Part I: Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (Unaudited) at September 30, 2024 and December 31, 2023 3
Condensed Consolidated Statements of Income (Unaudited) for the three and nine months ended September 30, 2024 and 2023 4
Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three and nine months ended September 30, 2024 and 2023 5
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) for the three and nine months ended September 30, 2024 and 2023 6
Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2024 and 2023 8
Notes to Condensed Consolidated Financial Statements (Unaudited) 10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 36
Item 3. Quantitative and Qualitative Disclosures about Market Risk 52
Item 4. Controls and Procedures 52
Part II: Other Information
Item 1. Legal Proceedings
For additional information regarding legal proceedings pending against us and certain other pending or threatened litigation, investigations or other matters, refer to “Legal Proceedings and Certain Regulatory Matters” in Note 13 to the unaudited Consolidated Financial Statements included in Part I, Item 1, "Financial Statements" of this Form 10-Q.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. “Risk factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, and the risk factor set forth below.
The number of our Medicare Advantage plans rated 4-star or higher are expected to significantly decline in 2025. We have filed a lawsuit seeking to set aside and vacate the 2025 Star Ratings of our Medicare Advantage plans, but there is no assurance that we will prevail in this lawsuit. If we are not successful the decline in our Star Ratings may negatively impact our 2026 quality bonus payments from CMS and may also significantly adversely affect our revenues, operating results, and cash flows.
Based on 2025 Medicare Advantage Star Ratings released by CMS in October 2024, approximately 25% of our Medicare Advantage members are currently enrolled in plans rated 4-star or higher for 2025, as compared to 94% based on our 2024 Star Ratings. We have filed a lawsuit that, among other things, seeks to set aside and vacate the 2025 Star Ratings for our Medicare Advantage plans, but there is no assurance that we will prevail in the lawsuit. If we are not successful the decline in our Star Ratings performance for 2025 may negatively impact our 2026 quality bonus payments from CMS and may also significantly adversely affect our revenues, operating results, and cash flows. Please see “Legal Proceedings and Certain Regulatory Matters” in Note 13 to the unaudited Condensed Consolidated Financial Statements included in Part I, Item 1, "Financial Statements" of this Form 10-Q for a description of the lawsuit.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The condensed consolidated financial statements of Humana Inc. in this document present the Company’s financial position, results of operations and cash flows, and should be read in conjunction with the following discussion and analysis. References to “we,” “us,” “our,” “Company,” and “Humana” mean Humana Inc. and its subsidiaries. This discussion includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in filings with the Securities and Exchange Commission, or SEC, in our press releases, investor presentations, and in oral statements made by or with the approval of one of our executive officers, the words or phrases like “believes,” “expects,” “anticipates,” “intends,” “likely will result,” “estimates,” “projects” or variations of such words and similar expressions are intended to identify such forward–looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions, including, among other things, information set forth in Item 1A. – Risk Factors in our 2023 Form 10-K, as modified by any changes to those risk factors included in this document and in other reports we filed subsequent to February 15, 2024, in each case incorporated by reference herein. In making these statements, we are not undertaking to address or update such forward-looking statements in future filings or communications regarding our business or results. In light of these risks, uncertainties and assumptions, the forward–looking events discussed in this document might not occur. There may also be other risks that we are unable to predict at this time. Any of these risks and uncertainties may cause actual results to differ materially from the results discussed in the forward-looking statements.
Executive Overview
General
Humana Inc., headquartered in Louisville, Kentucky, is committed to putting health first – for our teammates, our customers, and our company. Through our Humana insurance services, and our CenterWell health care services, we make it easier for the millions of people we serve to achieve their best health – delivering the care and service they need, when they need it. These efforts are leading to a better quality of life for people with Medicare, Medicaid, families, individuals, military service personnel, and communities at large.
Our industry relies on two key statistics to measure performance. The benefit ratio, which is computed by taking
total benefits expense as a percentage of premiums revenue, represents a statistic used to measure underwriting profitability. The operating cost ratio, which is computed by taking total operating costs, excluding depreciation and amortization, as a percentage of total revenue less investment income, represents a statistic used to measure administrative spending efficiency.
Employer Group Commercial Medical Products Business Exit
In February 2023, we announced our planned exit from the Employer Group Commercial Medical Products business, which includes all fully insured, self-funded and Federal Employee Health Benefit medical plans, as well as associated wellness and rewards programs. No other Humana health plan offerings are materially affected. Following a strategic review, we determined the Employer Group Commercial Medical Products business was no longer positioned to sustainably meet the needs of commercial members over the long term or support our long-term strategic plans. We anticipate the exit of this line of business to be finalized in the first half of 2025.
Value Creation Initiatives
Beginning in 2022, in order to create capacity to fund growth and investment in our Medicare Advantage business and further expansion of our healthcare services capabilities, we committed to drive additional value for the enterprise through cost saving, productivity initiatives, and value acceleration from previous investments. As a result of these initiatives, we recorded charges, primarily in asset impairments, of $55 million and $151 million for the three and nine months ended September 30, 2024, respectively, and $52 million for the three and nine months ended September 30, 2023 within operating costs in the condensed consolidated statements of income. These charges were recorded at the corporate level and not allocated to the segments. We expect to incur additional charges through the end of 2024.
Business Segments
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.
The results of each segment are measured by income (loss) from operations. Transactions between reportable segments primarily consist of sales of products and services rendered by our CenterWell segment, primarily pharmacy, 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.
Seasonality
One of the product offerings of our Insurance segment is Medicare stand-alone prescription drug plans, or PDP, under the Medicare Part D program. Our quarterly Insurance segment earnings and operating cash flows are impacted by the Medicare Part D benefit design and changes in the composition of our membership. The Medicare Part D benefit design results in coverage that varies as a member’s cumulative out-of-pocket costs pass through successive stages of a member’s plan period, which begins annually on January 1 for renewals. These plan designs generally result in us sharing a greater portion of the responsibility for total prescription drug costs in the early stages and less in the latter stages. As a result, the PDP benefit ratio generally decreases as the year progresses. In addition, the number of low income senior members as well as year-over-year changes in the mix of membership in our stand-alone PDP products affects the quarterly benefit ratio pattern.
The Insurance segment also experiences seasonality in the commercial fully-insured product offering. The effect on the Insurance segment benefit ratio is opposite of the Medicare stand-alone PDP impact, with the benefit ratio increasing as fully-insured members progress through their annual deductible and maximum out-of-pocket expenses. The Employer Group Commercial Fully-Insured business increased the Insurance segment benefit ratio by 10 basis points and increased the Insurance segment benefit ratio by 20 basis points for the three months ended September 30, 2024 and 2023, respectively. The Employer Group Commercial Fully-Insured business did not impact the Insurance segment benefit ratio for the nine months ended September 30, 2024 and 2023.
The Insurance segment also experiences seasonality in the operating cost ratio as a result of costs incurred in the second half of the year associated with the Medicare marketing season. The Insurance segment may experience adverse impacts in the operating cost ratio as a result of our Employer Group Commercial Medical Products exit. The Employer Group Commercial Fully-Insured business increased the Insurance segment operating cost ratio by 10 basis points for the three months ended September 30, 2024 and increased the Insurance segment operating cost ratio by 40 basis points for the three months ended September 30, 2023. The Employer Group Commercial Fully-Insured business did not impact the Insurance segment operating cost ratio for the nine months ended September 30, 2024 and increased the Insurance segment operating cost ratio by 40 basis points for the nine months ended September 30, 2023.
2024 Highlights
- Our strategy offers our members affordable health care combined with a positive consumer experience in growing markets. At the core of this strategy is our integrated care delivery model, which unites quality care, high member engagement, and sophisticated data analytics. Our approach to primary, physician-directed care for our members aims to provide quality care that is consistent, integrated, cost-effective, and member-focused, provided by both employed physicians and physicians with network contract arrangements. The model is designed to improve health outcomes and affordability for individuals and for the health system as a whole, while offering our members a simple, seamless healthcare experience. We believe this strategy is positioning us for long-term growth in both membership and earnings. We offer providers a continuum of opportunities to increase the integration of care and offer assistance to providers in transitioning from a fee-for-service to a value-based arrangement. These include performance bonuses, shared savings and shared risk relationships. At September 30, 2024, approximately 3,984,900 members, or 70%, of our individual Medicare Advantage members were in value-based relationships under our integrated care delivery model, as compared to 3,727,500 members, or 69%, at September 30, 2023.
- Net income attributable to Humana was $0.5 billion, or $3.98 per diluted common share, and $0.8 billion, or $6.71 per diluted common share, for the three months ended September 30, 2024 and 2023, respectively. Net income attributable to Humana was $1.9 billion, or $15.72 per diluted common share, and $3.0 billion, or $24.26 per diluted common share, for the nine months ended September 30, 2024, and 2023, respectively. These comparisons were significantly impacted by put/call valuation adjustments associated with non-consolidating minority interest investments, charges associated with value creation initiatives, transaction and integration costs and an accrual related to certain anticipated litigation expenses. The impact of these adjustments to our consolidated income before income taxes and equity in net earnings and diluted earnings per common share was as follows for the 2024 and 2023 quarter and period:
in millions
| Line item | For the three months ended September 30, 2024 | For the three months ended September 30, 2023 | For the nine months ended September 30, 2024 | For the nine months ended September 30, 2023 |
|---|---|---|---|---|
| Consolidated income before income taxes and equity in net earnings: | ||||
| Put/call valuation adjustments associated with our non consolidating minority interest investments | $(59) | $35 | $141 | $141 |
| Transaction and integration costs | — | — | — | (47) |
| Value creation initiatives | 55 | 52 | 151 | 52 |
| Accrual related to certain anticipated litigation expenses | — | 15 | — | 105 |
| Total | $(4) | $102 | $292 | $251 |
| For the three months ended September 30, | For the nine months ended September 30, | |||
| 2024 | 2023 | 2024 | 2023 | |
| Diluted earnings per common share: | ||||
| Put/call valuation adjustments associated with our non consolidating minority interest investments | $(0.49) | $0.28 | $1.17 | $1.13 |
| Transaction and integration costs | — | — | — | (0.38) |
| Value creation initiatives | 0.45 | 0.42 | 1.25 | 0.42 |
| Accrual related to certain anticipated litigation expenses | — | 0.12 | — | 0.84 |
| Net tax impact of transactions | 0.01 | (0.18) | (0.56) | (0.57) |
| Total | $(0.03) | $0.64 | $1.86 | $1.44 |
Regulatory Environment
We are and will continue to be regularly subject to new laws and regulations, changes to existing laws and regulations, and judicial determinations that impact the interpretation and applicability of those laws and regulations. The Health Care Reform Law, the Families First Act, the CARES Act, and the Inflation Reduction Act, and related regulations, are examples of laws which have enacted significant reforms to various aspects of the U.S. health insurance industry, including, among others, mandated coverage requirements, mandated benefits and guarantee issuance associated with insurance products, rebates to policyholders based on minimum benefit ratios, adjustments to Medicare Advantage premiums, the establishment of federally facilitated or state-based exchanges coupled with programs designed to spread risk among insurers, and the introduction of plan designs based on set actuarial values, and changes to the Part D prescription drug benefit design.
It is reasonably possible that these laws and regulations, as well as other current or future legislative, judicial or regulatory changes including restrictions on our ability to manage our provider network, manage and sell our products, or otherwise operate our business, or restrictions on profitability, including reviews by regulatory bodies that may compare our Medicare Advantage profitability to our non-Medicare Advantage business profitability, or compare the profitability of various products within our Medicare Advantage business, and require that they remain within certain ranges of each other, increases in member benefits or changes to member eligibility criteria without corresponding increases in premium payments to us, increases in regulation of our prescription drug benefit businesses, or changes to the Part D prescription drug benefit design (and uncertainty arising from the implementation of these changes) in the aggregate may have a material adverse effect on our results of operations (including restricting revenue, enrollment and premium growth in certain products and market segments, restricting our ability to expand into new markets, increasing our medical and operating costs, further lowering our Medicare payment rates and increasing our expenses associated with assessments); our financial position (including our ability to maintain the value of our goodwill); and our cash flows.
In March 2024, the United States Securities and Exchange Commission issued its final regulation on climate-related disclosures. The regulation requires certain disclosures in registration statements and annual reports, including financial impact and climate-related impact metrics. On April 4, 2024, the SEC exercised its discretion to stay the Final Rules pending the completion of judicial review. The new regulation is effective for us beginning with the annual report for the year ended December 31, 2025. We are evaluating the final rule and its impact on our disclosures.
We intend for the discussion of our financial condition and results of operations that follows to assist in the understanding of our financial statements and related changes in certain key items in those financial statements from year to year, including the primary factors that accounted for those changes. Transactions between reportable segments primarily consist of sales of products and services rendered by our CenterWell segment, primarily pharmacy, primary care, and home solutions, to our Insurance segment customers and are described in Note 14 to the condensed consolidated financial statements included in this report.
Comparison of Results of Operations for 2024 and 2023
The following discussion primarily deals with our results of operations for the three months ended September 30, 2024, or the 2024 quarter, the three months ended September 30, 2023, or the 2023 quarter, the nine months ended September 30, 2024, or the 2024 period, and the nine months ended September 30, 2023, or the 2023 period.
$ in millions, except per common share results
| Line item | Three months ended September 30, 2024 | Three months ended September 30, 2023 | Nine months ended September 30, 2024 | Nine months ended September 30, 2023 | Change · Three months ended September 30, 2024 vs 2023$ | Change · Three months ended September 30, 2024 vs 2023% | Change · Nine months ended September 30, 2024 vs 2023$ | Change · Nine months ended September 30, 2024 vs 2023% |
|---|---|---|---|---|---|---|---|---|
| Revenues: | ||||||||
| Insurance premiums | $27,951 | $25,099 | $84,354 | $76,144 | $2,852 | 11.4% | $8,210 | 10.8% |
| Services: | ||||||||
| Insurance | 226 | 257 | 715 | 730 | (31) | (12.1)% | (15) | (2.1)% |
| CenterWell | 877 | 759 | 2,550 | 2,263 | 118 | 15.5% | 287 | 12.7% |
| Total services revenue | 1,103 | 1,016 | 3,265 | 2,993 | 87 | 8.6% | 272 | 9.1% |
| Investment income | 343 | 308 | 929 | 775 | 35 | 11.4% | 154 | 19.9% |
| Total revenues | 29,397 | 26,423 | 88,548 | 79,912 | 2,974 | 11.3% | 8,636 | 10.8% |
| Operating expenses: | ||||||||
| Benefits | 25,120 | 21,745 | 75,283 | 65,612 | 3,375 | 15.5% | 9,671 | 14.7% |
| Operating costs | 3,339 | 3,271 | 9,529 | 9,361 | 68 | 2.1% | 168 | 1.8% |
| Depreciation and amortization | 210 | 201 | 631 | 578 | 9 | 4.5% | 53 | 9.2% |
| Total operating expenses | 28,669 | 25,217 | 85,443 | 75,551 | 3,452 | 13.7% | 9,892 | 13.1% |
| Income from operations | 728 | 1,206 | 3,105 | 4,361 | (478) | (39.6)% | (1,256) | (28.8)% |
| Interest expense | 169 | 114 | 496 | 347 | 55 | 48.2% | 149 | 42.9% |
| Other (income) expense, net | (92) | (6) | 26 | 40 | 86 | 1,433.3% | (14) | (35.0)% |
| Income before income taxes and equity in net earnings | 651 | 1,098 | 2,583 | 3,974 | (447) | (40.7)% | (1,391) | (35.0)% |
| Provision for income taxes | 155 | 256 | 629 | 911 | (101) | (39.5)% | (282) | (31.0)% |
| Equity in net losses | (16) | (12) | (57) | (39) | 4 | 33.3% | 18 | 46.2% |
| Net income | $480 | $830 | $1,897 | $3,024 | $(350) | (42.2)% | $(1,127) | (37.3)% |
| Diluted earnings per common share | $3.98 | $6.71 | $15.72 | $24.26 | $(2.73) | (40.7)% | $(8.54) | (35.2)% |
| Benefit ratio (a) | 89.9% | 86.6% | 89.2% | 86.2% | 3.3% | 3.0% | ||
| Operating cost ratio (b) | 11.5% | 12.5% | 10.9% | 11.8% | (1.0)% | (0.9)% | ||
| Effective tax rate | 24.4% | 23.5% | 24.9% | 23.1% | 0.9% | 1.8% |
(a)Represents benefits expense as a percentage of premiums revenue.
(b)Represents operating costs as a percentage of total revenues less investment income.
Premiums Revenue
Consolidated premiums revenue increased $2.9 billion, or 11.4%, from $25.1 billion in the 2023 quarter to $28.0 billion in the 2024 quarter and increased $8.2 billion, or 10.8%, from $76.1 billion in the 2023 period to $84.4
billion in the 2024 period primarily due to higher per member Medicare premiums as well as Medicare Advantage and state-based contracts membership growth. These factors were partially offset by the continued decline in our group commercial medical and stand-alone PDP membership.
Services Revenue
Consolidated services revenue increased $87 million, or 8.6%, from $1.0 billion in the 2023 quarter to $1.1 billion in the 2024 quarter and increased $272 million, or 9.1%, from $3.0 billion in the 2023 period to $3.3 billion in the 2024 period primarily due to higher revenues associated with growth in the primary care business, partially offset by the impact of the v28 risk model revision.
Investment Income
Investment income increased $35 million, or 11.4%, from $308 million in the 2023 quarter to $343 million in the 2024 quarter and increased $154 million, or 19.9%, from $775 million in the 2023 period to $929 million in the 2024 period primarily due to increase in interest income on our debt securities.
Benefit Expense
Consolidated benefits expense increased $3.4 billion, or 15.5%, from $21.7 billion in the 2023 quarter to $25.1 billion in the 2024 quarter and increased $9.7 billion, or 14.7%, from $65.6 billion in the 2023 period to $75.3 billion in the 2024 period. The consolidated benefit ratio increased 330 basis points from 86.6% for the 2023 quarter to 89.9% for the 2024 quarter and increased 300 basis points from 86.2% for the 2023 period to 89.2% for the 2024 period primarily due to the continued impact of elevated Medicare Advantage and state-based contracts medical cost trends in the 2024 quarter and period. The elevated medical cost trend was partially offset by the impact of the pricing and benefit design of our 2024 Medicare Advantage products, which included a reduction in member benefits in response to the net impact of the 2024 final rate notice and the initial emergence of increased medical cost trends in 2023. Further, the year-over-year comparisons continue to reflect a shift in line of business mix, with growth in Medicare Advantage and state-based contracts and other membership, which can carry a higher benefit ratio.
Consolidated benefits expense included $24 million of favorable prior-period medical claims reserve development in the 2024 quarter and $4 million of favorable prior-period medical claims development in the 2023 quarter. Consolidated benefits expense included $693 million of favorable prior-period medical claims reserve development in the 2024 period and $758 million of favorable prior-period medical claims reserve development in the 2023 period. Prior-period medical claims reserve development decreased the consolidated benefit ratio by approximately 10 basis points in the 2024 quarter and did not impact the consolidated benefit ratio in the 2023 quarter. Prior-period medical claims reserve development decreased the consolidated benefit ratio by approximately 80 basis points in the 2024 period and decreased the consolidated benefit ratio by approximately 100 basis points in the 2023 period.
Operating Costs
Our segments incur both direct and shared indirect operating costs. We allocate the indirect costs shared by the segments primarily as a function of revenues. As a result, the profitability of each segment is interdependent.
Consolidated operating costs increased $68 million, or 2.1%, from $3.3 billion in the 2023 quarter to $3.3 billion in the 2024 quarter and increased $168 million, or 1.8%, from $9.4 billion in the 2023 period to $9.5 billion in the 2024 period. The consolidated operating cost ratio decreased 100 basis points from 12.5% for the 2023 quarter to 11.5% for the 2024 quarter and decreased 90 basis points from 11.8% for the 2023 period to 10.9% for the 2024 period primarily due to scale efficiencies associated with growth in our Medicare Advantage membership, administrative cost efficiencies resulting from our value creation initiatives, lower impact of commission expense for brokers in 2024 compared to 2023 as a result of significant individual Medicare Advantage membership growth in 2023, and the impact of the accrued charge related to certain anticipated litigation expenses included in the 2023
quarter and period results. These factors were partially offset by the impact from charges related to value creation initiatives in the 2024 quarter and period.
Depreciation and Amortization
Depreciation and amortization increased $9 million, or 4.5%, from $201 million in the 2023 quarter to $210 million in the 2024 quarter and increased $53 million, or 9.2%, from $578 million in the 2023 period to $631 million in the 2024 period primarily due to capital expenditures.
Interest Expense
Interest expense increased $55 million, or 48.2%, from $114 million in the 2023 quarter to $169 million in the 2024 quarter and increased $149 million, or 42.9%, from $347 million in the 2023 period to $496 million in the 2024 period primarily due to increase in interest rates and higher average debt balances.
Income Taxes
The effective income tax rate was 24.4% and 23.5% for the three months ended September 30, 2024, and 2023, respectively, and 24.9% and 23.1% for the nine months ended September 30, 2024 and 2023, respectively. The year-over-year increase in the effective income tax rate is primarily due to a change in the mix of current year earnings between our Insurance segment and our CenterWell health services segment, as our CenterWell health services segment is subject to a higher effective tax rate than our Insurance segment. In addition, the prior year income tax rate was favorably impacted by the recognition of a non-taxable gain.
Insurance Segment
| Line item | September 30, 2024 | September 30, 2023 | ChangeMembers | Change% |
|---|---|---|---|---|
| Membership: | ||||
| Individual Medicare Advantage | 5,659,200 | 5,374,400 | 284,800 | 5.3% |
| Group Medicare Advantage | 546,700 | 510,300 | 36,400 | 7.1% |
| Medicare stand-alone PDP | 2,315,700 | 2,885,800 | (570,100) | (19.8)% |
| Total Medicare | 8,521,600 | 8,770,500 | (248,900) | (2.8)% |
| Medicare Supplement | 357,300 | 299,400 | 57,900 | 19.3% |
| Commercial fully-insured | 25,900 | 409,300 | (383,400) | (93.7)% |
| State-based contracts and other | 1,446,100 | 1,264,600 | 181,500 | 14.4% |
| Military services | 5,984,800 | 5,935,400 | 49,400 | 0.8% |
| Commercial ASO | 22,400 | 284,300 | (261,900) | (92.1)% |
| Total Medical Membership | 16,358,100 | 16,963,500 | (605,400) | (3.6)% |
| Total Specialty Membership (a) | 4,566,800 | 4,964,300 | (397,500) | (8.0)% |
(a) We provide a full range of insured specialty products including dental, vision, and life insurance benefits marketed to individuals and groups. Members included in these products may not be unique to each product since members have the ability to enroll in a medical product and one or more specialty products.
$ in millions
| Line item | Three months ended September 30, 2024 | Three months ended September 30, 2023 | Nine months ended September 30, 2024 | Nine months ended September 30, 2023 | Change · Three months ended September 30, 2024 vs 2023$ | Change · Three months ended September 30, 2024 vs 2023% | Change · Nine months ended September 30, 2024 vs 2023$ | Change · Nine months ended September 30, 2024 vs 2023% |
|---|---|---|---|---|---|---|---|---|
| Premiums and Services Revenue: | ||||||||
| Premiums: | ||||||||
| Individual Medicare Advantage | $21,856 | $19,637 | $66,519 | $59,195 | $2,219 | 11.3% | $7,324 | 12.4% |
| Group Medicare Advantage | 1,913 | 1,695 | 5,840 | 5,192 | 218 | 12.9% | 648 | 12.5% |
| Medicare stand-alone PDP | 721 | 493 | 2,409 | 1,677 | 228 | 46.2% | 732 | 43.6% |
| Total Medicare | 24,490 | 21,825 | 74,768 | 66,064 | 2,665 | 12.2% | 8,704 | 13.2% |
| Commercial fully-insured | 85 | 842 | 493 | 2,810 | (757) | (89.9)% | (2,317) | (82.5)% |
| Specialty benefits | 238 | 252 | 717 | 758 | (14) | (5.6)% | (41) | (5.4)% |
| Medicare Supplement | 217 | 185 | 620 | 546 | 32 | 17.3% | 74 | 13.6% |
| State-based contracts and other | 2,921 | 1,995 | 7,756 | 5,966 | 926 | 46.4% | 1,790 | 30.0% |
| Total premiums revenue | 27,951 | 25,099 | 84,354 | 76,144 | 2,852 | 11.4% | 8,210 | 10.8% |
| Commercial ASO | 12 | 55 | 44 | 190 | (43) | (78.2)% | (146) | (76.8)% |
| Military services and other | 214 | 202 | 671 | 540 | 12 | 5.9% | 131 | 24.3% |
| Services revenue | 226 | 257 | 715 | 730 | (31) | (12.1)% | (15) | (2.1)% |
| Total premiums and services revenue | $28,177 | $25,356 | $85,069 | $76,874 | $2,821 | 11.1% | $8,195 | 10.7% |
| Income from operations | $274 | $722 | $1,935 | $3,080 | $(448) | (62.0)% | $(1,145) | (37.2)% |
| Benefit ratio | 90.6% | 87.6% | 89.8% | 86.8% | 3.0% | 3.0% | ||
| Operating cost ratio | 9.2% | 10.4% | 8.6% | 9.9% | (1.2)% | (1.3)% |
Income from operations
Insurance segment income from operations decreased $0.4 billion, or 62.0%, from $0.7 billion in the 2023 quarter to $0.3 billion in the 2024 quarter and decreased $1.1 billion, or 37.2%, from $3.1 billion in the 2023 period to $1.9 billion in the 2024 period primarily due to the same factors impacting the segment's higher benefit ratio partially offset by the lower operating cost ratio as more fully described below.
Enrollment
Individual Medicare Advantage membership increased 284,800 members, or 5.3%, from September 30, 2023 to September 30, 2024 primarily due to membership additions associated with the previous Annual Election Period, or AEP. Individual Medicare Advantage membership includes 939,600 D-SNP members as of September 30, 2024, a net increase of 71,600 D-SNP members, or 8.2%, from 868,000 D-SNP members as of September 30, 2023.
Group Medicare Advantage membership increased 36,400 members, or 7.1%, from September 30, 2023 to September 30, 2024 primarily due to growth in small and medium group accounts.
Medicare stand-alone PDP membership decreased 570,100 members, or 19.8%, from September 30, 2023 to September 30, 2024 primarily due to continued intensified competition for Medicare stand-alone PDP offerings.
State-based contracts and other membership increased 181,500 members, or 14.4%, from September 30, 2023 to September 30, 2024 primarily reflecting the impact of membership additions associated with the implementation of new contracts partially offset with membership loss as a result of the public health of emergency unwind.
Commercial fully-insured medical membership decreased 383,400 members, or 93.7%, from September 30, 2023 to September 30, 2024 and commercial ASO medical membership decreased 261,900 members, or 92.1%, from September 30, 2023 to September 30, 2024. These decreases reflect our planned exit of the Employer Group Commercial Medical Products business, which includes all fully insured, self-funded and Federal Employee Health Benefit medical plans, as well as associated wellness and rewards programs. We anticipate the exit of this line of business to be finalized in the first half of 2025.
Specialty membership decreased 397,500 members, or 8.0%, from September 30, 2023 to September 30, 2024 primarily due to non-renewal of dental and vision plans as a result of exit from the Employer Group Commercial Medical Products business partially offset by growth in dental and vision plans as a result of Medicare Advantage enrollment.
Premiums Revenue
Insurance segment premiums revenue increased $2.9 billion, or 11.4%, from $25.1 billion in the 2023 quarter to $28.0 billion in the 2024 quarter and increased $8.2 billion, or 10.8%, from $76.1 billion in the 2023 period to $84.4 billion in the 2024 period primarily due to higher per member Medicare premiums as well as Medicare Advantage and state-based contracts membership growth. These factors were partially offset by the continued decline in our group commercial medical and stand-alone PDP membership.
Services Revenue
Insurance segment services revenue decreased $31 million, or 12.1%, from $257 million in the 2023 quarter to $226 million in the 2024 quarter and decreased $15 million, or 2.1%, from $730 million in the 2023 period to $715 million in the 2024 period.
Benefits Expense
The Insurance segment benefit ratio increased 300 basis points from 87.6% for the 2023 quarter to 90.6% for the 2024 quarter and increased 300 basis points from 86.8% for the 2023 period to 89.8% for the 2024 period primarily due to the continued impact of elevated Medicare Advantage and state-based contracts medical cost trends in the 2024 quarter and period. The elevated medical cost trend was partially offset by the impact of the pricing and benefit design of our 2024 Medicare Advantage products, which included a reduction in member benefits in response to the net impact of the 2024 final rate notice and the initial emergence of increased medical cost trends in 2023. Further, the year-over-year comparisons continue to reflect a shift in line of business mix, with growth in Medicare Advantage and state-based contracts and other membership, which can carry a higher benefit ratio.
Operating Costs
The Insurance segment operating cost ratio decreased 120 basis points from 10.4% for the 2023 quarter to 9.2% for the 2024 quarter and decreased 130 basis points from 9.9% for the 2023 period to 8.6% for the 2024 period primarily due to scale efficiencies associated with growth in our individual Medicare Advantage membership, administrative cost efficiencies resulting from our value creation initiatives, lower impact of commission expense for brokers in 2024 compared to 2023 as a result of significant individual Medicare Advantage membership growth in 2023, and the impact of the accrued charge related to certain anticipated litigation expenses included in the 2023 quarter and period results.
CenterWell Segment
$ in millions
| Line item | Three months ended September 30, 2024 | Three months ended September 30, 2023 | Nine months ended September 30, 2024 | Nine months ended September 30, 2023 | Change · Three months ended September 30, 2024 vs 2023$ | Change · Three months ended September 30, 2024 vs 2023% | Change · Nine months ended September 30, 2024 vs 2023$ | Change · Nine months ended September 30, 2024 vs 2023% |
|---|---|---|---|---|---|---|---|---|
| Revenues: | ||||||||
| Services: | ||||||||
| Home solutions | $326 | $342 | $996 | $997 | $(16) | (4.7)% | $(1) | (0.1)% |
| Pharmacy solutions | 232 | 203 | 672 | 661 | 29 | 14.3% | 11 | 1.7% |
| Primary care | 319 | 214 | 882 | 605 | 105 | 49.1% | 277 | 45.8% |
| Total services revenue | 877 | 759 | 2,550 | 2,263 | 118 | 15.5% | 287 | 12.7% |
| Intersegment revenues: | ||||||||
| Home solutions | 525 | 453 | 1,509 | 1,088 | 72 | 15.9% | 421 | 38.7% |
| Pharmacy solutions | 2,701 | 2,594 | 7,963 | 7,848 | 107 | 4.1% | 115 | 1.5% |
| Primary care | 938 | 854 | 2,784 | 2,496 | 84 | 9.8% | 288 | 11.5% |
| Total intersegment revenues | 4,164 | 3,901 | 12,256 | 11,432 | 263 | 6.7% | 824 | 7.2% |
| Total services and intersegment revenues | $5,041 | $4,660 | $14,806 | $13,695 | $381 | 8.2% | $1,111 | 8.1% |
| Income from operations | $382 | $400 | $1,002 | $1,017 | $(18) | (4.5)% | $(15) | (1.5)% |
| Operating cost ratio | 91.3% | 90.3% | 92.1% | 91.5% | 1.0% | 0.6% |
Income from operations
CenterWell income from operations decreased $18 million, or 4.5%, from $400 million in the 2023 quarter to $382 million in the 2024 quarter and decreased $0.02 billion, or 1.5%, from $1.02 billion in the 2023 period to $1.00 billion in the 2024 period primarily due to the same factors impacting the segment's operating cost ratio as more fully described below.
Services Revenue
CenterWell services revenue increased $118 million, or 15.5%, from $759 million in the 2023 quarter to $877 million in the 2024 quarter and increased $0.3 billion, or 12.7%, from $2.3 billion in the 2023 period to $2.6 billion in the 2024 period primarily due to higher revenues associated with growth in the primary care business, partially offset by the impact of the v28 risk model revision.
Intersegment Revenue
CenterWell intersegment revenues increased $0.3 billion, or 6.7%, from $3.9 billion in the 2023 quarter to $4.2 billion in the 2024 quarter and increased $0.8 billion, or 7.2%, from $11.4 billion in the 2023 period to $12.3 billion in the 2024 period primarily due to greater intersegment revenues associated with the home solutions business in the 2024 quarter and period as compared to the 2023 quarter and period as a result of the expansion of the value-based home care model, higher revenues associated with growth in the primary care business, partially offset by the impact of the v28 risk model revision, as well as an increase in pharmacy solutions revenues resulting from growth in the specialty pharmacy business, driven by increased penetration of Humana health plan members and payor agnostic consumers.
Operating Costs
The CenterWell segment operating cost ratio increased 100 basis points from 90.3% for the 2023 quarter to 91.3% for the 2024 quarter and increased 60 basis points from 91.5% for the 2023 period to 92.1% for the 2024 period primarily due to the unfavorable impact of the v28 risk model revision to the primary care business partially offset by administrative cost efficiencies resulting from our value creation initiatives and positive prior-period medical claims reserve development within the Primary Care Organization.
Liquidity
Historically, our primary sources of cash have included receipts of premiums, services revenue, and investment and other income, as well as proceeds from the sale or maturity of our investment securities, and borrowings. Our primary uses of cash historically have included disbursements for claims payments, operating costs, interest on borrowings, taxes, purchases of investment securities, acquisitions, capital expenditures, repayments on borrowings, dividends, and share repurchases. As premiums generally are collected in advance of claim payments by a period of up to several months, our business normally should produce positive cash flows during periods of increasing premiums and enrollment. Conversely, cash flows would be negatively impacted during periods of decreasing premiums and enrollment. From period to period, our cash flows may also be affected by the timing of working capital items including premiums receivable, benefits payable, and other receivables and payables. Our cash flows are impacted by the timing of payments to and receipts from CMS associated with Medicare Part D subsidies for which we do not assume risk. The use of cash flows may be limited by regulatory requirements of state departments of insurance (or comparable state regulators) which require, among other items, that our regulated subsidiaries maintain minimum levels of capital and seek approval before paying dividends from the subsidiaries to the parent. Our use of cash flows derived from our non-insurance subsidiaries, such as in our CenterWell segment, is generally not restricted by state departments of insurance (or comparable state regulators).
For additional information regarding our liquidity risk, refer to Part I, Item 1A, "Risk Factors" in our 2023 Form 10-K and Part II, Item 1A, "Risk Factors" of this Form 10-Q.
Cash and cash equivalents increased to approximately $5.1 billion at September 30, 2024 from $4.7 billion at December 31, 2023. The change in cash and cash equivalents for the nine months ended September 30, 2024 and 2023 is summarized as follows:
in millions
| Line item | Nine Months Ended2024 | Nine Months Ended2023 |
|---|---|---|
| Net cash provided by operating activities | $3,494 | $11,115 |
| Net cash used in investing activities | (2,889) | (2,610) |
| Net cash provided by financing activities | (183) | 1,582 |
| Increase in cash and cash equivalents | $422 | $10,087 |
Cash Flow from Operating Activities
Cash flows provided by operations of $3.5 billion in the 2024 period decreased $7.6 billion from cash flows provided by operations of $11.1 billion in the 2023 period. Our operating cash flows for the 2023 period were significantly impacted by the early receipt of the Medicare premium remittance of $7.1 billion in September 2023 because the payment date for October 2023 fell on a weekend. Generally, when the first day of a month falls on a weekend or holiday, with the exception of January 1 (New Year's Day), we receive this payment at the end of the previous month. This also resulted in an increase to unearned revenues in our condensed consolidated balance sheet at September 30, 2023. The 2024 period does not include an early receipt of the Medicare premium remittance. Our operating cash flows for the 2024 period also reflect lower earnings compared to the 2023 period, partially offset by the favorable impact of working capital items in the 2024 period.
The most significant drivers of changes in our working capital are typically the timing of payments of benefits expense and receipts for premiums. Benefits expense includes claim payments, capitation payments, pharmacy costs
net of rebates, allocations of certain centralized expenses and various other costs incurred to provide health insurance coverage to members, as well as estimates of future payments to hospitals and others for medical care and other supplemental benefits provided on or prior to the balance sheet date. For additional information regarding our benefits payable and benefits expense recognition, refer to Note 2 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" in our 2023 Form 10-K.
The detail of total net receivables at September 30, 2024 and December 31, 2023 and reconciliation to cash flow for the nine months ended September 30, 2024 and 2023 was as follows:
| September 30, 2024 | December 31, 2023 | 2024 Period Change | 2023 Period Change | |
| (in millions) | ||||
| Medicare | $1,289 | $1,426 | $(137) | $33 |
| Commercial and other | 753 | 549 | 204 | 96 |
| Military services | 195 | 148 | 47 | 24 |
| Allowances | (93) | (88) | (5) | (3) |
| Total net receivables | $2,144 | $2,035 | $109 | $150 |
| Reconciliation to cash flow statement: | ||||
| Receivables acquired | — | (24) | ||
| Change in receivables per cash flow statement | $109 | $126 |
The changes in Medicare receivables for both the 2024 period and the 2023 period reflect individual Medicare Advantage membership growth and the typical pattern caused by the timing of accruals and related collections associated with the CMS risk-adjustment model. Significant collections occur with the mid-year and final settlements with CMS in the second and third quarter.
Cash Flow from Investing Activities
During the 2024 period and 2023 period, we acquired various businesses for approximately $37 million and $223 million, net of cash and cash equivalents received, respectively.
Our ongoing capital expenditures primarily relate to our information technology initiatives, support of services in our primary care operations including medical and administrative facility improvements necessary for activities such as the provision of care to members, claims processing, billing and collections, wellness solutions, care coordination, regulatory compliance and customer service. Total net capital expenditures, excluding acquisitions, were $421 million in the 2024 period and $721 million in the 2023 period.
Net purchases of investment securities were $2.4 billion and $1.7 billion in the 2024 period and 2023 period, respectively.
Cash Flow from Financing Activities
Claim payments were higher than receipts from CMS associated with Medicare Part D claim subsidies for which we do not assume risk by $0.6 billion in the 2024 period and receipts from CMS associated with Medicare Part D claim subsidies for which we do not assume risk were higher than claim payments by $2.5 billion in the 2023 period.
Under our administrative services only TRICARE contracts, health care costs payments for which we do not assume risk exceeded reimbursements from the federal government by $75 million and $28 million in the 2024 and 2023 periods, respectively.
In March 2024, we issued $1.25 billion of 5.375% unsecured senior notes due April 15, 2031 and $1.00 billion of 5.750% unsecured senior notes due April 15, 2054. Our net proceeds, reduced for the underwriters' discounts and
commissions paid, were $2.23 billion. We used the net proceeds for general corporate purposes, which include the repayment of existing indebtedness, including borrowings under our commercial paper program.
In August 2023, we entered into a Rule 10b5-1 Repurchase Plan to repurchase a portion of our $750 million aggregate principal amount of 1.350% senior notes maturing in February 2027, our $600 million aggregate principal amount of 3.950% senior notes maturing in March 2027, our $750 million aggregate principal amount of 3.700% senior notes maturing in March 2029, and our $500 million aggregate principal amount of 3.125% senior notes maturing in August 2029 during the period beginning on August 7, 2023 and ending on November 15, 2023. For the nine months ended September 30, 2023, we repurchased $213 million principal amount of these senior notes for approximately $196 million cash.
In March 2023, we entered into a Rule 10b5-1 Repurchase Plan to repurchase a portion of our $1.5 billion aggregate principal amount of 0.650% senior notes maturing in August 2023 and our $600 million aggregate principal amount of 3.850% senior notes maturing in October 2024 during the period beginning on March 13, 2023 and ending on July 21, 2023. For the nine months ended September 30, 2023, we repurchased $361 million principal amount of these senior notes for approximately $358 million cash. In August 2023, we repaid the remaining $1.2 billion aggregate principal amount of our 0.650% senior notes due on their maturity date of August 3, 2023.
In March 2023, we issued $500 million of 5.700% unsecured senior notes due March 13, 2026 and $750 million of 5.500% unsecured senior notes due March 15, 2053. Our net proceeds, reduced for the underwriters' discounts and commissions paid, were $1.2 billion. We used the net proceeds to repay outstanding amounts under our $500 million Delayed Draw Term Loan. The remaining net proceeds will be used for general corporate purposes, which include the repayment of existing indebtedness, including borrowings under our commercial paper program
Net repayments from the issuance of commercial paper were $895 million in the 2024 period and net proceeds from the issuance of commercial paper were $1.6 billion in the 2023 period. The maximum principal amount outstanding at any one time during the 2024 period was $2.7 billion.
We repurchased common shares for $750 million and $980 million in the 2024 period and 2023 period, respectively, under share repurchase plans authorized by the Board of Directors. We also acquired common shares in connection with employee stock plans for $18 million and $31 million in the 2024 period and 2023 period, respectively.
We paid dividends to stockholders of $323 million and $320 million during the 2024 period and 2023 period, respectively.
Future Sources and Uses of Liquidity
Dividends
For additional information regarding our dividends to stockholders, refer to Note 10 to the unaudited Consolidated Financial Statements included in Part I, Item 1, "Financial Statements" of this Form 10-Q.
Stock Repurchases
For additional information regarding stock repurchases, refer to Note 10 to the unaudited Consolidated Financial Statements included in Part I, Item 1, "Financial Statements" of this Form 10-Q.
Debt
For additional information regarding debt, including our senior notes, term loans, revolving credit agreements, commercial paper program and other short-term borrowings, refer to Note 12 to the unaudited Consolidated Financial Statements included in Part I, Item 1, "Financial Statements" of this Form 10-Q.
Acquisitions
For additional information regarding acquisitions, refer to Note 3 to the unaudited Consolidated Financial Statements included in Part I, Item 1, "Financial Statements" of this Form 10-Q.
Liquidity Requirements
We believe our cash balances, investment securities, operating cash flows, and funds available under our credit agreement and our commercial paper program or from other public or private financing sources, taken together, provide adequate resources to fund ongoing operating and regulatory requirements, acquisitions, future expansion opportunities, and capital expenditures for at least the next twelve months, as well as to refinance or repay debt, and repurchase shares.
Adverse changes in our credit rating may increase the rate of interest we pay and may impact the amount of credit available to us in the future. Our investment-grade credit rating at September 30, 2024 was BBB according to Standard & Poor’s Rating Services, or S&P, and Baa2 according to Moody’s Investors Services, Inc., or Moody’s. A downgrade by S&P to BB+ or by Moody’s to Ba1 triggers an interest rate increase of 25 basis points with respect to $250 million of our senior notes. Successive one notch downgrades increase the interest rate an additional 25 basis points, or annual interest expense by $1 million, up to a maximum 100 basis points, or annual interest expense by $3 million.
In addition, we operate as a holding company in a highly regulated industry. Humana Inc., our parent company, is dependent upon dividends and administrative expense reimbursements from our subsidiaries, most of which are subject to regulatory restrictions. We continue to maintain significant levels of aggregate excess statutory capital and surplus in our state-regulated operating subsidiaries. Cash, cash equivalents, and short-term investments at the parent company were $609 million at September 30, 2024 compared to $510 million at December 31, 2023. This increase primarily reflects working capital changes, net proceeds from the issuance of senior notes and commercial paper, proceeds from the sale and maturities of investment securities, dividends from insurance subsidiaries and cash from certain non-insurance subsidiaries within our CenterWell segment partially offset by common stock repurchases, repayment of maturing senior notes, repayment of borrowings under the commercial paper program, purchases of investment securities, capital expenditures, capital contributions to certain subsidiaries, cash dividends to shareholders and acquisitions. Our use of operating cash derived from our non-insurance subsidiaries, such as our CenterWell segment, is generally not restricted by departments of insurance (or comparable state regulators).
Regulatory Requirements
Certain of our subsidiaries operate in states that regulate the payment of dividends, loans, or other cash transfers to Humana Inc., our parent company, and require minimum levels of equity as well as limit investments to approved securities. The amount of dividends that may be paid to Humana Inc. by these subsidiaries, without prior approval by state regulatory authorities, or ordinary dividends, is limited based on the entity’s level of statutory income and statutory capital and surplus. If the dividend, together with other dividends paid within the preceding twelve months, exceeds a specified statutory limit or is paid from sources other than earned surplus, it is generally considered an extraordinary dividend requiring prior regulatory approval. In most states, prior notification is provided before paying a dividend even if approval is not required.
Although minimum required levels of equity are largely based on premium volume, product mix, and the quality of assets held, minimum requirements vary significantly at the state level. Based on the most recently filed statutory financial statements as of June 30, 2024, our state regulated subsidiaries had aggregate statutory capital and surplus of approximately $13.5 billion, which exceeded aggregate minimum regulatory requirements of $10.6 billion. The amount of ordinary dividends paid to our parent company was approximately $0.5 billion during the nine months ended September 30, 2024. The amount, timing and mix of ordinary and extraordinary dividend payments will vary due to state regulatory requirements, the level of excess statutory capital and surplus and expected future surplus requirements related to, for example, premium volume and product mix.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Our earnings and financial position are exposed to financial market risk, including those resulting from changes in interest rates.
Interest rate risk also represents a market risk factor affecting our consolidated financial position due to our significant investment portfolio, consisting primarily of fixed maturity securities of investment-grade quality with a weighted average S&P credit rating of AA- at September 30, 2024. Our net unrealized position decreased $448 million from a net unrealized loss position of $1,294 million at December 31, 2023 to a net unrealized loss position of $846 million at September 30, 2024. At September 30, 2024, we had gross unrealized losses of $998 million on our investment portfolio primarily due to an increase in market interest rates since the time the securities were purchased. There were no material credit allowances during the nine months ended September 30, 2024. While we believe that these securities in an unrealized loss will recover in value over time and we currently do not have the intent to sell such securities, given the current market conditions and the significant judgments involved, there is a continuing risk that future declines in fair value may occur and material realized losses from sales or credit allowances may be recorded in future periods.
Duration is the time-weighted average of the present value of the bond portfolio’s cash flow. Duration is indicative of the relationship between changes in fair value and changes in interest rates, providing a general indication of the sensitivity of the fair values of our fixed maturity securities to changes in interest rates. However, actual fair values may differ significantly from estimates based on duration. The average duration of our investment portfolio, including cash and cash equivalents, was approximately 3.3 years as of September 30, 2024 and 3.0 years as of December 31, 2023. Based on the duration, including cash equivalents, a 1% increase in interest rates would generally decrease the fair value of our securities by approximately $803 million at September 30, 2024.
Item 4. Controls and Procedures
Under the supervision and with the participation of our Chief Executive Officer, or CEO, our Chief Financial Officer, or CFO, and our Principal Accounting Officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures for the quarter ended September 30, 2024.
Based on our evaluation, our CEO, CFO, and our Principal Accounting Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information the Company is required to disclose in its reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, including, without limitation, ensuring that such information is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
There have been no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Part II. Other Information
Item 5. Other Information
a.None.
b.None.
c.During the three months ended September 30, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.