Humana Reports Fourth Quarter 2024 Financial Results; Provides Full Year 2025 Financial Guidance

Rhea-AI Summary

Humana (HUM) reported a fourth quarter 2024 net loss of $5.76 per share on a GAAP basis and an adjusted net loss of $2.16 per share. For full-year 2024, the company reported earnings of $9.98 per share (GAAP) and $16.21 (adjusted).

The company's Insurance segment Adjusted benefit ratio was 91.9% in Q4 2024, including a 20-basis point increase related to Star Ratings investments. For 2025, Humana expects GAAP EPS of approximately $15.88 and adjusted EPS of approximately $16.25.

Notably, Humana anticipates an individual Medicare Advantage membership decline of approximately 550,000 members (10%) from 2024, due partly to exiting certain unprofitable plans and counties. The company is advancing its Medicaid and CenterWell strategies, which are expected to drive increased earnings contribution over the mid and longer term.

Positive

• Full year 2024 adjusted EPS of $16.21
• 2025 guidance projects adjusted EPS of $16.25, maintaining 2024 levels
• Strategic exit from unprofitable plans to improve profitability

Negative

• Q4 2024 net loss of $5.76 per share (GAAP)
• Expected 10% decline (550,000 members) in Medicare Advantage membership for 2025
• Insurance segment benefit ratio increased to 91.9% in Q4 2024
• Significant decline in Medicare Advantage plans rated 4-star or higher for 2025

Insights

Financial Analyst

Humana's Q4 2024 results reveal significant operational headwinds that warrant careful analysis. The $2.16 adjusted loss per share in Q4 represents a material deterioration from the prior year, while the full-year adjusted EPS of $16.21 marks a substantial 37.9% decline from 2023.

Three critical challenges emerge: First, the projected 550,000 Medicare Advantage member decline for 2025 signals deeper market positioning issues beyond just exiting unprofitable markets. This strategic retreat, while potentially improving margins, will create meaningful revenue headwinds given Medicare Advantage's role as Humana's primary growth engine.

Second, the 91.9% Insurance segment benefit ratio indicates persistent medical cost pressures that are squeezing margins. This elevated ratio, even with the planned Star Ratings investments, suggests underlying cost management challenges that may take several quarters to address.

Third, the flat 2025 EPS guidance of $16.25 (adjusted) demonstrates near-term earnings catalysts. While management emphasizes operational excellence investments, the lack of earnings growth during a transition year raises questions about the timeline for margin recovery.

However, there are some positive strategic elements: The company's focus on Medicaid expansion and CenterWell services represents a prudent diversification strategy. These segments, while currently smaller contributors, offer more stable growth prospects and potentially better margins over time compared to the increasingly competitive Medicare Advantage market.

• Reports 4Q24 net loss per share of $5.76 on a GAAP basis, Adjusted net loss per share of $2.16; reports FY 2024 earnings per share (EPS) of $9.98 on a GAAP basis, $16.21 on an Adjusted basis
• 4Q24 Insurance segment Adjusted benefit ratio of 91.9 percent, which includes a 20-basis point increase related to incremental Star Ratings investments, was consistent with expectations
• Affirms previous commentary of Adjusted FY 2025 EPS guidance to be 'at least in line with 2024 results'; anticipating GAAP EPS of approximately $15.88, or approximately $16.25 on an Adjusted basis, inclusive of incremental investments to support operational excellence
• Expects individual Medicare Advantage annual membership decline of approximately 550,000, or approximately 10 percent, from 2024, inclusive of the company's decision to exit certain unprofitable plans and counties
• Continuing to advance Medicaid and CenterWell strategies; expected to drive increased earnings contribution over the mid and longer term
• Publishes prepared management remarks to Investor Relations page of www.humana.com ahead of this morning's 9:00 a.m. ET question and answer session to discuss its financial results for the quarter and expectations for future earnings

LOUISVILLE, Ky.--(BUSINESS WIRE)-- Humana Inc. (NYSE: HUM) today reported consolidated pretax results and net (loss) earnings per share for the quarter ended December 31, 2024 (4Q24) versus the quarter ended December 31, 2023 (4Q23) and for the year ended December 31, 2024 (FY 2024) versus the year ended December 31, 2023 (FY 2023) as noted in the tables below.

Consolidated (loss) income before income taxes and equity in net losses (pretax results) In millions	4Q24 (a)	4Q23 (a)	FY 2024 (a)	FY 2023 (a)
Generally Accepted Accounting Principles (GAAP)	($862)	($591)	$1,721	$3,383
Amortization associated with identifiable intangibles	14	15	60	67
Put/call valuation adjustments associated with the company's non-consolidating minority interest investments	155	179	296	320
Impact of exit of employer group commercial medical products business	67	1	144	16
Value creation initiatives	130	384	281	436
Impairment charges	200	91	200	91
Transaction and integration costs	—	—	—	(48)
Accrued charge related to certain anticipated litigation expenses	—	—	—	105
Change in fair market value of publicly-traded equity securities	—	—	—	(1)
Adjusted (non-GAAP)	($296)	$79	$2,702	$4,369
(Net loss per share) EPS	4Q24 (a)	4Q23 (a)	FY 2024 (a)	FY 2023 (a)
GAAP	($5.76)	($4.42)	$9.98	$20.00
Amortization associated with identifiable intangibles	0.12	0.13	0.50	0.54
Put/call valuation adjustments associated with the company's non-consolidating minority interest investments	1.29	1.46	2.45	2.57
Impact of exit of employer group commercial medical products business	0.55	0.01	1.19	0.13
Value creation initiatives	1.08	3.13	2.33	3.50
Impairment charges	1.66	0.74	1.65	0.73
Transaction and integration costs	—	—	—	(0.38)
Accrued charge related to certain anticipated litigation expenses	—	—	—	0.84
Change in fair market value of publicly-traded equity securities	—	—	—	(0.01)
Cumulative net tax impact of non-GAAP adjustments	(1.10)	(1.16)	(1.89)	(1.83)
Adjusted (non-GAAP)	($2.16)	($0.11)	$16.21	$26.09
Refer to the "Footnotes" section included herein for further explanation of disclosures for Adjusted (non-GAAP) financial measures, as well as additional reconciliations.

Please refer to the tables above, as well as the consolidated and segment highlight sections in the detailed earnings release for additional discussion of the factors impacting the year-over-comparisons.

“We were pleased with Humana’s solid finish to the year, while also reaffirming our outlook for 2025,” said Jim Rechtin, Humana’s President and Chief Executive Officer. “We are confident in our long-term strategy and 2025 will be a critical step in returning to compelling, normalized margins.”

FY 2025 Earnings Guidance

Humana provides its GAAP EPS guidance for the year ending December 31, 2025 (FY 2025) of approximately $15.88, or approximately $16.25 on an Adjusted basis.

Diluted earnings per share	FY 2025 Guidance	FY 2024 (a)
GAAP	approximately $15.88	$9.98
Amortization associated with identifiable intangibles	0.49	0.50
Put/call valuation adjustments associated with the company's non-consolidating minority interest investments	—	2.45
Impact of exit of employer group commercial medical products business	—	1.19
Value creation initiatives	—	2.33
Impairment charges	—	1.65
Cumulative net tax impact of non-GAAP adjustments	(0.12)	(1.89)
Adjusted (non-GAAP) – FY 2025 projected (b); FY 2024 Reported	approximately $16.25	$16.21
Refer to the "Footnotes" section included herein for further explanation of disclosures for Adjusted (non-GAAP) financial measures, as well as additional reconciliations.

Detailed Press Release

Humana’s full earnings press release, including the statistical pages, has been posted to the company’s Investor Relations site and may be accessed at https://humana.gcs-web.com/ or via a current report on Form 8-K filed by the company with the Securities and Exchange Commission this morning (available at www.sec.gov or on the company’s website).

Conference Call

Humana will host a live question and answer session for analysts at 9:00 a.m. Eastern time today to discuss its financial results for the quarter and the company’s expectations for future earnings. In advance of the question and answer session, Humana will post prepared management remarks to the Quarterly Results section of its Investor Relations page (https://humana.gcs-web.com/financial-information/quarterly-results).

To participate via phone, please register in advance at this link - https://register.vevent.com/register/BIe3b4c275f3cf421383fa6ac8a142593b.

Upon registration, telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number and a unique registrant ID that can be used to access the call.

A webcast of the 4Q24 earnings call may also be accessed via Humana’s Investor Relations page at humana.com. The company suggests participants for both the conference call and those listening via the web dial in or sign on at least 15 minutes in advance of the call.

For those unable to participate in the live event, the archive will be available in the Historical Webcasts and Presentations section of the Investor Relations page (https://humana.gcs-web.com/events-and-presentations), approximately two hours following the live webcast.

Footnotes

The company has included financial measures throughout this earnings release that are not in accordance with GAAP. Management believes that these measures, when presented in conjunction with the corresponding GAAP measures, provide a comprehensive perspective to more accurately compare and analyze the company’s core operating performance over time. Consequently, management uses these non-GAAP (Adjusted) financial measures as consistent and uniform indicators of the company’s core business operations from period to period, as well as for planning and decision-making purposes and in determination of incentive compensation. Non-GAAP (Adjusted) financial measures should be considered in addition to, but not as a substitute for, or superior to, financial measures prepared in accordance with GAAP. All financial measures in this earnings release are in accordance with GAAP unless otherwise indicated. Please refer to the footnotes for a detailed description of each item adjusted out of GAAP financial measures to arrive at non-GAAP (Adjusted) financial measures.

(a) For the periods covered in this earnings release, the following items are excluded from the non-GAAP financial measures described above, as applicable:

• Amortization associated with identifiable intangibles - Since amortization varies based on the size and timing of acquisition activity, management believes this exclusion provides a more consistent and uniform indicator of performance from period to period. For all periods shown within this earnings release, GAAP measures affected include consolidated pretax results, (net loss per share) EPS, and Insurance and CenterWell segments income from operations. The table below discloses respective period amortization expense for each segment:

	4Q24	4Q23	FY 2024	FY 2023
Insurance segment	$4	$4	$17	$22
CenterWell segment	$10	$11	$43	$45

• Put/call valuation adjustments associated with the company’s non-consolidating minority interest investments - These amounts are the result of fair value measurements associated with the company's Primary Care Organization strategic partnership and are unrelated to the company's core business operations. For all periods shown within this earnings release, GAAP measures affected include consolidated pretax results and (net loss per share) EPS.
• Impact of exit of employer group commercial medical products business - These amounts relate to activity from the exit of the employer group commercial medical products business as announced by Humana on February 23, 2023. For all periods shown within this earnings release, GAAP measures affected include consolidated pretax results, (net loss per share) EPS, consolidated revenues, consolidated benefit ratio, consolidated operating cost ratio, Insurance segment revenues, Insurance segment benefit ratio, Insurance segment operating cost ratio, and Insurance segment income from operations.
• Value creation initiatives - These charges relate to the company's ongoing initiative to drive additional value for the enterprise through cost saving, productivity initiatives, and value creation from previous investments, and primarily consist of asset impairment and severance charges. These charges were recorded at the corporate level and not allocated to the segments. For all periods shown within this earnings release, GAAP measures affected in this release include consolidated pretax results, (net loss per share) EPS, and the consolidated operating cost ratio.
• Impairment charges - The company recognized non-cash impairment charges in 4Q24 and 4Q23 related to certain indefinite-lived intangible assets based on the company's estimate of future financial performance in certain state markets. Additionally, in 4Q23 the company recognized non-cash impairment charges related to minority ownership investments that were deemed to be unrecoverable based on investment performance. These charges were recorded at the corporate level and not allocated to the segments. For all periods, GAAP measures affected include consolidated pretax results, (net loss per share) EPS, and the consolidated operating cost ratio. For 4Q23 and FY 20023, consolidated revenues (specifically investment income) were also affected.
• Transaction and integration costs - The transaction and integration costs primarily related to the acquisition of Kindred at Home in 2021 and the subsequent divestiture of majority ownership of Gentiva (formerly Kindred) Hospice in 2022. For FY 2023, GAAP measures affected include consolidated pretax results, (net loss per share) EPS, and the consolidated operating cost ratio.
• Accrued charge related to certain anticipated litigation expenses - This charge related to certain anticipated expenses the company accrued in connection with a legal matter. For FY 2023, GAAP measures affected include consolidated pretax results, (net loss per share) EPS, the consolidated and Insurance segment operating cost ratios, and Insurance segment income from operations.
• Change in fair market value of publicly-traded equity securities - These gains are a result of market and economic conditions that are unrelated to the company's core business operations. For FY 2023, GAAP measures affected include consolidated pretax results, EPS, and consolidated revenues (specifically investment income).
• Cumulative net tax impact of non-GAAP adjustments - This adjustment represents the cumulative net impact of the corresponding tax benefit or expense related to the aforementioned items excluded from the applicable GAAP measures. For all periods presented in this earnings release, (net loss per share) EPS is the sole GAAP measure affected.

In addition to the reconciliations shown on page 2 of this release, the following are reconciliations of GAAP to Adjusted (non-GAAP) measures described above and disclosed within this earnings release:

Revenues

Revenues - CONSOLIDATED (in millions)	4Q24	4Q23	FY 2024	FY 2023
GAAP	$29,213	$26,462	$117,761	$106,374
Change in fair market value of publicly-traded equity securities	—	—	—	(1)
Impact of exit of employer group commercial medical products business	(14)	(764)	(551)	(3,764)
Impairment charges	—	36	—	36
Adjusted (non-GAAP)	$29,199	$25,734	$117,210	$102,645
Revenues - INSURANCE SEGMENT (in millions)	4Q24	4Q23	FY 2024	FY 2023
GAAP	$28,170	$25,565	$113,764	$102,854
Impact of exit of employer group commercial medical products business	(14)	(764)	(551)	(3,764)
Adjusted (non-GAAP)	$28,156	$24,801	$113,213	$99,090

Benefit Ratio

Benefit ratio - CONSOLIDATED	4Q24	4Q23	FY 2024	FY 2023
GAAP	91.5 %	90.7 %	89.8 %	87.3 %
Impact of exit of employer group commercial medical products business	(0.2) %	(0.2) %	(0.1) %	(0.1) %
Adjusted (non-GAAP)	91.3 %	90.5 %	89.7 %	87.2 %
Benefit ratio - INSURANCE SEGMENT	4Q24	4Q23	FY 2024	FY 2023
GAAP	92.1 %	91.5 %	90.4 %	88.0 %
Impact of exit of employer group commercial medical products business	(0.2) %	(0.1) %	(0.1) %	— %
Adjusted (non-GAAP)	91.9 %	91.4 %	90.3 %	88.0 %

Operating Cost Ratio

Operating cost ratio - CONSOLIDATED	4Q24	4Q23	FY 2024	FY 2023
GAAP	14.4 %	14.6 %	11.8 %	12.5 %
Impact of exit of employer group commercial medical products business	— %	— %	(0.1) %	(0.2) %
Value creation initiatives	(0.5) %	(1.5) %	(0.2) %	(0.4) %
Accrued charge related to certain anticipated litigation expenses	— %	— %	— %	(0.1) %
Impairment charges	(0.7) %	(0.2) %	(0.2) %	(0.1) %
Adjusted (non-GAAP)	13.2 %	12.9 %	11.3 %	11.7 %
Operating cost ratio - INSURANCE SEGMENT	4Q24	4Q23	FY 2024	FY 2023
GAAP	11.0 %	11.1 %	9.2 %	10.2 %
Impact of exit of employer group commercial medical products business	— %	(0.2) %	— %	(0.3) %
Accrued charge related to certain anticipated litigation expenses	— %	— %	— %	(0.1) %
Adjusted (non-GAAP)	11.0 %	10.9 %	9.2 %	9.8 %

Insurance Segment - (Loss) Income from Operations

(Loss) income from operations - INSURANCE SEGMENT (in millions)	4Q24	4Q23	FY 2024	FY 2023
GAAP	($646)	($426)	$1,289	$2,654
Amortization associated with identifiable intangibles	4	4	17	22
Impact of exit of employer group commercial medical products business	67	61	177	116
Accrued charge related to certain anticipated litigation expenses	—	—	—	105
Adjusted (non-GAAP)	($575)	($361)	$1,483	$2,897

b) FY 2025 projected Adjusted results exclude the future impact of items that cannot be estimated at this time.

Cautionary Statement

This news release includes forward-looking statements regarding Humana within the meaning of the Private Securities Litigation Reform Act of 1995. When used in investor presentations, press releases, Securities and Exchange Commission (SEC) filings, and in oral statements made by or with the approval of one of Humana’s executive officers, the words or phrases like “expects,” “believes,” “anticipates,” “assumes,” “intends,” “likely will result,” “estimates,” “projects” or variations of such words and similar expressions are intended to identify such forward-looking statements.

These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and assumptions, including, among other things, information set forth in the “Risk Factors” section of the company’s SEC filings, a summary of which includes but is not limited to the following:

• If Humana does not design and price its products properly and competitively, if the premiums Humana receives are insufficient to cover the cost of healthcare services delivered to its members, if the company is unable to implement clinical initiatives to provide a better healthcare experience for its members, lower costs and appropriately document the risk profile of its members, or if its estimates of benefits expense are inadequate, Humana’s profitability could be materially adversely affected. Humana estimates the costs of its benefit expense payments, and designs and prices its products accordingly, using actuarial methods and assumptions based upon, among other relevant factors, claim payment patterns, medical cost inflation, and historical developments such as claim inventory levels and claim receipt patterns. The company continually reviews estimates of future payments relating to benefit expenses for services incurred in the current and prior periods and makes necessary adjustments to its reserves, including premium deficiency reserves, where appropriate. These estimates involve extensive judgment, and have considerable inherent variability because they are extremely sensitive to changes in claim payment patterns and medical cost trends. Accordingly, Humana's reserves may be insufficient.
• If Humana fails to effectively implement its operational and strategic initiatives, including its Medicare initiatives, which are of particular importance given the concentration of the company's revenues in these products, state-based contract strategy, the growth of its CenterWell business, and its integrated care delivery model, the company’s business may be materially adversely affected.
• The number of Humana’s Medicare Advantage plans rated 4-star or higher will significantly decline in 2025. Humana has filed a lawsuit seeking to set aside and vacate the 2025 Star Ratings of its Medicare Advantage plans, but there is no assurance that the company will prevail in this lawsuit. If the company is not successful, the decline in Star Ratings will negatively impact its 2026 quality bonus payments from CMS and may also significantly adversely affect the company’s revenues, operating results, and cash flows. In addition, there can be no assurances the company will be successful in maintaining or improving its Star Ratings in future years.
• If Humana, or the third-party service providers on which it relies, fails to properly maintain the integrity of its data, to strategically maintain existing or implement new information systems, to protect Humana’s proprietary rights to its systems, or to defend against cyber-security attacks, contain such attacks when they occur, or prevent other privacy or data security incidents that result in security breaches that disrupt the company's operations or in the unintentional dissemination of sensitive personal information or proprietary or confidential information, the company’s business may be materially adversely affected.
• Humana is involved in various legal actions, or disputes that could lead to legal actions (such as, among other things, provider contract disputes and qui tam litigation brought by individuals on behalf of the government), governmental and internal investigations, and routine internal review of business processes any of which, if resolved unfavorably to the company, could result in substantial monetary damages or changes in its business practices. Increased litigation and negative publicity could also increase the company’s cost of doing business.
• As a government contractor, Humana is exposed to risks that may materially adversely affect its business or its willingness or ability to participate in government healthcare programs including, among other things, loss of material government contracts; governmental audits and investigations; potential inadequacy of government determined payment rates; potential restrictions on profitability, including by comparison of profitability of the company’s Medicare Advantage business to non-Medicare Advantage business; or other changes in the governmental programs in which Humana participates. Changes to the risk-adjustment model utilized by CMS to adjust premiums paid to Medicare Advantage plans or retrospective recovery by CMS of previously paid premiums as a result of the final rule related to the risk adjustment data validation audit methodology published by CMS on January 30, 2023 (Final RADV Rule), which Humana believes fails to address adequately the statutory requirement of actuarial equivalence and violates the Administrative Procedure Act due to its failure to include a "Fee for Service Adjuster" could have a material adverse effect on the company's operating results, financial position and cash flows.
• Humana's business activities are subject to substantial government regulation. New laws or regulations, or legislative, judicial, or regulatory changes in existing laws or regulations or their manner of application could increase the company's cost of doing business and have a material adverse effect on Humana’s results of operations (including restricting revenue, enrollment and premium growth in certain products and market segments, restricting the company’s ability to expand into new markets, increasing the company’s medical and operating costs by, among other things, requiring a minimum benefit ratio on insured products, lowering the company’s Medicare payment rates and increasing the company’s expenses associated with a non-deductible health insurance industry fee and other assessments); the company’s financial position (including the company’s ability to maintain the value of its goodwill); and the company’s cash flows.
• Humana’s failure to manage acquisitions, divestitures and other significant transactions successfully may have a material adverse effect on the company’s results of operations, financial position, and cash flows.
• If Humana fails to develop and maintain satisfactory relationships with the providers of care to its members, the company’s business may be adversely affected.
• Humana faces significant competition in attracting and retaining talented employees. Further, managing succession for, and retention of, key executives is critical to the Company’s success, and its failure to do so could adversely affect the Company’s businesses, operating results and/or future performance.
• Humana’s pharmacy business is highly competitive and subjects it to regulations and supply chain risks in addition to those the company faces with its core health benefits businesses.
• Changes in the prescription drug industry pricing benchmarks may adversely affect Humana’s financial performance.
• Humana’s ability to obtain funds from certain of its licensed subsidiaries is restricted by state insurance regulations.
• Downgrades in Humana’s debt ratings, should they occur, may adversely affect its business, results of operations, and financial condition.
• Volatility or disruption in the securities and credit markets may significantly and adversely affect the value of our investment portfolio and the investment income that we derive from this portfolio.

In making forward-looking statements, Humana is not undertaking to address or update them in future filings or communications regarding its business or results. In light of these risks, uncertainties, and assumptions, the forward-looking events discussed herein may or may not occur. There also may be other risks that the company is unable to predict at this time. Any of these risks and uncertainties may cause actual results to differ materially from the results discussed in the forward-looking statements.

Humana advises investors to read the following documents as filed by the company with the SEC for further discussion both of the risks it faces and its historical performance:

• Form 10-K for the year ended December 31, 2023;
• Form 10-Qs for the quarters ended March 31, 2024, June 30, 2024, and September 30, 2024; and
• Form 8-Ks filed during 2024 and 2025.

About Humana

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20250211538257/en/

Lisa Stoner

Humana Investor Relations

(502) 580-2652

e-mail: LStamper@humana.com

Mark Taylor

Humana Corporate Communications

(317) 753-0345

e-mail: MTaylor108@humana.com

Source: Humana Inc.

FAQ

What were Humana's (HUM) Q4 2024 earnings results?

Humana reported a Q4 2024 net loss of $5.76 per share on a GAAP basis and an adjusted net loss of $2.16 per share.

What is Humana's (HUM) earnings guidance for 2025?

Humana expects 2025 GAAP EPS of approximately $15.88 and adjusted EPS of approximately $16.25.

How many Medicare Advantage members is HUM expected to lose in 2025?

Humana expects to lose approximately 550,000 Medicare Advantage members in 2025, representing a 10% decline from 2024.

What was Humana's (HUM) Insurance segment benefit ratio in Q4 2024?

Humana's Insurance segment Adjusted benefit ratio was 91.9% in Q4 2024, including a 20-basis point increase related to Star Ratings investments.

How will HUM's Medicare Advantage Star Ratings change in 2025?

Humana's number of Medicare Advantage plans rated 4-star or higher will significantly decline in 2025, impacting 2026 quality bonus payments from CMS.