums:
Individual Medicare Advantage
Individual Medicare Advantage
Individual Medicare Advantage	Individual Medicare Advantage	$	19,749			$	16,692			$	39,558		$	33,744		$	3,057	18.3	%	$	5,814	17.2	%		$	22,448			$			$	19,809						$						$	2,639			13.3					13.3	%
Group Medicare Advantage	Group Medicare Advantage	1,732				1,857				3,497			3,732			(125)		(6.7)	%	(235)		(6.3)	%	Group Medicare Advantage			1,989				1,765				1,765						224								224				12.7			12.7	%
Medicare stand-alone PDP	Medicare stand-alone PDP	568				606				1,184			1,245			(38)		(6.3)	%	(61)		(4.9)	%	Medicare stand-alone PDP			821				616				616						205								205				33.3			33.3	%
Total Medicare	Total Medicare	22,049				19,155				44,239			38,721			2,894		15.1	%	5,518		14.3	%	Total Medicare			25,258				22,190				22,190						3,068								3,068				13.8			13.8	%
Commercial fully-insured	Commercial fully-insured	950				1,109				1,968			2,249			(159)		(14.3)	%	(281)		(12.5)	%	Commercial fully-insured			256				1,018				1,018						(762)								(762)				(74.9)			(74.9)	%
Specialty benefits	Specialty benefits	252				261				506			522			(9)		(3.4)	%	(16)		(3.1)	%	Specialty benefits			239				254				254						(15)								(15)				(5.9)			(5.9)	%
Medicare Supplement	Medicare Supplement	182				185				361			367			(3)		(1.6)	%	(6)		(1.6)	%	Medicare Supplement			197				179				179						18								18				10.1			10.1	%
Medicaid and other		2,062				1,556				3,971			3,110			506		32.5	%	861		27.7	%
State-based contracts and other																								State-based contracts and other			2,311							1,909										402				21.1		%
Total premiums revenue	Total premiums revenue	25,495				22,266				51,045			44,969			3,229		14.5	%	6,076		13.5	%	Total premiums revenue			28,261				25,550				25,550						2,711								2,711				10.6			10.6	%
Commercial ASO	Commercial ASO	64				75				135			152			(11)		(14.7)	%	(17)		(11.2)	%	Commercial ASO			24				71				71						(47)								(47)				(66.2)			(66.2)	%
Military and other		167				131				338			258			36		27.5	%	80		31.0	%
Military services and other																								Military services and other			251							171										80				46.8		%
Services revenue	Services revenue	231				206				473			410			25		12.1	%	63		15.4	%	Services revenue			275				242				242						33								33				13.6			13.6	%
Total premiums and services revenue	Total premiums and services revenue	$	25,726			$	22,472			$	51,518		$	45,379		$	3,254	14.5	%	$	6,139	13.5	%	Total premiums and services revenue			$	28,536			$			$	25,792					$							$	2,744			10.6				10.6	%
Income from operations	Income from operations	$	1,031			$	1,107			$	2,358		$	2,103		$	(76)	(6.9)	%	$	255	12.1	%	Income from operations			$	898			$			$	1,327					$							$	(429)			(32.3)				(32.3)	%
Benefit ratio	Benefit ratio	86.8		%		86.1		%		86.4		%	86.5		%			0.7	%			(0.1)	%	Benefit ratio			89.3		%					86.1		%															3.2		%
Operating cost ratio	Operating cost ratio	9.9		%		9.4		%		9.6		%	9.2		%			0.5	%			0.4	%	Operating cost ratio			8.3		%					9.4		%															(1.1)		%

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Income from operations

Insurance segment income from operations decreased ~~$0.1~~$0.4 billion, or ~~6.9%~~32.3%, from ~~$1.1~~$1.3 billion in the ~~2022~~2023 quarter to ~~$1.0~~$0.9 billion in the ~~2023~~2024 quarter primarily due to the same factors impacting the segment's higher benefit ~~and~~ratio partially offset by the lower operating cost ~~ratios~~ratio as more fully described below. Insurance segment income from operations increased $0.3 billion, or 12.1%, from $2.1 billion in the 2022 period to $2.4 billion in the 2023 period primarily due to growth in individual Medicare Advantage membership in 2023.

Enrollment

Individual Medicare Advantage membership increased ~~714,000~~395,900 members, or ~~15.7%~~7.7%, from ~~June 30, 2022~~March 31, 2023 to ~~June 30, 2023~~ March 31, 2024primarily due to membership additions associated with the most recent ~~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,~~Annual Election Period, or ~~D-SNP, membership.~~AEP. Individual Medicare Advantage membership includes ~~831,400~~922,200 D-SNP members as of ~~June 30, 2023,~~March 31, 2024, a net increase of ~~170,200~~140,100 D-SNP members, or ~~25.7%~~18%, from ~~661,200~~782,100 D-SNP members as of ~~June 30, 2022.~~March 31, 2023.

Group Medicare Advantage membership ~~decreased 53,000~~increased 40,300 members, or ~~9.4%~~7.9%, from ~~June 30, 2022~~March 31, 2023 to ~~June 30, 2023 reflecting the net loss of certain large accounts partially offset by continued~~March 31, 2024 primarily due to growth in small and medium group accounts.

Medicare stand-alone PDP membership decreased ~~665,400~~609,300 members, or ~~18.6%~~20.6%, from ~~June 30, 2022~~March 31, 2023 to ~~June 30, 2023~~March 31, 2024 primarily due to continued intensified competition for Medicare stand-alone PDP offerings.

~~Medicaid~~State-based contracts and other membership ~~increased 277,200~~decreased 110,100 members, or ~~26.3%~~8.0%, from ~~June 30, 2022~~March 31, 2023 to ~~June 30, 2023 reflecting~~March 31, 2024 primarily due to the ~~impact of membership additions associated with the implementation~~end of the ~~Louisiana and Ohio contracts effective January 2023 and February 2023, respectively.~~suspension of state eligibility redetermination efforts previously enacted as part of the Public Health Emergency.

Commercial fully-insured medical membership decreased ~~119,900~~412,900 members, or ~~20.1%~~79.0%, from ~~June 30, 2022~~March 31, 2023 to ~~June 30, 2023~~March 31, 2024 and commercial ASO medical membership decreased ~~52,800~~337,100 members, or ~~11.8%~~81.3%, from ~~June 30, 2022~~March 31, 2023 to ~~June 30, 2023.~~March 31, 2024. These decreases reflect our planned exit of the Employer Group Commercial Medical Products business, which includes all fully insured, self-funded and Federal Employee Health Benefit medical plans, as well as associated wellness and rewards programs. The exit from this line of business will be phased over the 18 to 24 months following our February 2023 announcement.

Military membership decreased 78,700 members, or 1.3%, from June 30, 2022 to June 30, 2023. Membership includes military service members, retirees, and their families to whom we are providing healthcare services under the current TRICARE East Region contract.

Specialty membership decreased ~~115,300~~461,500 members, or ~~2.2%~~9.0%, from ~~June 30, 2022~~March 31, 2023 to ~~June 30, 2023 reflecting the decline in membership associated with our Optional Supplemental Benefit products~~March 31, 2024 primarily due to non-renewal of dental and vision plans as a result of ~~enhanced mandatory~~exit from the Employer Group Commercial Medical Products business partially offset by growth in dental and vision ~~supplemental benefits on~~plans as a result of Medicare Advantage ~~plans, as well as loss on dental and vision individuals due to terminations and dental and vision groups cross-sold with medical.~~enrollment.

Premiums Revenue

Insurance segment premiums revenue increased ~~$3.2~~$2.7 billion, or ~~14.5%~~10.6%, from ~~$22.3 billion in the 2022 quarter to $25.5~~$25.6 billion in the 2023 quarter ~~and increased $6.08 billion, or 13.5%, from $44.97~~to $28.3 billion in the ~~2022 period to $51.05 billion in the 2023 period~~2024 quarter primarily due to ~~individual Medicare Advantage and state-based contracts membership growth and~~ higher per member Medicare premiums and individual and group Medicare Advantage ~~premiums.~~membership growth. These factors were partially offset by the ~~phase-out of COVID-19 sequestration relief~~continued decline in ~~2022,~~the our group commercial medical and stand-alone PDP membership, as well as ~~the year-over-year~~a decline in state-based contracts membership ~~associated with group commercial medical, group Medicare Advantage and stand-alone PDP products.~~

~~Table~~as a result of ~~Contents~~

the end of the suspension of state eligibility redetermination efforts previously enacted as part of the Public Health Emergency.

Services Revenue

Insurance segment services revenue increased ~~$25~~$33 million, or ~~12.1%~~13.6%, from ~~$206 million in the 2022 quarter to $231~~$242 million in the 2023 quarter ~~and increased $63 million, or 15.4%, from $410~~to $275 million in the ~~2022 period to $473 million in the 2023 period.~~2024 quarter.

Benefits Expense

The Insurance segment benefit ratio increased 70320 basis points from 86.1% for the ~~2022~~2023 quarter to ~~86.8%~~89.3% for the ~~2023~~2024 quarter primarily due to ~~investments~~higher Medicare Advantage medical cost trends in the 2024 quarter compared to the 2023 quarter partially offset by the impact of pricing and benefit design of our ~~products for 2023, higher~~2024 Medicare Advantage ~~utilization trends~~ products, which included a reduction in benefits in response to the ~~2023 quarter,~~net impact of the final rate notice and the ~~impact~~initial emergence of continued individual Medicare Advantage growth following the 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 premium yield, higher favorable prior-period~~ medical claims reserve development in the 2023 quarter, and lower COVID-19 inpatient utilization in the 2023 quarter including the corresponding decrease in average unit costs given the additional 20% payment on these admissions during the Public Health Emergency.

The Insurance segment benefit ratio decreased 10 basis points from 86.5% for the 2022 period to 86.4% for the 2023 period primarily due to increased individual Medicare Advantage premium yield, lower COVID-19 inpatient utilization in the 2023 period including the corresponding decrease in average unit cost given the additional 20% payment on these admissions during the Public Health Emergency, and higher favorable prior-period medical claims reserve development in the 2023 period. These factors were partially offset by investments in the benefit design of our products for 2023, higher Medicare Advantage utilization trends in the 2023 quarter, and the impact of individual Medicare Advantage growth in 2023, including a high proportion of age-ins.trends. Further, the ~~2023 quarter and period ratios continue~~year-over-year comparison continues to reflect a shift in

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line of business mix, with growth in ~~individual~~ Medicare Advantage and state-based contracts and other membership, which can carry a higher ~~benefits expense~~benefit ratio.

The Insurance segment benefits expense included ~~$232~~$535 million of favorable prior-period medical claims reserve development in the ~~2023~~2024 quarter and ~~$37~~$522 million of favorable prior-period medical claims reserve development in the ~~2022 quarter. The Insurance segment benefit expense included $754 million of favorable prior-period medical claims reserve development in the~~ 2023 period and $397 million of favorable prior-period medical claims reserve development in the 2022 period. Prior-period medical claims reserve development decreased the Insurance segment benefit ratio by approximately 90 basis points in the 2023 quarter and decreased the Insurance segment benefit ratio by approximately 20 basis points in the 2022 quarter. Prior-period medical claims reserve development decreased the Insurance segment benefit ratio by approximately ~~150~~190 basis points in the ~~2023 period~~2024 quarter and decreased the Insurance segment benefit ratio by approximately 90200 basis points in the ~~2022 period.~~2023 quarter.

Operating Costs

The Insurance segment operating cost ratio ~~increased 50~~decreased 110 basis points from 9.4% for the ~~2022~~2023 quarter to ~~9.9%~~8.3% for the 2024 quarter primarily due to scale efficiencies associated with growth in our individual Medicare Advantage membership, administrative cost efficiencies resulting from our value creation initiatives, and lower commission expense for brokers in the 2024 quarter compared to the 2023 quarter ~~and increased 40 basis points from 9.2% for the 2022 period to 9.6% for the 2023 period primarily due to an increase in commissions for brokers related to the~~as a result of significant individual Medicare Advantage membership growth in 2023, the favorable impact to revenues in 2022 as a result of sequestration relief, and accrual related to certain anticipated litigation expenses in the 2023 quarter. These factors were partially offset by scale efficiencies associate with growth in the individual Medicare Advantage membership and the impact of initiatives related to the previously-disclosed value creation plan.2023.

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CenterWell Segment


																				Change
																Change
		Three months ended June 30,								Six months ended June 30,						Three months ended June 30, 2023 vs 2022				Six months ended June 30, 2023 vs 2022
																				Change
		2023				2022				2023			2022			$		%		$		%
		($ in millions)
																				Change
					Three Months Ended March 31,																							Three Months Ended March 31,									Three Months Ended March 31, 2024 vs 2023
									2024																								2024	2023												$				%
									($ in millions)																													($ in millions)
Revenues:	Revenues:
Services:
Services:
Services:	Services:

Home solutions	Home solutions	$	341			$	752			$	655		$	1,478		$	(411)	(54.7)	%	$	(823)	(55.7)	%

Home solutions

Home solutions																									$	335				$	314								$	21		6.7		%
Pharmacy solutions	Pharmacy solutions	216				254				458			475			(38)		(15.0)	%	(17)		(3.6)	%	Pharmacy solutions	211				242		242					(31)							(31)				(12.8)		(12.8)	%
Provider services		190				137				391			250			53		38.7	%	141		56.4	%
Primary care																								Primary care	241					201									40			19.9		%
Total services revenue	Total services revenue	747				1,143				1,504			2,203			(396)		(34.6)	%	(699)		(31.7)	%	Total services revenue	787				757		757					30							30				4.0		4.0	%
Intersegment revenues:	Intersegment revenues:

Home solutions	Home solutions	321				117				635			226			204		174.4	%	409		181.0	%

Home solutions

Home solutions																									485					314									171			54.5		%
Pharmacy solutions	Pharmacy solutions	2,639				2,489				5,254			4,935			150		6.0	%	319		6.5	%	Pharmacy solutions	2,617				2,615		2,615					2							2				0.1		0.1	%
Provider services		823				777				1,642			1,525			46		5.9	%	117		7.7	%
Primary care																								Primary care	929					819									110			13.4		%
Total intersegment revenues	Total intersegment revenues	3,783				3,383				7,531			6,686			400		11.8	%	845		12.6	%	Total intersegment revenues	4,031				3,748		3,748					283							283				7.6		7.6	%
Total services and intersegment revenues	Total services and intersegment revenues	$	4,530			$	4,526			$	9,035		$	8,889		$	4	0.1	%	$	146	1.6	%	Total services and intersegment revenues	$	4,818			$	$	4,505				$						$	313			6.9			6.9	%
Income from operations	Income from operations	$	287			$	358			$	617		$	728		$	(71)	(19.8)	%	$	(111)	(15.2)	%	Income from operations	$	282			$	$	330				$						$	(48)			(14.5)			(14.5)	%
Operating cost ratio	Operating cost ratio	92.6		%		91.1		%		92.1		%	90.8		%			1.5	%			1.3	%	Operating cost ratio	93.0		%			91.6		%													1.4		%

Income from operations

CenterWell income from operations decreased ~~$71~~$48 million, or ~~19.8%~~14.5%, from ~~$358 million in the 2022 quarter to $287~~$330 million in the 2023 quarter ~~and decreased $111 million, or 15.2%, from $728~~to $282 million in the ~~2022 period to $617 million in the 2023 period~~2024 quarter primarily due to the same factors impacting the segment's higher operating cost ratio as more fully described below.

Services Revenue

CenterWell services revenue ~~decreased $0.4 billion,~~increased $30 million, or ~~34.6%~~4.0%, from ~~$1.1 billion in the 2022 quarter to $0.7 billion~~$757 million in the 2023 quarter ~~and decreased $0.7 billion, or 31.7%, from $2.2 billion~~to $787 million in the ~~2022 period to $1.5 billion in the 2023 period~~2024 quarter primarily due to higher revenues associated with growth in the ~~divestiture~~primary care and home solutions businesses partially offset by a decline in revenues associated with the pharmacy solutions business and the impact of the ~~60% ownership of Gentiva Hospice in August 2022.~~v28 risk model revision.

Intersegment Revenues

CenterWell intersegment revenues increased ~~$0.4~~$0.3 billion, or ~~11.8%~~7.6%, from ~~$3.4 billion in the 2022 quarter to $3.8~~$3.7 billion in the 2023 quarter ~~and increased $0.8 billion, or 12.6%, from $6.7~~to $4.0 billion in the ~~2022 period to $7.5 billion in the 2023 period~~2024 quarter primarily due to ~~individual Medicare Advantage membership growth, which led to higher pharmacy revenues, higher revenues associated with growth in the provider business, and~~ greater intersegment revenues associated with the home solutions business in the 2024 quarter as compared to the 2023 quarter as a result of the expansion of the value-based care home model and higher intersegment revenues associated with growth in the primary care business, partially offset by the impact of the v28 risk model revision.

Operating Costs

The CenterWell segment operating cost ratio increased 140 basis points from 91.6% for the 2023 ~~compared~~quarter to ~~2022.~~93.0% for the 2024 quarter primarily due to the unfavorable impact of the v28 risk model revision to the primary care business.

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~~Operating Costs~~

The CenterWell segment operating cost ratio increased 150 basis points from 91.1% for the 2022 quarter to 92.6% for the 2023 quarter and increased 130 basis points from 90.8% for the 2022 period to 92.1% for the 2023 period primarily due the divestiture of the 60% ownership of Gentiva Hospice in August 2022, which carried a lower operating cost ratio compared to other businesses within the 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 Medicare Advantage episodes in the core fee-for-service business, as well as continued investments within the home solutions business to abate the pressures of the current nursing labor environment. The 2023 period increases were partially offset by an improving ratio in the provider business driven by year-over-year medical costs favorability.

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 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 ~~2022~~2023 Form 10-K and Part II, Item 1A, "Risk Factors" of this Form 10-Q.

Cash and cash equivalents increased to approximately ~~$16.2~~$5.9 billion at ~~June 30, 2023~~March 31, 2024 from ~~$5.1~~$4.7 billion at December 31, ~~2022.~~2023. The change in cash and cash equivalents for the ~~six~~three months ended ~~June 30,~~March 31, 2024 and 2023 ~~and 2022~~ is summarized as follows:


		Six Months Ended
		2023		2022
	Three Months Ended							Three Months Ended
	2024						2024		2023
		(in millions)				(in millions)
Net cash provided by operating activities	Net cash provided by operating activities	$	9,863	$	1,261
Net cash used in investing activities	Net cash used in investing activities	(2,025)		(1,670)
Net cash provided by financing activities	Net cash provided by financing activities	3,315		2,235
Increase in cash and cash equivalents	Increase in cash and cash equivalents	$	11,153	$	1,826

Cash Flow from Operating Activities

Cash flows provided by operations of ~~$9.9 billion~~$423 million in the ~~2023 period increased $8.6~~2024 quarter decreased $6.3 billion from cash flows provided by operations of ~~$1.3~~$6.7 billion in the ~~2022 period.~~2023 quarter. Our operating cash flows for the 2023 ~~period~~quarter were significantly impacted by the early receipt of the Medicare premium remittance of ~~$7.0~~$6.6 billion in ~~June~~March 2023 because the payment date for ~~July~~April 2023 fell on a weekend. Generally, when the first day of a month falls on a weekend or holiday, with the exception of January 1 (New Year's Day), we receive this payment at the end of the previous month. This also resulted in an increase to unearned revenues in our condensed consolidated balance sheet at ~~June 30,~~March 31, 2023. ~~Additionally, the 2023 period includes the CMS mid-year settlement of $2.2 billion which was received in~~

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June 2023. The 2022 period does not include the CMS mid-year settlement as it was received in July 2022. Our operating cash flows for the 2023 period also reflect higher earnings compared to the 2022 period and, excluding the items notes above, the negative impact of working capital items compared to the 2022 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 2022 Form 10-K.

The detail of total net receivables at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 and reconciliation to cash flow for the ~~six~~three months ended ~~June 30,~~March 31, 2024 and 2023 ~~and 2022~~ was as follows:

June 30, 2023 December 31, 2022 2023 Period Change 2022 Period Change
(in millions)
Medicare $ 913 $ 1,260 $ (347) $ 1,740
Commercial and other 467 383 84 (201)
Military 121 101 20 5
Allowances (72) (70) (2) 11
Total net receivables $ 1,429 $ 1,674 $ (245) $ 1,555
Reconciliation to cash flow statement:
Receivables from acquisition (24) —
Receivables held-for-sale — 178
Change in receivables per cash flow statement $ (269) $ 1,733

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	March 31, 2024		December 31, 2023		2024 Quarter Change		2023 Quarter Change
	(in millions)
Medicare	$	3,288	$	1,426	$	1,862	$	1,398
Commercial and other	553		549		4		66
Military services	169		148		21		(32)
Allowances	(85)		(88)		3		1
Total net receivables	$	3,925	$	2,035	$	1,890	$	1,433

The changes in Medicare receivables for both the ~~2023 period~~2024 quarter and the ~~2022~~2023 period reflect individual Medicare Advantage membership growth and the typical pattern caused by the timing of accruals and related collections associated with the CMS risk-adjustment model. Significant collections occur with the mid-year and final settlements with CMS in the second and third quarter.

Cash Flow from Investing Activities

During the 2024 quarter and 2023 ~~period and 2022 period,~~quarter, we acquired various businesses for approximately ~~$189~~$14 million and ~~$167~~$73 million, net of cash and cash equivalents received, respectively.

Our ongoing capital expenditures primarily relate to our information technology initiatives, support of services in our ~~provider services~~primary care operations including medical and administrative facility improvements necessary for activities such as the provision of care to members, claims processing, billing and collections, wellness solutions, care coordination, regulatory compliance and customer service. Total net capital expenditures, excluding acquisitions, were ~~$487~~$177 million in the 2024 quarter and $223 million in the 2023 ~~period and $574 million in the 2022 period.~~quarter.

Net purchases of investment securities were ~~$1.3 billion in the 2023 period~~$223 million and ~~net purchases of investment securities were $929~~$996 million in the ~~2022 period.~~

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2024 quarter and 2023 quarter, respectively.

Cash Flow from Financing Activities

Receipts from CMS associated with Medicare Part D claim subsidies for which we do not assume risk were higher than claim payments by ~~$3.5 billion~~$569 million and ~~$3.1~~$3.03 billion in the 2024 and 2023 ~~and 2022 periods,~~quarters, respectively.

Under our administrative services only TRICARE contracts, health care costs payments for which we do not assume risk exceeded reimbursements from the federal government by ~~$27~~$70 million and $4$29 million in the 2024 and 2023 ~~and 2022 periods,~~quarters, respectively.

~~Net~~In March 2024, we issued $1.3 billion of 5.375% unsecured senior notes due April 15, 2031 and $1.0 billion of 5.750% unsecured senior notes due April 15, 2054. Our net proceeds, ~~from~~reduced for the ~~issuance~~underwriters' discounts and commissions paid, were $2.2 billion. We used the net proceeds for general corporate purposes, which include the repayment of ~~commercial paper were $238 million in the~~ ~~2023 period~~ ~~and net repayments from the issuance of~~existing indebtedness, including borrowings under our commercial paper ~~were $418 million in~~ ~~the 2022 period. The maximum principal amount outstanding at any one time during the 2023 period was $850 million.~~program.

In March 2023, we issued $500 million of 5.700% unsecured senior notes due March 13, 2026 and $750 million of 5.500% unsecured senior notes due March 15, 2053. Our net proceeds, reduced for the underwriters' discounts and commissions paid, were $1.2 billion. We used the net proceeds to repay outstanding amounts under our $500 million Delayed Draw Term Loan. The remaining net proceeds will be used for general corporate purposes, which include the repayment of existing indebtedness, including borrowings under our commercial paper program.

In March ~~2022, we issued $750 million of 3.700% unsecured senior notes due March 23, 2029. Our net proceeds, reduced for the underwriters' discounts and commissions paid, were $744 million.~~

~~In March~~ 2023, we entered into a Rule 10b5-1 Repurchase Plan, or the Plan, to repurchase a portion of our $1.5 billion aggregate principal amount of 0.650% senior notes maturing in August 2023 and our $600 million aggregate principal amount of 3.850% senior notes maturing in October 2024 during the Plan period beginning on March 13, 2023 and ending on ~~July 21,~~June 15, 2023. ~~During the six months ended June 30,~~At March 31, 2023, we repurchased ~~$325~~$61 million, for cash totaling approximately $60 million.

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Net repayments from the issuance of commercial paper were $644 million in the 2024 quarter and net repayments from the issuance of commercial paper were $177 million in the 2023 quarter. The maximum principal amount ~~of our $1.5 billion, 0.650% senior notes for approximately $322 million cash and $28 million principal amount of our $600 million, 3.850% senior notes for approximately $27 million cash.~~outstanding at any one time during the 2024 period was $2.7 billion.

We repurchased common shares for ~~$601~~$702 million and ~~$1.0 billion~~$67 million in the 2024 quarter and 2023 ~~period and 2022 period,~~quarter, respectively, under share repurchase plans authorized by the Board of Directors. We also acquired common shares in connection with employee stock plans for ~~$27~~$15 million and ~~$28~~$27 million in the 2024 quarter and 2023 ~~period and 2022 period,~~quarter, respectively.

We paid dividends to stockholders of ~~$211~~$109 million and $100 million during the 2024 quarter and 2023 ~~period and $191 million during the 2022 period.~~

~~The remainder of the cash used in or provided by financing activities in 2023 and 2022 primarily resulted from the change in book overdraft.~~quarter, respectively.

Future Sources and Uses of Liquidity

Dividends

For additional information regarding our dividends to stockholders, refer to Note 10 to the unaudited Consolidated Financial Statements included in Part I, Item 1, "Financial Statements" of this Form 10-Q.

Stock Repurchases

For additional information regarding stock repurchases, refer to Note 10 to the unaudited Consolidated Financial Statements included in Part I, Item 1, "Financial Statements" of this Form 10-Q.

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Debt

For additional information regarding debt, including our senior notes, term loans, revolving credit agreements, commercial paper program and other short-term borrowings, refer to Note 12 to the unaudited Consolidated Financial Statements included in Part I, Item 1, "Financial Statements" of this Form 10-Q.

~~Divestiture~~

~~On August 11, 2022, we completed~~ ~~the sale of a 60% interest in Gentiva Hospice to CD&R, for cash proceeds of approximately $2.7 billion, net of cash disposed, including debt repayments from Gentiva Hospice to Humana of~~ ~~$1.9 billion.~~ ~~In connection with the sale we recognized a pre-tax gain, net of transaction costs, of $237 million.~~Acquisitions

For additional information regarding ~~the divestiture,~~acquisitions, refer to Note 3 to the unaudited Consolidated Financial Statements included in Part I, Item 1, "Financial Statements" of this Form 10-Q.

Liquidity Requirements

We believe our cash balances, investment securities, operating cash flows, and funds available under our credit agreement and our commercial paper program or from other public or private financing sources, taken together, provide adequate resources to fund ongoing operating and regulatory requirements, acquisitions, future expansion opportunities, and capital expenditures for at least the next twelve months, as well as to refinance or repay debt, and repurchase shares.

Adverse changes in our credit rating may increase the rate of interest we pay and may impact the amount of credit available to us in the future. Our investment-grade credit rating at ~~June 30, 2023~~March 31, 2024 was ~~BBB+~~BBB according to Standard & Poor’s Rating Services, or S&P, and ~~Baa3~~Baa2 according to Moody’s Investors Services, Inc., or Moody’s. A downgrade by S&P to BB+ or by Moody’s to Ba1 triggers an interest rate increase of 25 basis points with respect to $250 million of our senior notes. Successive one notch downgrades increase the interest rate an additional 25 basis points, or annual interest expense by $1 million, up to a maximum 100 basis points, or annual interest expense by $3 million.

In addition, we operate as a holding company in a highly regulated industry. Humana Inc., our parent company, is dependent upon dividends and administrative expense reimbursements from our subsidiaries, most of which are subject to regulatory restrictions. We continue to maintain significant levels of aggregate excess statutory capital and surplus in our state-regulated operating subsidiaries. Cash, cash equivalents, and short-term investments at the parent

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company were ~~$1.1 billion~~$509 million at ~~June 30, 2023~~March 31, 2024, remaining relatively unchanged compared to ~~$934~~$510 million at December 31, 2022. This increase primarily reflects net proceeds from the issuance of senior notes and commercial paper, the sale of investment securities, dividends from insurance subsidiaries and cash from certain non-insurance subsidiaries within our CenterWell segment partially offset by common stock repurchases, repayment of the Delayed Draw Term Loan, repayment of maturing senior notes, capital expenditures, repayment of borrowings under the commercial paper program, capital contributions to certain subsidiaries, cash dividends to shareholders and acquisitions. Our use of operating cash derived from our non-insurance subsidiaries, such as our CenterWell segment, is generally not restricted by departments of insurance (or comparable state regulators).2023.

Regulatory Requirements

Certain of our subsidiaries operate in states that regulate the payment of dividends, loans, or other cash transfers to Humana Inc., our parent company, and require minimum levels of equity as well as limit investments to approved securities. The amount of dividends that may be paid to Humana Inc. by these subsidiaries, without prior approval by state regulatory authorities, or ordinary dividends, is limited based on the entity’s level of statutory income and statutory capital and surplus. If the dividend, together with other dividends paid within the preceding twelve months, exceeds a specified statutory limit or is paid from sources other than earned surplus, it is generally considered an extraordinary dividend requiring prior regulatory approval. In most states, prior notification is provided before paying a dividend even if approval is not required.

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Although minimum required levels of equity are largely based on premium volume, product mix, and the quality of assets held, minimum requirements vary significantly at the state level. Based on the most recently filed statutory financial statements as of ~~March~~December 31, 2023, our state regulated subsidiaries had aggregate statutory capital and surplus of approximately ~~$11.9~~$12.2 billion, which exceeded aggregate minimum regulatory requirements of ~~$8.8~~$9.8 billion. The amount of ordinary dividends that may be paid to our parent company ~~was~~in 2024 is approximately ~~$0.7~~$1.1 billion ~~during~~in the ~~six months ended June 30,~~aggregate. Actual dividends paid to our parent company were approximately $1.8 billion in 2023. The amount, timing and mix of ordinary and extraordinary dividend payments will vary due to state regulatory requirements, the level of excess statutory capital and surplus and expected future surplus requirements related to, for example, premium volume and product mix.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our earnings and financial position are exposed to financial market risk, including those resulting from changes in interest ~~rates.~~rates.4

Interest rate risk also represents a market risk factor affecting our consolidated financial position due to our significant investment portfolio, consisting primarily of fixed maturity securities of investment-grade quality with a weighted average S&P credit rating of AAAA- at ~~June 30, 2023.~~March 31, 2024. Our net unrealized position ~~decreased $102~~increased $114 million from a net unrealized loss position of ~~$1.7~~$1.3 billion at December 31, ~~2022~~2023 to a net unrealized loss position of ~~$1.6~~$1.4 billion at ~~June 30, 2023.~~March 31, 2024. At ~~June 30, 2023,~~March 31, 2024, we had gross unrealized losses of ~~$1.6~~$1.4 billion on our investment portfolio primarily due to an increase in market interest rates since the time the securities were purchased. There were no material credit allowances during the ~~six~~three months ended ~~June 30, 2023.~~March 31, 2024. While we believe that these securities in an unrealized loss will recover in value over time and we currently do not have the intent to sell such securities, given the current market conditions and the significant judgments involved, there is a continuing risk that future declines in fair value may occur and material realized losses from sales or credit allowances may be recorded in future periods.

Duration is the time-weighted average of the present value of the bond portfolio’s cash flow. Duration is indicative of the relationship between changes in fair value and changes in interest rates, providing a general indication of the sensitivity of the fair values of our fixed maturity securities to changes in interest rates. However, actual fair values may differ significantly from estimates based on duration. The average duration of our investment portfolio, including cash and cash equivalents, was approximately ~~3.2~~3 years as of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023. Based on the duration, including cash equivalents, a 1% increase in interest rates would generally decrease the fair value of our securities by approximately ~~$675~~$688 million at ~~June 30, 2023.~~

March 31, 2024.

Item 4. Controls and Procedures

Under the supervision and with the participation of our Chief Executive Officer, or CEO, our Chief Financial Officer, or CFO, and our Principal Accounting Officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures for the quarter ended ~~June 30, 2023.~~March 31, 2024.

Based on our evaluation, our CEO, CFO, and our Principal Accounting Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information the Company is required to disclose in its reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, including, without limitation, ensuring that such information is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in the Company’s internal control over financial reporting during the quarter ended ~~June 30, 2023~~March 31, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II. Other Information

Item 1. Legal Proceedings

For additional information regarding legal proceedings pending against us and certain other pending or threatened litigation, investigations or other matters, refer to “Legal Proceedings and Certain Regulatory Matters” in Note 13 to the unaudited Consolidated Financial Statements included in Part I, Item 1, "Financial Statements" of this Form 10-Q.

Item 1A. Risk Factors

There have been no changes to the risk factors included in our ~~2022~~2023 Form 10-K.

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

(a)None.

(b)N/A

(c)The following table provides information about our purchases of equity securities that are registered by us pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, during the three months ended ~~June 30, 2023:~~March 31, 2024:

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)
April 2023 226,434 $ 508.44 226,434 $ 2,818,207,924
May 2023 255,595 521.70 255,595 2,684,862,954
June 2023 602,096 464.53 602,096 2,405,174,034
Total 1,084,125 $ — 1,084,125


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)
January 2024	1,572,566	$	392.11	1,572,566	$	883,530,302
February 2024	181,648	371.58		181,648	2,992,126,583
March 2024	50,431	346.94		50,431	2,974,630,293
Total	1,804,645	$	388.78	1,804,645

(1)OnEffective February ~~15, 2023,~~16, 2024, the Board of Directors replaced the ~~previous share~~February 2023 repurchase authorization ~~of up to $3 billion~~ (of which approximately ~~$1 billion~~$824 million remained unused) with a new share repurchase authorization for repurchases of up to $3 billion of our common shares exclusive of shares repurchased in connection with employee stock plans, expiring as of February 15, ~~2026.~~2027, which we refer to as the 2024 repurchase authorization. Our remaining repurchase authorization was ~~$2.2~~$2.96 billion as of ~~August 1, 2023.~~April 23, 2024.

(2)Excludes ~~54,134~~0.04 million shares repurchased in connection with employee stock plans.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

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Item 5. Other Information

a.None.

b.None.

c.During the three months ended ~~June 30, 2023,~~March 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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Item 6: Exhibits


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)			Humana Inc. Amended and Restated By-laws, effective as of December 8, 2022 (incorporated herein by reference to Exhibit 3(b) to Humana Inc.’s Current Report on Form 8-K filed on December 8, 2022).
10.1			~~Five-Year $2.5 Billion Amended~~Twenty-Eighth Supplemental Indenture, dated March 13, 2024, between the Company and ~~Restated Credit Agreement, dated as of June 2, 2023, among Humana Inc., and JPMorgan Chase Bank, N.A. as Agent,~~The Bank of ~~America, N.A. as Syndication Agent, Citibank,~~New York Mellon Trust Company, N.A., ~~Goldman Sachs Bank USA, PNC Capital Markets LLC, U.S. Bank, National Association and Wells Fargo Securities, LLC,~~ as Documentation Agents, and JPMorgan Chase Bank, N.A., BofA Securities, Inc., Citibank, N.A., Goldman Sachs Bank USA, PNC Capital Markets LLC, U.S. Bank, National Association and Wells Fargo Securities, LLC, as Joint-Lead Arrangers and Joint Bookrunnerstrustee (incorporated herein by reference to Exhibit ~~10.1~~4.2 to Humana Inc.’s Current Report on Form 8-K filed on ~~June 2, 2023)~~March 13, 2024).
10.2			~~364-Day $1.5 Billion Revolving Credit Agreement,~~Twenty-Ninth Supplemental Indenture, dated ~~as of June 2, 2023, among Humana Inc.,~~March 13, 2024, between the Company and ~~JPMorgan Chase Bank, N.A. as Agent,~~The Bank of ~~America, N.A. as Syndication Agent, Citibank,~~New York Mellon Trust Company, N.A., ~~Goldman Sachs Bank USA, PNC Capital Markets LLC, U.S. Bank, National Association and Wells Fargo Securities, LLC,~~ as Documentation Agents, and JPMorgan Chase Bank, N.A., BofA Securities, Inc., Citibank, N.A., Goldman Sachs Bank USA, PNC Capital Markets LLC, U.S. Bank, National Association and Wells Fargo Securities, LLC, as Joint-Lead Arrangers and Joint Bookrunnerstrustee (incorporated herein by reference to Exhibit ~~10.1~~4.4 to Humana Inc.’s Current Report on Form 8-K filed on ~~June 2, 2023)~~March 13, 2024).
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 ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022;~~2023; (ii) the Condensed Consolidated Statements of Income for the three ~~and six~~ months ended ~~June 30, 2023~~March 31, 2024 and ~~2022;~~2023; (iii) the Condensed Consolidated Statements of Comprehensive Income for the three ~~and six~~ months ended ~~June 30, 2023~~March 31, 2024 and ~~2022;~~2023; (iv) the Consolidated Statements of Stockholders' Equity for the three ~~and six~~ months ended ~~June 30, 2023~~March 31, 2024 and ~~2022;~~2023; (v) the Condensed Consolidated Statements of Cash Flows for the three ~~and six~~ months ended ~~June 30, 2023~~March 31, 2024 and ~~2022;~~2023; 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.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			HUMANA INC.
			(Registrant)

Date:	~~August 2, 2023~~April 24, 2024	By:	/s/ JOHN-PAUL W. FELTER
			John-Paul W. Felter
			Senior Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)


	June 30, 2023		December 31, 2022		2023 Period Change		2022 Period Change
	(in millions)
Medicare	$	913	$	1,260	$	(347)	$	1,740
Commercial and other	467		383		84		(201)
Military	121		101		20		5
Allowances	(72)		(70)		(2)		11
Total net receivables	$	1,429	$	1,674	$	(245)	$	1,555
Reconciliation to cash flow statement:
Receivables from acquisition					(24)		—
Receivables held-for-sale					—		178
Change in receivables per cash flow statement					$	(269)	$	1,733