| SEGMENT INFORMATION | SEGMENT INFORMATION Our two reportable segments, Insurance and CenterWell, are based on a combination of the type of health plan customer and adjacent businesses centered on well-being solutions for our health plans and other customers, as described below. These segment groupings are consistent with information used by our Chief Executive Officer, the Chief Operating Decision Maker, to assess performance and allocate resources. The 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. The CenterWell segment includes our pharmacy, 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 $4.8 billion and $5.0 billion for the three months ended June 30, 2024 and 2023, respectively. For the six months ended June 30, 2024 and 2023, these amounts were $8.5 billion and $9.0 billion respectively. In addition, depreciation and amortization expense associated with certain businesses delivering benefits to our members, primarily associated with our primary care and pharmacy operations, are included with benefits expense. The amount of this expense was $32 million and $34 million for the three months ended June 30, 2024 and 2023, respectively, and $64 million and $67 million for the six months ended June 30, 2024 and 2023, 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 2023 Form 10-K. Transactions between reportable segments primarily consist of sales of products and services rendered by our CenterWell segment, primarily pharmacy, primary care, and home solutions, 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 and six months ended June 30, 2024 and 2023: Insurance CenterWell Eliminations/ Consolidated Three months ended June 30, 2024 (in millions) External revenues Premiums: Individual Medicare Advantage $ 22,215 $ — $ — $ 22,215 Group Medicare Advantage 1,938 — — 1,938 Medicare stand-alone PDP 867 — — 867 Total Medicare 25,020 — — 25,020 Commercial fully-insured 152 — — 152 Specialty benefits 240 — — 240 Medicare Supplement 206 — — 206 State-based contracts and other 2,524 — — 2,524 Total premiums 28,142 — — 28,142 Services revenue: Home solutions — 335 — 335 Primary care — 322 — 322 Commercial ASO 8 — — 8 Military services and other 206 — — 206 Pharmacy solutions — 229 — 229 Total services revenue 214 886 — 1,100 Total external revenues 28,356 886 — 29,242 Intersegment revenues Services 1 1,416 (1,417) — Products — 2,645 (2,645) — Total intersegment revenues 1 4,061 (4,062) — Investment income 168 — 130 298 Total revenues 28,525 4,947 (3,932) 29,540 Operating expenses: Benefits 25,182 — (143) 25,039 Operating costs 2,395 4,553 (3,800) 3,148 Depreciation and amortization 185 56 (29) 212 Total operating expenses 27,762 4,609 (3,972) 28,399 Income from operations 763 338 40 1,141 Interest expense — 1 167 168 Other expense, net — — 55 55 Income (loss) before income taxes and equity in net earnings 763 337 (182) 918 Equity in net income (losses) 1 (18) — (17) Segment earnings (loss) $ 764 $ 319 $ (182) $ 901 Net loss attributable to noncontrolling interests 1 — — 1 Segment earnings (loss) attributable to Humana $ 765 $ 319 $ (182) $ 902 Insurance CenterWell Eliminations/ Consolidated Three months ended June 30, 2023 (in millions) External revenues Premiums: Individual Medicare Advantage $ 19,749 $ — $ — $ 19,749 Group Medicare Advantage 1,732 — — 1,732 Medicare stand-alone PDP 568 — — 568 Total Medicare 22,049 — — 22,049 Commercial fully-insured 950 — — 950 Specialty benefits 252 — — 252 Medicare Supplement 182 — — 182 State-based contracts and other 2,062 — — 2,062 Total premiums 25,495 — — 25,495 Services revenue: Home solutions — 341 — 341 Primary care — 190 — 190 Commercial ASO 64 — — 64 Military services and other 167 — — 167 Pharmacy solutions — 216 — 216 Total services revenue 231 747 — 978 Total external revenues 25,726 747 — 26,473 Intersegment revenues Services 15 1,144 (1,159) — Products — 2,639 (2,639) — Total intersegment revenues 15 3,783 (3,798) — Investment income 134 — 140 274 Total revenues 25,875 4,530 (3,658) 26,747 Operating expenses: Benefits 22,127 — (118) 22,009 Operating costs 2,545 4,193 (3,627) 3,111 Depreciation and amortization 172 50 (31) 191 Total operating expenses 24,844 4,243 (3,776) 25,311 Income from operations 1,031 287 118 1,436 Interest expense — 1 119 120 Other expense, net — — 54 54 Income (loss) before income taxes and equity in net earnings 1,031 286 (55) 1,262 Equity in net earnings (losses) 1 (11) — (10) Segment earnings (loss) $ 1,032 $ 275 $ (55) $ 1,252 Net loss attributable to noncontrolling interests 3 — — 3 Segment earnings (loss) attributable to Humana $ 1,035 $ 275 $ (55) $ 1,255 Insurance CenterWell Eliminations/ Consolidated Six months ended June 30, 2024 (in millions) External revenues Premiums: Individual Medicare Advantage $ 44,663 $ — $ — $ 44,663 Group Medicare Advantage 3,927 — — 3,927 Medicare stand-alone PDP 1,688 — — 1,688 Total Medicare 50,278 — — 50,278 Commercial fully-insured 408 — — 408 Specialty benefits 479 — — 479 Medicare Supplement 403 — — 403 State-based contracts and other 4,835 — — 4,835 Total premiums 56,403 — — 56,403 Services revenue: Home solutions — 670 — 670 Primary care — 563 — 563 Commercial ASO 32 — — 32 Military services and other 457 — — 457 Pharmacy solutions — 440 — 440 Total services revenue 489 1,673 — 2,162 Total external revenues 56,892 1,673 — 58,565 Intersegment revenues Services 2 2,830 (2,832) — Products — 5,262 (5,262) — Total intersegment revenues 2 8,092 (8,094) — Investment income 330 — 256 586 Total revenues 57,224 9,765 (7,838) 59,151 Operating expenses: Benefits 50,433 — (270) 50,163 Operating costs 4,759 9,036 (7,605) 6,190 Depreciation and amortization 371 109 (59) 421 Total operating expenses 55,563 9,145 (7,934) 56,774 Income from operations 1,661 620 96 2,377 Interest expense — 2 325 327 Other expense, net — — 118 118 Income (loss) before income taxes and equity in net losses 1,661 618 (347) 1,932 Equity in net losses (1) (40) — (41) Segment earnings (loss) $ 1,660 $ 578 $ (347) $ 1,891 Net loss attributable to noncontrolling interests 3 — — 3 Segment earnings (loss) attributable to Humana $ 1,663 $ 578 $ (347) $ 1,894 Insurance CenterWell Eliminations/ 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 State-based contracts and other 3,971 — — 3,971 Total premiums 51,045 — — 51,045 Services revenue: Home solutions — 655 — 655 Primary care — 391 — 391 Commercial ASO 135 — — 135 Military services 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 |
