•Reports 3Q22 earnings per diluted common share of $9.39 on a GAAP basis, Adjusted EPS of $6.88; reports YTD 2022 EPS of $22.16 on a GAAP basis, $23.58 on an Adjusted basis

•Updates FY 2022 EPS guidance to 'approximately $23.27' on a GAAP basis; affirms recent $0.25 per share upward revision to Adjusted EPS guidance of 'approximately $25.00', representing growth of 21 percent over FY 2021 Adjusted EPS

•Achieves 96 percent of the company's Medicare Advantage members currently enrolled in 4-star and above contracts, and 66 percent of members in 4.5 and 5-star contracts for 2023, an industry-leader among its publicly traded peers

•Anticipates 2023 individual Medicare Advantage membership growth of 325,000 to 400,000, or 7.1 percent to 8.7 percent growth, over projected FY 2022 ending membership; in line with anticipated high single-digit industry growth

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.

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).

(a) 3Q22 Adjusted results exclude the following:

•Amortization expense for identifiable intangibles of approximately $25 million pretax, or $0.15 per diluted common share. GAAP measures affected in this release include consolidated pretax, EPS, and segment earnings (including amortization expense of $11 million in the Retail segment; $1 million in the Group and Specialty segment; $12 million in the Healthcare Services segment)

•Put/call valuation adjustments of approximately $13 million pretax, or $0.08 per diluted common share, associated with Humana’s non-consolidating minority interest investments. GAAP measures affected include consolidated pretax and EPS.

•Transaction and integration costs of approximately $17 million pretax, or $0.10 per diluted common share; GAAP measure affected include consolidated pretax, EPS, and the consolidated operating cost ratio. See Operating cost ratio reconciliation below for respective period.

•Change in fair market value of publicly-traded equity securities of $51 million pretax, or $0.31 per diluted common share. GAAP measures affected include consolidated pretax, EPS, and consolidated revenues. See Revenues reconciliation below for respective period.

•Estimated charges of $82 million pretax, or $0.50 per diluted common share, primarily related to initiatives undertaken associated with the company's previously disclosed $1 billion value creation plan to create capacity to fund growth and investment in its Medicare Advantage business and further expansion of its Healthcare Services capabilities in 2023. GAAP measures affected include consolidated pretax, EPS, and the consolidated operating cost ratio. See Operating cost ratio reconciliation below for respective period.

•Gain of approximately $240 million pretax related to the sale of a 60 percent interest in KAH Hospice in August 2022. The 3Q22 impact of $3.03 per diluted common share includes the combined impact of the $240 million pretax gain and income tax effects related to the closing of the transaction. As a result of the closing of the sale, there was an increase to the company's tax basis in both the shares sold and the shares retained, thereby resulting in a $1.14 per diluted common share tax benefit adjustment in 3Q22. Consolidated pretax and EPS are the only GAAP measures affected.

•Excluding the impact of the KAH Hospice transaction described in the previous bullet point, the other non-GAAP adjustments within this footnote include a cumulative net tax benefit of approximately $0.15 per diluted common share.

(b) 3Q21 Adjusted results exclude the following:

•Amortization expense for identifiable intangibles of approximately $17 million pretax, or $0.10 per diluted common share. GAAP measures affected include consolidated pretax, EPS, and segment earnings (including amortization expense of $4 million in the Retail segment; $1 million in the Group and Specialty segment; $12 million in the Healthcare Services segment).

•Gain associated with Kindred at Home equity method investment of approximately $1,129 million pretax, or $8.74 per diluted common share; the gain was recorded upon closing of the Kindred at Home transaction in August 2021; GAAP measures affected include consolidated pretax and EPS.

•Put/call valuation adjustments of approximately $33 million pretax, or $0.20 per diluted common share, associated with Humana’s non-consolidating minority interest investments. GAAP measures affected include consolidated pretax and EPS.

•Transaction and integration costs of approximately $71 million, or $0.39 per diluted common share; GAAP measures affected include consolidated pretax, EPS, and the consolidated operating cost ratio. See Operating cost ratio reconciliation above for respective period.

•Change in fair market value of publicly-traded equity securities of $174 million pretax, or $1.04 per diluted common share. GAAP measures affected include consolidated pretax, EPS, and consolidated revenues. See Revenues reconciliation above for respective period.

•The non-GAAP adjustments within this footnote include a cumulative net tax benefit of approximately $0.56 per diluted common share.

(c) YTD 2022 Adjusted results exclude the following:

•Amortization expense for identifiable intangibles of approximately $61 million pretax, or $0.37 per diluted common share. GAAP measures affected include consolidated pretax, EPS, and segment earnings (including amortization expense of $19 million in the Retail segment; $4 million in the Group and Specialty segment; $39 million in the Healthcare Services segment).

•Put/call valuation adjustments of approximately $16 million pretax, or $0.10 per diluted common share, associated with Humana’s non-consolidating minority interest investments. GAAP measures affected include consolidated pretax and EPS.

•Transaction and integration costs of approximately $70 million pretax, or $0.42 per diluted common share; GAAP measure affected include consolidated pretax, EPS, and the consolidated operating cost ratio. See Operating cost ratio reconciliation above for respective period.

•Change in fair market value of publicly-traded equity securities of $119 million pretax, or $0.72 per diluted common share. GAAP measures affected include consolidated pretax, EPS, and consolidated revenues. See Revenues reconciliation above for respective period.

•Charges of $285 million pretax, or $1.73 per diluted common share, primarily related to initiatives undertaken associated with the company's previously disclosed $1 billion value creation plan to create capacity to fund growth and investment in its Medicare Advantage business and further expansion of its Healthcare Services capabilities in 2023. GAAP measures affected include consolidated pretax, EPS, and the consolidated operating cost ratio. See Operating cost ratio reconciliation above for respective period.

•Gain of approximately $240 million pretax related to the sale of a 60 percent interest in KAH Hospice in August 2022. The YTD 2022 impact of $1.72 per diluted common share includes the combined impact of the $240 million pretax gain and the related income tax effects of the transaction. The YTD 2022 net income tax impact related to the transaction was $0.17 per diluted common share, reflective of the $1.31 per diluted common share related to the recognition of a deferred tax liability in the second quarter of 2022 in connection with the held-for-sale classification resulting from the pending transaction, partially offset by the $1.14 per diluted common share benefit recognized in 3Q22 associated with the increase to the company's tax basis in both the shares sold and the shares retained at the time of the completion of the sale in 3Q22. Consolidated pretax and EPS are the only GAAP measures affected.

•Excluding the impact of the KAH Hospice transaction described in the previous bullet point, the other non-GAAP adjustments within this footnote include a cumulative net tax benefit of approximately $0.93 per diluted common share.

•Amortization expense for identifiable intangibles of approximately $47 million pretax, or $0.28 per diluted common share; GAAP measures affected include consolidated pretax, EPS, and segment earnings (including amortization expense of $12 million in the Retail segment; $3 million in the Group and Specialty segment; $31 million in the Healthcare Services segment).

•Gain associated with Kindred at Home equity method investment of approximately $1,129 million pretax, or $8.73 per diluted common share; the gain was recorded upon closing of the Kindred at Home transaction in August 2021; GAAP measures affected include consolidated pretax and EPS.

•Put/call valuation adjustments of approximately $567 million, or $3.38 per diluted common share, associated with Humana’s non-consolidating minority interest investments, including the impact of the termination of the put/call agreement related to Kindred at Home as a result of the transaction announced on April 27, 2021. GAAP measures affected include consolidated pretax and EPS.

•Transaction and integration costs of approximately $93 million, or $0.52 per diluted common share; GAAP measure affected include consolidated pretax, EPS, and the consolidated operating cost ratio. See Operating cost ratio reconciliation above for respective period.

•Change in fair market value of publicly-traded equity securities of $197 million, or $1.18 per diluted common share. GAAP measures affected include consolidated pretax, EPS, and consolidated revenues. See Revenues reconciliation above for respective period.

•The non-GAAP adjustments within this footnote include a cumulative net tax benefit of approximately $1.64 per diluted common share.

(g) FY 2022 projected Adjusted results exclude the following:

•Amortization expense for identifiable intangibles of approximately $0.48 per diluted common share.

•Put/call valuation adjustments of approximately $0.10 per diluted common share, associated with Humana’s non-consolidating minority interest investments. FY 2022 GAAP EPS guidance excludes the impact of future value changes of these put/call options as the future value changes cannot be estimated.

•Transaction and integration costs of approximately $0.62 per diluted common share.

•Change in fair market value of publicly-traded equity securities of $0.72 per diluted common share. The future value of publicly-traded equity securities, their impact on GAAP EPS, and the related non-GAAP adjustment will fluctuate on the public trading value of the stock. The guidance set forth herein assumes no further change in the fair value of these investments.

•Estimated charges of $1.73 per diluted common share, primarily associated with initiatives undertaken related to the company's previously disclosed $1 billion value creation plan to create capacity to fund growth and investment in its Medicare Advantage business and further expansion of its Healthcare Services capabilities in 2023. FY 2022 GAAP EPS guidance excludes the future impact of potential charges related to the value creation plan.

•Net gain of $1.72 per diluted common share related to the sale of KAH Hospice in August 2022.

(h) FY 2021 Adjusted results exclude the following:

•Amortization expense for identifiable intangibles of approximately $0.39 per diluted common share.

•Gain associated with Kindred at Home equity method investment of approximately $8.73 per diluted common share; the gain was recorded upon closing of the Kindred at Home transaction in August 2021.

•Put/call valuation adjustments of approximately $3.56 per diluted common share, associated with Humana’s non-consolidating minority interest investments, including the impact of the termination of the put/call agreement related to Kindred at Home as a result of the transaction announced on April 27, 2021.

•Transaction and integration costs of approximately $0.72 per diluted common share.

•Change in fair market value of publicly-traded equity securities of $2.03 per diluted common share.

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

•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, particularly its Medicare initiatives and state-based contract strategy, the company’s business may be materially adversely affected, which is of particular importance given the concentration of the company’s revenues in these products. In addition, there can be no assurances that the company will be successful in maintaining or improving its Star ratings in future years.

•If Humana 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 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, or MA, plans according to the health status of covered members, including proposed changes to the methodology used by CMS for risk adjustment data validation audits that fail to address adequately the statutory requirement of actuarial equivalence, if implemented, 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.

•The securities and credit markets may experience volatility and disruption, which may adversely affect Humana’s business.

•The spread of, and response to, the novel coronavirus, or COVID-19, underscores certain risks Humana faces, including those discussed above, and the ongoing, heightened uncertainty created by the pandemic precludes any prediction as to the ultimate adverse impact to Humana of COVID-19.

As the COVID-19 pandemic continues, the premiums the company charges may prove to be insufficient to cover the cost of health care services delivered to its members, each of which could be impacted by many factors, including the impacts that Humana has experienced, and may continue to experience, to its revenues due to limitations on its ability to implement clinical initiatives to manage health care costs and chronic conditions of its members, and appropriately document their risk profiles, as a result of the company’s members being unable or unwilling to see their providers due to actions taken to mitigate the spread of COVID-19; increased costs that may result from higher utilization rates of medical facilities and services and other increases in associated hospital and pharmaceutical costs; and shifts in the company’s premium and medical claims cost trends to reflect the demographic impact of higher mortality during the COVID-19 pandemic.

In addition, Humana is offering, and has been mandated by legislative and regulatory action (including the Families First Act and CARES Act) to provide, certain expanded benefit coverage to its members, such as waiving, or reimbursing, certain costs for COVID-19 testing, vaccinations and treatment. These measures taken by Humana, or governmental action, to respond to the ongoing impact of COVID-19 (including further expansion or modification of the services delivered to its members, the adoption or modification of regulatory requirements associated with those services and the costs and challenges associated with ensuring timely compliance with such requirements), and the potential for widespread testing, treatments and the distribution and administration of COVID-19 vaccines, could adversely impact the company’s profitability.

The spread and impact of COVID-19 and additional variants, or actions taken to mitigate this spread, could have material and adverse effects on Humana’s ability to operate effectively, including as a result of the complete or partial closure of facilities or labor shortages. Disruptions in public and private infrastructure, including communications, availability of in-person sales and marketing channels, financial services and supply chains, could materially and adversely disrupt the company’s normal business operations. A significant subset of the company's and the company's third party providers' employee population are in a remote work environment in an effort to mitigate the spread of COVID-19, which may exacerbate certain risks to Humana’s business, including an increased demand for information technology resources, increased risk of phishing and other cybersecurity attacks, and increased risk of unauthorized dissemination of sensitive personal, proprietary, or confidential information. The continued COVID-19 pandemic has severely impacted global economic activity, including the businesses of some of Humana’s commercial customers, and caused significant volatility and negative pressure in the financial markets. In addition to disrupting Humana’s operations, these developments may adversely affect the timing of commercial customer premium collections and corresponding claim payments, the value of the company’s investment portfolio, or future liquidity needs.

•Form 10-K for the year ended December 31, 2021;

•Form 10-Q for the quarters ended March 31, 2022 and June 30, 2022; and

•Form 8-Ks filed during 2022.

•Annual reports to stockholders

•Securities and Exchange Commission filings

•Most recent investor conference presentations

•Quarterly earnings news releases and conference calls

•Calendar of events

•Corporate Governance information

•Reports 3Q22 earnings per diluted common share of $9.39 on a GAAP basis, Adjusted EPS of $6.88; reports YTD 2022 EPS of $22.16 on a GAAP basis, $23.58 on an Adjusted basis

•Updates FY 2022 EPS guidance to 'approximately $23.27' on a GAAP basis; affirms recent $0.25 per share upward revision to Adjusted EPS guidance of 'approximately $25.00', representing growth of 21 percent over FY 2021 Adjusted EPS

•Achieves 96 percent of the company's Medicare Advantage members currently enrolled in 4-star and above contracts, and 66 percent of members in 4.5 and 5-star contracts for 2023, an industry-leader among its publicly traded peers

•Anticipates 2023 individual Medicare Advantage membership growth of 325,000 to 400,000, or 7.1 percent to 8.7 percent growth, over projected FY 2022 ending membership; in line with anticipated high single-digit industry growth

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

Additional FY 2022 guidance points are included in the table on page 19 of this earnings release.

The favorable year-over-year GAAP consolidated revenues comparison for both the quarter and the YTD period were primarily driven by the following factors:

•individual Medicare Advantage and state-based contracts membership growth,

•higher per member individual Medicare Advantage premiums, and

•the impact of Home solutions revenues (The acquisition of the remaining 60 percent interest in Kindred at Home (KAH) was completed in August 2021; this impact was partially offset by the divestiture of the company's 60 percent ownership of KAH Hospice that was completed in August 2022).

These increases were partially offset by the following factors:

•declining year-over-year membership associated with the company's group commercial medical products; and

•the phase-out of COVID-19 sequestration relief in YTD 2022.

These factors were partially offset by lower favorable prior period medical claims reserve development (Prior Period Development) in 2022. Excluding the impact of the lower favorable Prior Period Development, the consolidated benefit ratio would have been 85.6 percent in 3Q22 compared to 87.3 percent in 3Q21, and 86.6 percent in YTD 2022 compared to 87.6 percent in YTD 2021.

Furthermore, the 3Q22 and YTD 2022 ratios continue to reflect a shift in line of business mix with continued growth in certain government programs, which carry a higher benefits expense ratio, combined with a decline in Medicare stand-alone PDP, which has a lower benefits expense ratio.

The higher levels of favorable Prior Period Development in 2021 reflected the reversal of actions taken in 2020, including the suspension of certain financial recovery programs for a period of time to provide financial and administrative relief for providers facing unprecedented strain as a result of the pandemic.

The increases in the GAAP consolidated operating cost ratio from 3Q21 to 3Q22 and YTD 2021 to YTD 2022 primarily related to the following factors:

•the impact of KAH operations; the business has a significantly higher operating cost ratio than the company's historical consolidated operating cost ratio; the operations added approximately 160 basis points and 200 basis points, respectively, to the 3Q22 and YTD 2022 consolidated operating cost ratios compared to 110 basis points and 40 basis points, respectively, to the 3Q21 and YTD 2021 ratios; and

•the net impact of charges associated with initiatives undertaken associated with the company's previously disclosed $1 billion value creation plan, primarily related to asset and software impairment and abandonment and severance. The charges were recorded at the corporate level and not allocated to the segments.

These increases were partially offset by scale efficiencies associated with growth in the company's individual Medicare Advantage membership.

•Days in claims payable (DCP) of 46.2 days at September 30, 2022 represented an increase of 0.2 days from 46.0 days at June 30, 2022, and a decrease of 0.3 days from 46.5 days at September 30, 2021.

Changes are outlined in the DCP rollforward on page S-18 of the statistical supplement included in this release.

•Humana's debt-to-total capitalization at September 30, 2022 decreased 590 basis points to 39.4 percent from 45.3 percent at June 30, 2022. The decrease primarily resulted from the company's use of its proceeds from its August 2022 divestiture of KAH Hospice to repay a portion of its term loan debt, along with the impact of 3Q22 net earnings and commercial paper repayments.

GAAP cash flows provided by operations in 3Q22 and YTD 2022 were significantly impacted by the timing of the premium payment from CMS, as the early receipt of the October 2022 Medicare premium payment of $5.78 billion was received in September 2022.

The year-over-year favorable comparison of YTD operating cash flows further reflects higher earnings in 2022, excluding the impact of the gains recognized from the respective transactions in each year, combined with positive working capital impacts in 2022, and the 2021 cash flow impact associated with the pay down of claims inventory and capitation for provider surplus amounts earned in 2020, as well as additional provider support.

*Represents shares purchased under the previously announced January 2022 $1.00 billion accelerated stock purchase (ASR) program that is part of the $3.00 billion repurchase program authorized by the Board of Directors on February 18, 2021. Final settlement of the January 2022 ASR was completed during the first quarter of 2022.

The year-over-year increases in Retail segment revenues, on both a quarter and YTD basis, primarily reflect the following items:

•individual Medicare Advantage and state-based contracts membership growth; and

•higher per member individual Medicare Advantage premiums.

These factors were partially offset by the phase-out of COVID-19 sequestration relief in YTD 2022.

These factors were partially offset by lower favorable Prior Period Development in 2022. Excluding the impact of the lower favorable Prior Period Development, the segment's benefit ratio would have been 86.6 percent in 3Q22 compared to 88.4 percent in 3Q21, and 87.8 percent in YTD 2022 compared to 88.8 percent in YTD 2021.

Furthermore, the 3Q22 and YTD 2022 ratios continue to reflect a shift in line of business mix within the segment, with growth in individual Medicare Advantage and state-based contracts and other membership, which carry a higher benefits expense ratio, combined with a decline in Medicare stand-alone PDP, which has a lower benefits expense ratio.

The increases in the segment's 3Q22 and YTD 2022 operating cost ratios from the respective periods in 2021 primarily reflect strategic investments to position the segment for long-term success, including the impact of higher marketing spend in 2022 to support individual Medicare Advantage growth.

These factors were partially offset by scale efficiencies associated with growth in the company's individual Medicare Advantage membership.

Individual Medicare Advantage membership includes 667,000 Dual Eligible Special Need Plans (D-SNP) members as of September 30, 2022 a net increase of 105,700, or 19 percent, from 561,300 as of September 30, 2021, and up 90,900, or 16 percent, from 576,100 as of December 31, 2021.

The year-over-year decreases in Group and Specialty segment revenues, on both a quarter and YTD basis, primarily reflect the anticipated decline in the company's fully-insured commercial medical and ASO commercial membership, partially offset by higher per member premiums across the fully-insured commercial business.

The segment's 3Q22 and YTD 2022 benefit ratios decreased from the comparative ratios in 2021, primarily reflective of the following factors:

•the impact of the specialty product's lower benefit ratio, as the segment results now reflect a higher mix of the specialty business,

•company's pricing and benefit design efforts to address COVID-19 and increase profitability, and

•the less severe COVID-19 impact in 2022 compared to the elevated impact in 2021, including the Delta variant in 3Q21, and the enrolled population's higher vaccination rate in 2022 compared to 2021.

These factors were partially offset by the anticipated lower Prior Period Development in 2022. Excluding the impact of the Prior Period Development, the segment's benefit ratio would have been 78.3 percent in 3Q22 compared to 86.1 percent in 3Q21 and 77.1 percent in YTD 2022 compared to 83.3 percent in YTD 2021.

The year-over-year quarterly and YTD increases to the Group and Specialty segment's GAAP operating cost ratios were unfavorably affected by the following factors:

•the impact of membership declining at a greater rate than the decline in absolute administrative expenses within the segment leading to a greater proportion of expense to fully-insured premiums and services revenues,

•a greater proportion of the segment's membership being associated with the company's ASO commercial, Military services, and specialty businesses; each of which have a higher operating cost ratio than the fully-insured commercial product, and

•investments in the Military services business across demonstration programs, partners service contracts and in preparation for the next generation of the United States Department of Defense's TRICARE contracts, and

•investments in the company's specialty business to promote growth.

Healthcare Services segment revenues in 3Q22 and YTD 2022 increased compared to the respective periods in 2021; these increases were favorably impacted by the following factors:

◦the company's individual Medicare Advantage and state-based contracts membership growth leading to higher pharmacy revenues, ◦impact of greater mail-order pharmacy penetration,

◦higher revenues associated with growth in the company's provider business, and

◦the impact of Home solutions revenues (The acquisition of the remaining 60 percent interest in KAH was completed in August 2021; this impact was partially offset by the divestiture of the company's 60 percent ownership of KAH Hospice that was completed in August 2022).

The year-over-year decline in the segment's YTD operating cost ratio from 2021 to 2022 primarily represents the impact of the Kindred at Home operations being consolidated for the entire YTD 2022 period compared to a partial YTD 2021 period due to the timing of the previously discussed transactions. The KAH operations have a lower operating cost ratio than other businesses within the segment. The year-over-year YTD favorability was further impact by the company's pharmacy operations.

The YTD favorability was partially offset by investments in KAH to abate the pressures of the current nursing labor environment.

See additional operational metrics for the Healthcare Services segment on pages S-15 through S-17 of the statistical supplement included in this release.

(a) 3Q22 Adjusted results exclude the following:

•Amortization expense for identifiable intangibles of approximately $25 million pretax, or $0.15 per diluted common share. GAAP measures affected in this release include consolidated pretax, EPS, and segment earnings (including amortization expense of $11 million in the Retail segment; $1 million in the Group and Specialty segment; $12 million in the Healthcare Services segment)

•Put/call valuation adjustments of approximately $13 million pretax, or $0.08 per diluted common share, associated with Humana’s non-consolidating minority interest investments. GAAP measures affected include consolidated pretax and EPS.

•Transaction and integration costs of approximately $17 million pretax, or $0.10 per diluted common share; GAAP measure affected include consolidated pretax, EPS, and the consolidated operating cost ratio. See Operating cost ratio reconciliation below for respective period.

•Change in fair market value of publicly-traded equity securities of $51 million pretax, or $0.31 per diluted common share. GAAP measures affected include consolidated pretax, EPS, and consolidated revenues. See Revenues reconciliation below for respective period.

•Estimated charges of $82 million pretax, or $0.50 per diluted common share, primarily related to initiatives undertaken associated with the company's previously disclosed $1 billion value creation plan to create capacity to fund growth and investment in its Medicare Advantage business and further expansion of its Healthcare Services capabilities in 2023. GAAP measures affected include consolidated pretax, EPS, and the consolidated operating cost ratio. See Operating cost ratio reconciliation below for respective period.

•Gain of approximately $240 million pretax related to the sale of a 60 percent interest in KAH Hospice in August 2022. The 3Q22 impact of $3.03 per diluted common share includes the combined impact of the $240 million pretax gain and income tax effects related to the closing of the transaction. As a result of the closing of the sale, there was an increase to the company's tax basis in both the shares sold and the shares retained, thereby resulting in a $1.14 per diluted common share tax benefit adjustment in 3Q22. Consolidated pretax and EPS are the only GAAP measures affected.

•Excluding the impact of the KAH Hospice transaction described in the previous bullet point, the other non-GAAP adjustments within this footnote include a cumulative net tax benefit of approximately $0.15 per diluted common share.

(b) 3Q21 Adjusted results exclude the following:

•Amortization expense for identifiable intangibles of approximately $17 million pretax, or $0.10 per diluted common share. GAAP measures affected include consolidated pretax, EPS, and segment earnings (including amortization expense of $4 million in the Retail segment; $1 million in the Group and Specialty segment; $12 million in the Healthcare Services segment).

•Gain associated with Kindred at Home equity method investment of approximately $1,129 million pretax, or $8.74 per diluted common share; the gain was recorded upon closing of the Kindred at Home transaction in August 2021; GAAP measures affected include consolidated pretax and EPS.

•Put/call valuation adjustments of approximately $33 million pretax, or $0.20 per diluted common share, associated with Humana’s non-consolidating minority interest investments. GAAP measures affected include consolidated pretax and EPS.

•Transaction and integration costs of approximately $71 million, or $0.39 per diluted common share; GAAP measures affected include consolidated pretax, EPS, and the consolidated operating cost ratio. See Operating cost ratio reconciliation above for respective period.

•Change in fair market value of publicly-traded equity securities of $174 million pretax, or $1.04 per diluted common share. GAAP measures affected include consolidated pretax, EPS, and consolidated revenues. See Revenues reconciliation above for respective period.

•The non-GAAP adjustments within this footnote include a cumulative net tax benefit of approximately $0.56 per diluted common share.

(c) YTD 2022 Adjusted results exclude the following:

•Amortization expense for identifiable intangibles of approximately $61 million pretax, or $0.37 per diluted common share. GAAP measures affected include consolidated pretax, EPS, and segment earnings (including amortization expense of $19 million in the Retail segment; $4 million in the Group and Specialty segment; $39 million in the Healthcare Services segment).

•Put/call valuation adjustments of approximately $16 million pretax, or $0.10 per diluted common share, associated with Humana’s non-consolidating minority interest investments. GAAP measures affected include consolidated pretax and EPS.

•Transaction and integration costs of approximately $70 million pretax, or $0.42 per diluted common share; GAAP measure affected include consolidated pretax, EPS, and the consolidated operating cost ratio. See Operating cost ratio reconciliation above for respective period.

•Change in fair market value of publicly-traded equity securities of $119 million pretax, or $0.72 per diluted common share. GAAP measures affected include consolidated pretax, EPS, and consolidated revenues. See Revenues reconciliation above for respective period.

•Charges of $285 million pretax, or $1.73 per diluted common share, primarily related to initiatives undertaken associated with the company's previously disclosed $1 billion value creation plan to create capacity to fund growth and investment in its Medicare Advantage business and further expansion of its Healthcare Services capabilities in 2023. GAAP measures affected include consolidated pretax, EPS, and the consolidated operating cost ratio. See Operating cost ratio reconciliation above for respective period.

•Gain of approximately $240 million pretax related to the sale of a 60 percent interest in KAH Hospice in August 2022. The YTD 2022 impact of $1.72 per diluted common share includes the combined impact of the $240 million pretax gain and the related income tax effects of the transaction. The YTD 2022 net income tax impact related to the transaction was $0.17 per diluted common share, reflective of the $1.31 per diluted common share related to the recognition of a deferred tax liability in the second quarter of 2022 in connection with the held-for-sale classification resulting from the pending transaction, partially offset by the $1.14 per diluted common share benefit recognized in 3Q22 associated with the increase to the company's tax basis in both the shares sold and the shares retained at the time of the completion of the sale in 3Q22. Consolidated pretax and EPS are the only GAAP measures affected.

•Excluding the impact of the KAH Hospice transaction described in the previous bullet point, the other non-GAAP adjustments within this footnote include a cumulative net tax benefit of approximately $0.93 per diluted common share.

•Amortization expense for identifiable intangibles of approximately $47 million pretax, or $0.28 per diluted common share; GAAP measures affected include consolidated pretax, EPS, and segment earnings (including amortization expense of $12 million in the Retail segment; $3 million in the Group and Specialty segment; $31 million in the Healthcare Services segment).

•Gain associated with Kindred at Home equity method investment of approximately $1,129 million pretax, or $8.73 per diluted common share; the gain was recorded upon closing of the Kindred at Home transaction in August 2021; GAAP measures affected include consolidated pretax and EPS.

•Put/call valuation adjustments of approximately $567 million, or $3.38 per diluted common share, associated with Humana’s non-consolidating minority interest investments, including the impact of the termination of the put/call agreement related to Kindred at Home as a result of the transaction announced on April 27, 2021. GAAP measures affected include consolidated pretax and EPS.

•Transaction and integration costs of approximately $93 million, or $0.52 per diluted common share; GAAP measure affected include consolidated pretax, EPS, and the consolidated operating cost ratio. See Operating cost ratio reconciliation above for respective period.

•Change in fair market value of publicly-traded equity securities of $197 million, or $1.18 per diluted common share. GAAP measures affected include consolidated pretax, EPS, and consolidated revenues. See Revenues reconciliation above for respective period.

•The non-GAAP adjustments within this footnote include a cumulative net tax benefit of approximately $1.64 per diluted common share.

(g) FY 2022 projected Adjusted results exclude the following:

•Amortization expense for identifiable intangibles of approximately $0.48 per diluted common share.

•Put/call valuation adjustments of approximately $0.10 per diluted common share, associated with Humana’s non-consolidating minority interest investments. FY 2022 GAAP EPS guidance excludes the impact of future value changes of these put/call options as the future value changes cannot be estimated.

•Transaction and integration costs of approximately $0.62 per diluted common share.

•Change in fair market value of publicly-traded equity securities of $0.72 per diluted common share. The future value of publicly-traded equity securities, their impact on GAAP EPS, and the related non-GAAP adjustment will fluctuate on the public trading value of the stock. The guidance set forth herein assumes no further change in the fair value of these investments.

•Estimated charges of $1.73 per diluted common share, primarily associated with initiatives undertaken related to the company's previously disclosed $1 billion value creation plan to create capacity to fund growth and investment in its Medicare Advantage business and further expansion of its Healthcare Services capabilities in 2023. FY 2022 GAAP EPS guidance excludes the future impact of potential charges related to the value creation plan.

•Net gain of $1.72 per diluted common share related to the sale of KAH Hospice in August 2022.

(h) FY 2021 Adjusted results exclude the following:

•Amortization expense for identifiable intangibles of approximately $0.39 per diluted common share.

•Gain associated with Kindred at Home equity method investment of approximately $8.73 per diluted common share; the gain was recorded upon closing of the Kindred at Home transaction in August 2021.

•Put/call valuation adjustments of approximately $3.56 per diluted common share, associated with Humana’s non-consolidating minority interest investments, including the impact of the termination of the put/call agreement related to Kindred at Home as a result of the transaction announced on April 27, 2021.

•Transaction and integration costs of approximately $0.72 per diluted common share.

•Change in fair market value of publicly-traded equity securities of $2.03 per diluted common share.

(i) The company provides 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.

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

“estimates,” “projects” or variations of such words and similar expressions are intended to identify such forward-looking statements.

•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, particularly its Medicare initiatives and state-based contract strategy, the company’s business may be materially adversely affected, which is of particular importance given the concentration of the company’s revenues in these products. In addition, there can be no assurances that the company will be successful in maintaining or improving its Star ratings in future years.

•If Humana 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 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, or MA, plans according to the health status of covered members, including proposed changes to the methodology used by CMS for risk adjustment data validation audits that fail to address adequately the statutory requirement of actuarial equivalence, if implemented, 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.

•The securities and credit markets may experience volatility and disruption, which may adversely affect Humana’s business.

•The spread of, and response to, the novel coronavirus, or COVID-19, underscores certain risks Humana faces, including those discussed above, and the ongoing, heightened uncertainty created by the pandemic precludes any prediction as to the ultimate adverse impact to Humana of COVID-19.

As the COVID-19 pandemic continues, the premiums the company charges may prove to be insufficient to cover the cost of health care services delivered to its members, each of which could be impacted by many factors, including the impacts that Humana has experienced, and may continue to experience, to its revenues due to limitations on its ability to implement clinical initiatives to manage health care costs and chronic conditions of its members, and appropriately document their risk profiles, as a result of the company’s members being unable or unwilling to see their providers due to actions taken to mitigate the spread of COVID-19; increased costs that may result from higher utilization rates of medical facilities and services and other increases in associated hospital and pharmaceutical costs; and shifts in the company’s premium and medical claims cost trends to reflect the demographic impact of higher mortality during the COVID-19 pandemic. In addition, Humana is offering, and has been mandated by legislative and regulatory action (including the Families First Act and CARES Act) to provide, certain expanded benefit coverage to its members, such as waiving, or reimbursing, certain costs for COVID-19 testing, vaccinations and treatment. These measures taken by Humana, or governmental action, to respond to the ongoing impact of COVID-19 (including further expansion or modification of the services delivered to its members, the adoption or modification of regulatory requirements associated with those services and the costs and challenges associated with ensuring timely compliance with such requirements), and the potential for widespread testing, treatments and the distribution and administration of COVID-19 vaccines, could adversely impact the company’s profitability.

The spread and impact of COVID-19 and additional variants, or actions taken to mitigate this spread, could have material and adverse effects on Humana’s ability to operate effectively, including as a result of the complete or partial closure of facilities or labor shortages. Disruptions in public and private infrastructure, including communications, availability of in-person sales and marketing channels, financial services and supply chains, could materially and adversely disrupt the company’s normal business operations. A significant subset of the company's and the company's third party providers' employee population are in a remote work environment in an effort to mitigate the spread of COVID-19, which may exacerbate certain risks to Humana’s business, including an increased demand for information technology resources, increased risk of phishing and other cybersecurity attacks, and increased risk of unauthorized dissemination of sensitive personal, proprietary, or confidential information.

The continued COVID-19 pandemic has severely impacted global economic activity, including the businesses of some of Humana’s commercial customers, and caused significant volatility and negative pressure in the financial markets. In addition to disrupting Humana’s operations, these developments may adversely affect the timing of commercial customer premium collections and corresponding claim payments, the value of the company’s investment portfolio, or future liquidity needs.

•Form 10-K for the year ended December 31, 2021;

•Form 10-Q for the quarters ended March 31, 2022 and June 30, 2022; and

•Form 8-Ks filed during 2022.

•Annual reports to stockholders

•Securities and Exchange Commission filings

•Most recent investor conference presentations

•Quarterly earnings news releases and conference calls

•Calendar of events

•Corporate Governance information

Consolidated Balance Sheets

 

			For the nine months ended September 30,
			2022			2021						Dollar Change			Percentage Change
Cash flows from operating activities
Net income			$	2,820		$	2,947
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of KAH Hospice			(240)			—
Gain on Kindred at Home equity method investment			—			(1,129)
Loss on investment securities, net			136			18
Equity in net earnings			(1)			(69)
Impairment of property and equipment			144			—
Depreciation			555			468
Amortization			73			51
Stock-based compensation			173			132
Benefit from deferred income taxes			(33)			—
Changes in operating assets and liabilities, net of effect of businesses acquired and dispositions:
Receivables			11			(294)
Other assets			(465)			(476)
Benefits payable			948			573
Other liabilities			(195)			207
Unearned revenues			5,758			(84)
Other, net			30			14
Net cash provided by operating activities			9,714			2,358						$7,356			-312.0		%
Cash flows from investing activities
Acquisitions, net of cash and cash equivalents acquired			(293)			(3,959)
Purchases of property and equipment, net			(862)			(945)
Proceeds from sale of KAH Hospice, net			2,708			—
Purchases of investment securities			(4,740)			(6,573)
Maturities of investment securities			1,214			2,103
Proceeds from sales of investment securities			1,979			2,920
Net cash provided by (used in) investing activities			6			(6,454)						$6,460			100.1		%
Cash flows from financing activities
Receipts from contract deposits, net			3,787			605
Proceeds from issuance of senior notes, net			744			2,984
(Repayment) proceeds from the issuance of commercial paper, net			(660)			193
Proceeds from issuance of term loan			—			500
Repayment of term loan			(2,000)			(150)
Debt issue costs			(2)			(29)
Change in book overdraft			(89)			(80)
Common stock repurchases			(1,032)			(36)
Dividends paid			(291)			(263)
Other			(13)			3
Net cash provided by financing activities			444			3,727						($3,283)			-88.1		%
Increase (decrease) in cash and cash equivalents			10,164			(369)
Cash and cash equivalents at beginning of period			3,394			4,673
Cash and cash equivalents at end of period			$	13,558		$	4,304