HUMANA INC (Form: 10-Q, Received: 04/27/2022 14:24:20)

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The accompanying condensed consolidated financial statements are presented in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures normally required by accounting principles generally accepted in the United States of America, or GAAP, or those normally made in an Annual Report on Form 10-K. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. For further information, the reader of this Form 10-Q should refer to our Form 10-K for the year ended December 31, 2021, that was filed with the Securities and Exchange Commission, or the SEC, on February 17, 2022. We refer to the Form 10-K as the “2021 Form 10-K” in this document. References throughout this document to “we,” “us,” “our,” “Company,” and “Humana” mean Humana Inc. and its subsidiaries.

The preparation of our condensed consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The areas involving the most significant use of estimates are the estimation of benefits payable, the impact of risk adjustment provisions related to our Medicare contracts, the valuation and related impairment recognition of investment securities, and the valuation and related impairment recognition of long-lived assets, including goodwill and indefinite-lived intangible assets. These estimates are based on knowledge of current events and anticipated future events, and accordingly, actual results may ultimately differ materially from those estimates. Refer to Note 2 to the consolidated financial statements included in our 2021 Form 10-K for information on accounting policies that we consider in preparing our consolidated financial statements.

The emergence and spread of the novel coronavirus, or COVID-19, beginning in the first quarter of 2020 has impacted our business. During periods of increased incidences of COVID-19, a reduction in non-COVID-19 hospital admissions for non-essential care have resulted in lower overall healthcare system utilization. At the same time, COVID-19 treatment and testing costs increased utilization. During the first quarter of 2022, we experienced lower overall utilization of the healthcare system than anticipated, as the reduction in COVID-19 utilization following the increased incidence associated with the Omicron variant outpaced the increase in non-COVID-19 utilization. The significant disruption in utilization during 2020 also impacted our ability to implement clinical initiatives to manage health care costs and chronic conditions of our members, and appropriately document their risk profiles, and, as such, significantly affected our 2021 revenue under the risk adjustment payment model for Medicare Advantage plans. Finally, changes in utilization patterns and actions taken in 2021 as a result of the COVID-19 pandemic, including the suspension of certain financial recovery programs for a period of time and shifting the timing of claim payments and provider capitation surplus payments, impacted our claim reserve development and operating cash flows for 2021.

On April 21, 2022, we signed a definitive agreement with private investment firm Clayton, Dubilier & Rice, or CD&R, to divest a 60% interest in the Hospice and Personal Care divisions of Humana’s Kindred at Home subsidiary, or KAH Hospice, at an enterprise valuation of $3.4 billion. These divisions include patient-centered services for Hospice, Palliative, Community and Personal Care. Under the agreement, we will receive cash proceeds of approximately $2.8 billion, which includes a combination of debt repayments from KAH Hospice to Humana and equity proceeds from the 60% interest purchased by CD&R.

Our revenues include premium and service revenues. Service revenues include administrative service fees that are recorded based upon established per member per month rates and the number of members for the month and are recognized as services are provided for the month. Additionally, service revenues include net patient service revenues that are recorded based upon established billing rates, less allowances for contractual adjustments, and are recognized as services are provided. For more information about our revenues, refer to Note 2 to the consolidated financial statements included in our 2021 Form 10-K for information on accounting policies that we consider in preparing our consolidated financial statements. See Note 14 for disaggregation of revenue by segment and type.

In September 2018, the FASB issued new guidance related to accounting for long-duration contracts of insurers which revises key elements of the measurement models and disclosure requirements for long-duration contracts issued by insurers, including the amortization of deferred contract acquisition costs and the measurement of liabilities for future policy benefits using current, rather than locked-in, assumptions. The new guidance, limited to our Medicare supplement product which represent less than 1% of consolidated premiums and services revenue, is effective for us beginning with annual and interim periods in 2023 and, using a modified retrospective approach, is to be applied to contracts in force on the basis of their existing carrying value amounts at the beginning of the earliest period presented. We are currently evaluating the impact on our results of operations, financial position and cash flows.

On August 17, 2021, we acquired the remaining 60% interest in Kindred at Home, or KAH, the nation’s largest home health and hospice provider, from TPG Capital, or TPG, and Welsh, Carson, Anderson & Stowe, or WCAS, two private equity funds, or the Sponsors, for an enterprise value of $8.2 billion, which includes our equity value of $2.4 billion associated with our 40% minority ownership interest. We paid the approximate $5.8 billion transaction price (net of our existing equity stake) through a combination of debt financing, the assumption of existing KAH indebtedness and parent company cash.

During 2022 and 2021, we acquired various health and wellness related businesses which, individually or in the aggregate, have not had a material impact on our results of operations, financial condition, or cash flows. The results of operations and financial condition of these businesses acquired in 2022 and 2021 have been included in our condensed consolidated statements of income and condensed consolidated balance sheets from the respective acquisition dates. Acquisition-related costs recognized in 2022 and 2021 were not material to our results of operations. For asset acquisitions, the goodwill acquired is partially amortizable as deductible expenses for tax purposes. The pro forma financial information assuming the acquisitions had occurred as of the beginning of the calendar year prior to the year of acquisition, as well as the revenues and earnings generated during the year of acquisition, were not material for disclosure purposes.


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in millions)
March 31, 2022
U.S. Treasury and other U.S. government corporations and agencies:
U.S. Treasury and agency obligations	$	621	$	—	$	(33)	$	588
Mortgage-backed securities	3,326		2		(256)		3,072
Tax-exempt municipal securities	796		3		(18)		781
Mortgage-backed securities:
Residential	480		—		(30)		450
Commercial	1,570		1		(58)		1,513
Asset-backed securities	1,579		2		(18)		1,563
Corporate debt securities	5,668		12		(347)		5,333
Total debt securities	$	14,040	$	20	$	(760)	13,300
Common stock							184
Total investment securities							$	13,484

December 31, 2021
U.S. Treasury and other U.S. government corporations and agencies:
U.S. Treasury and agency obligations	$	611	$	1	$	(10)	$	602
Mortgage-backed securities	3,265		33		(69)		3,229
Tax-exempt municipal securities	810		33		(2)		841
Mortgage-backed securities:
Residential	373		—		(6)		367
Commercial	1,394		27		(11)		1,410
Asset-backed securities	1,346		6		(4)		1,348
Corporate debt securities	5,641		118		(59)		5,700
Total debt securities	$	13,440	$	218	$	(161)	13,497
Common stock							475
Total investment securities							$	13,972


	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(in millions)
March 31, 2022
U.S. Treasury and other U.S. government corporations and agencies:
U.S. Treasury and agency obligations	$	110	$	(5)	$	453	$	(28)	$	563	$	(33)
Mortgage-backed securities	1,112		(75)		1,915		(181)		3,027		(256)
Tax-exempt municipal securities	36		(3)		418		(15)		454		(18)
Mortgage-backed securities:
Residential	383		(22)		67		(8)		450		(30)
Commercial	390		(20)		1,060		(38)		1,450		(58)
Asset-backed securities	614		(12)		615		(6)		1,229		(18)
Corporate debt securities	1,879		(132)		2,413		(215)		4,292		(347)
Total debt securities	$	4,524	$	(269)	$	6,941	$	(491)	$	11,465	$	(760)

December 31, 2021
U.S. Treasury and other U.S. government corporations and agencies:
U.S. Treasury and agency obligations	$	201	$	(3)	$	355	$	(7)	$	556	$	(10)
Mortgage-backed securities	2,082		(49)		556		(20)		2,638		(69)
Tax-exempt municipal securities	68		(1)		34		(1)		102		(2)
Mortgage-backed securities:
Residential	358		(6)		8		—		366		(6)
Commercial	295		(4)		400		(7)		695		(11)
Asset-backed securities	530		(3)		425		(1)		955		(4)
Corporate debt securities	1,456		(28)		769		(31)		2,225		(59)
Total debt securities	$	4,990	$	(94)	$	2,547	$	(67)	$	7,537	$	(161)

Approximately 96% of our debt securities were investment-grade quality, with a weighted average credit rating of AA- by Standard & Poor's Rating Service, or S&P, at March 31, 2022. Most of the debt securities that were below investment-grade were rated BB, the higher end of the below investment-grade rating scale. Tax-exempt municipal securities were diversified among general obligation bonds of states and local municipalities in the United States as well as special revenue bonds issued by municipalities to finance specific public works projects such as utilities, water and sewer, transportation, or education. Our general obligation bonds are diversified across the

Our unrealized losses from all debt securities were generated from approximately 1,215 positions out of a total of approximately 1,760 positions at March 31, 2022. All issuers of debt securities we own that were trading at an unrealized loss at March 31, 2022 remain current on all contractual payments. After taking into account these and other factors previously described, we believe these unrealized losses primarily were caused by an increase in market interest rates in the current markets since the time these debt securities were purchased. At March 31, 2022, we did not intend to sell any debt securities with an unrealized loss position in accumulated other comprehensive income, and it is not likely that we will be required to sell these debt securities before recovery of their amortized cost basis. Additionally, we did not record any material credit allowances for debt securities that were in an unrealized loss position for the three months ended March 31, 2022 and 2021.


	Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
	(in millions)
March 31, 2022
Cash equivalents	$	4,482	$	4,482	$	—	$	—
Debt securities:
U.S. Treasury and other U.S. government corporations and agencies:
U.S. Treasury and agency obligations	588		—		588		—
Mortgage-backed securities	3,072		—		3,072		—
Tax-exempt municipal securities	781		—		781		—
Mortgage-backed securities:
Residential	450		—		450		—
Commercial	1,513		—		1,513		—
Asset-backed securities	1,563		—		1,563		—
Corporate debt securities	5,333		—		5,253		80
Total debt securities	13,300		—		13,220		80
Common stock	184		184		—		—
Total invested assets	$	17,966	$	4,666	$	13,220	$	80

December 31, 2021
Cash equivalents	$	3,322	$	3,322	$	—	$	—
Debt securities:
U.S. Treasury and other U.S. government corporations and agencies:
U.S. Treasury and agency obligations	602		—		602		—
Mortgage-backed securities	3,229		—		3,229		—
Tax-exempt municipal securities	841		—		841		—
Mortgage-backed securities:
Residential	367		—		367		—
Commercial	1,410		—		1,410		—
Asset-backed securities	1,348		—		1,348		—
Corporate debt securities	5,700		—		5,632		68
Total debt securities	13,497		—		13,429		68
Common stock	475		475		—		—
Total invested assets	$	17,294	$	3,797	$	13,429	$	68

Our debt is recorded at carrying value in our consolidated balance sheets. The carrying value of our senior notes debt outstanding, net of unamortized debt issuance costs, was $9.8 billion at March 31, 2022 and $9.0 billion at December 31, 2021. The fair value of our senior notes debt was $10.0 billion at March 31, 2022 and $10.0 billion at December 31, 2021. The fair value of our senior notes debt is determined based on Level 2 inputs, including quoted market prices for the same or similar debt, or if no quoted market prices are available, on the current prices estimated to be available to us for debt with similar terms and remaining maturities. Carrying value approximates fair value for our term loans and commercial paper borrowings. The term loan and commercial paper borrowings were $3.2 billion as of March 31, 2022 and $3.5 billion as of December 31, 2021.

Effective April 27, 2021, with the signing of the definitive agreement to acquire the remaining 60% interest of KAH, the respective put and call options were terminated. As such, the $63 million put and $440 million call fair values as of March 31, 2021 were subsequently reduced to zero, resulting in $377 million in "Other (income) expense, net" in our consolidated statements of income for the year ended December 31, 2021. The change in fair value of the put and call options included within other long-term liabilities and other long-term assets, respectively, at March 31, 2021 was reflected as "Other (income) expense, net" in our consolidated statements of income for the three months ended March 31, 2021.

The put and call options fair values associated with our Primary Care Organization strategic partnership with WCAS, which are exercisable at a fixed revenue exit multiple and provide a minimum return on WCAS' investment if exercised, are measured at fair value each reporting period. The put and call options fair values were $182 million and $14 million, respectively, at March 31, 2022. The put and call options fair values, derived from the Monte Carlo simulation, were $202 million and $13 million, respectively, at December 31, 2021.

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

Certain assets and liabilities are measured at fair value on a non-recurring basis subject to fair value adjustment only in certain circumstances. As disclosed in Note 3, “Acquisitions”, we completed our acquisition of KAH during the third quarter of 2021. The net assets acquired and resulting goodwill and other intangible assets were recorded at fair value primarily using Level 3 inputs. The net tangible assets including receivables and accrued liabilities were recorded at their carrying value which approximated their fair value due to their short term nature. The fair value of goodwill and other intangible assets were internally estimated based primarily on the income approach. The income approach estimates fair value based on the present value of cash flow that the assets could be expected to generate in the future. We developed internal estimates for expected cash flows in the present value calculation using inputs and significant assumptions that include historical revenues and earnings, revenue growth rates, the amount and timing of future cash flows, discount rates, contributory asset charges and future tax rates, among others. The excess purchase price over the fair value of assets and liabilities acquired is recorded as goodwill.

We cover prescription drug benefits in accordance with Medicare Part D under multiple contracts with the Centers for Medicare and Medicaid Services, or CMS, as described further in Note 2 to the consolidated financial statements included in our 2021 Form 10-K. The accompanying condensed consolidated balance sheets include the following amounts associated with Medicare Part D at March 31, 2022 and December 31, 2021. CMS subsidies/discounts in the table below include the reinsurance and low-income cost subsidies funded by CMS for which we assume no risk as well as brand name prescription drug discounts for Part D plan participants in the coverage gap funded by CMS and pharmaceutical manufacturers.


	Three months ended March 31,
		2022		2021
		(dollars in millions, except per common share results; number of shares in thousands)
Net income available for common stockholders		$	930	$	828
Weighted average outstanding shares of common stock used to compute basic earnings per common share		126,938		128,931
Dilutive effect of:
Employee stock options		40		52
Restricted stock		496		568
Shares used to compute diluted earnings per common share		127,474		129,551
Basic earnings per common share		$	7.32	$	6.42
Diluted earnings per common share		$	7.29	$	6.39
Number of antidilutive stock options and restricted stock excluded from computation		626		531

In February 2022, the Board declared a cash dividend of $0.7875 per share payable on April 29, 2022 to stockholders of record on March 31, 2022. In April 2022, the Board declared a cash dividend of $0.7875 per share payable on July 29, 2022 to stockholders of record on June 30, 2022. Declaration and payment of future quarterly dividends is at the discretion of our Board and may be adjusted as business needs or market conditions change.

Our Board of Directors may authorize the purchase of our common stock shares. Under the share repurchase authorization, shares may be purchased from time to time at prevailing prices in the open market, by block purchases, through plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, or in privately-negotiated transactions, including pursuant to accelerated share repurchase agreements with investment banks, subject to certain regulatory restrictions on volume, pricing, and timing.

On January 11, 2022, we entered into separate accelerated stock repurchase agreements, the January 2022 ASR Agreements, with Mizuho Markets Americas LLC, or Mizuho, and Wells Fargo Bank, or Wells Fargo, to repurchase $1 billion of our common stock as part of the $3 billion repurchase program authorized by the Board of Directors on February 18, 2021. On January 12, 2022, in accordance with the January 2022 ASR Agreements, we made a payment of $1 billion ($500 million to Mizuho and $500 million to Wells Fargo) and received an initial delivery of 2.2 million shares of our common stock (1.08 million shares each from Mizuho and Wells Fargo). In January 2022, we recorded the payments to Mizuho and Wells Fargo as a reduction to stockholders’ equity, consisting of an $850 million increase in treasury stock, which reflects the value of the initial 2.2 million shares received upon initial settlement, and a $150 million decrease in capital in excess of par value, which reflects the value of stock held back by Mizuho and Wells Fargo pending final settlement of the January 2022 ASR Agreements. Upon final settlement of the January 2022 ASR Agreements with Mizuho and Wells Fargo on March 29, 2022 and March 30, 2022, respectively, we received an additional 0.1 million shares and 0.1 million shares, respectively, as determined by the average daily volume weighted-averages share price of our common stock during the term of the agreement, less a discount, of $410.96 and $411.66, respectively, bringing the total shares received under the January 2022 ASR Agreements to 2.4 million. In addition, upon settlement we reclassified the $150 million value of stock initially held back by Mizuho and Wells Fargo from capital in excess of par value to treasury stock. Our remaining repurchase authorization was $2 billion as of April 26, 2022.


	March 31, 2022		December 31, 2021
	(in millions)
Short-term debt:
Commercial paper	$	691	$	955

Senior notes:
$600 million, 3.150% due December 1, 2022	600		599
$400 million, 2.900% due December 15, 2022	399		399
Total senior notes	999		998
Total short-term debt	$	1,690	$	1,953

Long-term debt:
Senior notes:
$1.5 billion, 0.650% due August 3, 2023	1,494		1,492
$600 million, 3.850% due October 1, 2024	598		598
$600 million, 4.500% due April 1, 2025	596		596
$750 million, 1.350% due February 3, 2027	742		742
$600 million, 3.950% due March 15, 2027	596		596
$750 million, 3.700% due March 23, 2029	741		—
$500 million, 3.125% due August 15, 2029	496		496
$500 million, 4.875% due April 1, 2030	495		495
$750 million, 2.150% due February 3, 2032	741		741
$250 million, 8.150% due June 15, 2038	261		261
$400 million, 4.625% due December 1, 2042	396		396
$750 million, 4.950% due October 1, 2044	740		740
$400 million, 4.800% due March 15, 2047	396		395
$500 million, 3.950% due August 15, 2049	493		493
Total senior notes	8,785		8,041
Term loans:
Term loan, due October 29, 2023	2,000		2,000
Delayed draw term loan, due May 28, 2024	500		500
Total term loans	2,500		2,500
Total long-term debt	$	11,285	$	10,541

Our senior notes, which are unsecured, may be redeemed at our option at any time at 100% of the principal amount plus accrued interest and a specified make-whole amount. The 8.15% senior notes are subject to an interest rate adjustment if the debt ratings assigned to the notes are downgraded (or subsequently upgraded). In addition, our senior notes contain a change of control provision that may require us to purchase the notes under certain circumstances.

In May 2021, we entered into a $500 million unsecured delayed draw term loan credit agreement. Under the term loan credit agreement, loans bear interest at either LIBOR plus a spread or the base rate plus a spread. The loans under the term loan credit agreement mature on the third anniversary of the funding date. The LIBOR spread, currently 125 basis points, varies depending on our credit ratings ranging from 100.0 to 162.5 basis points. The term loan credit agreement provides for the transition from LIBOR and does not require amendment in connection with such transition.

In August 2021, we borrowed $500 million under the delayed draw term loan agreement, which was used, in combination with other debt financing, to fund the approximate $5.8 billion transaction price of Kindred at Home. The term loan credit agreement contains customary restrictive covenants and a financial covenant regarding maximum debt to capitalization of 60%, as well as customary events of default. We are in compliance with this financial covenant, with actual debt to capitalization of 45.8% as measured in accordance with the term loan credit agreement as of March 31, 2022.

Loans under the October 2021 Term Loan Agreement bear interest at adjusted Term SOFR, as defined in the October 2021 Term Loan Agreement, or the base rate plus a spread. The applicable margin, currently 112.5 basis points, varies depending on our credit ratings ranging from 87.5 to 137.5 basis points. The loans under the October 2021 Term Loan Agreement will mature on October 29, 2023. The October 2021 Term Loan Agreement contains customary covenants, including a maximum debt to capitalization financial condition covenant regarding maximum debt to capitalization of 60%, as well as customary events of default. We are in compliance with this financial covenant, with actual debt to capitalization of 45.8% as measured in accordance with the term loan credit agreement as of March 31, 2022. We have other relationships, including financial advisory and banking, with some parties to the October 2021 Term Loan Agreement.

In June 2021, we entered into two separate revolving credit agreements: (i) a 5-year, $2.5 billion unsecured revolving credit agreement and (ii) a 364-day $1.5 billion unsecured revolving credit agreement. Under the revolving credit agreements, at our option, we can borrow on either a competitive advance basis or a revolving credit basis. The revolving credit portion bears interest at either LIBOR plus a spread or the base rate plus a spread. The competitive advance portion of any borrowings will bear interest at market rates prevailing at the time of borrowing on either a fixed rate or a floating rate based on LIBOR, at our option. The revolving credit agreements provide for the transition from LIBOR and do not require amendment in connection with such transition.

The LIBOR spread, currently 110.0 basis points under the 5-year revolving credit agreements and 115.0 basis points under the 364-day revolving credit agreement, varies depending on our credit ratings ranging from 91.0 to 140.0 basis points under the 5-year revolving credit agreement and from 93.0 to 145.0 basis points under the 364-day revolving credit agreement. We also pay an annual facility fee regardless of utilization. This facility fee, currently 15.0 basis points, under the 5-year revolving credit agreement and 10.0 basis points under the 364-day revolving agreement, varies depending on our credit ratings ranging from 9.0 to 22.5 basis points under the 5-year revolving credit agreement and from 7.0 to 17.5 basis points under the 364-day revolving credit agreement.

The terms of the revolving credit agreements include standard provisions related to conditions of borrowing which could limit our ability to borrow additional funds. In addition, the credit agreements contain customary restrictive covenants and a financial covenant regarding maximum debt to capitalization of 60%, as well as customary events of default. We are in compliance with this financial covenant, with actual debt to capitalization of 45.8% as measured in accordance with the revolving credit agreements as of March 31, 2022. Upon our agreement with one or more financial institutions, we may expand the aggregate commitments under the revolving credit agreements by up to $750 million in the aggregate, to a maximum of $4.75 billion, across the 5-year and 364-day revolving credit agreements.

At March 31, 2022, we had no borrowings and approximately $74 million of letters of credit outstanding under the revolving credit agreements, including those of KAH. Accordingly, as of March 31, 2022, we had $2.5 billion of remaining borrowing capacity under the 5-year revolving credit agreement and $1.5 billion of remaining borrowing capacity under the 364-day revolving credit agreement (which excludes the uncommitted $750 million of incremental loan facilities), none of which would be restricted by our financial covenant compliance requirement.

Under our commercial paper program we may issue short-term, unsecured commercial paper notes privately placed on a discount basis through certain broker dealers at any time. On February 10, 2022, we increased the size of our commercial paper program to permit the issuance of commercial paper notes in an aggregate principal amount not to exceed $4 billion compared to the prior amount not to exceed $2 billion. Amounts available under the program may be borrowed, repaid and re-borrowed from time to time. The net proceeds of issuances have been and are expected to be used for general corporate purposes. The maximum principal amount outstanding at any one time during the three months ended March 31, 2022 was $1.5 billion, with $691 million outstanding at March 31, 2022 compared to $955 million outstanding at December 31, 2021. The outstanding commercial paper at March 31, 2022 had a weighted average annual interest rate of 0.89%.

Our Medicare products, which accounted for approximately 82% of our total premiums and services revenue for the three months ended March 31, 2022, primarily consisted of products covered under the Medicare Advantage and Medicare Part D Prescription Drug Plan contracts with the federal government. These contracts are renewed generally for a calendar year term unless CMS notifies us of its decision not to renew by May 1 of the calendar year in which the contract would end, or we notify CMS of our decision not to renew by the first Monday in June of the calendar year in which the contract would end. All material contracts between Humana and CMS relating to our Medicare products have been renewed for 2022 and all of our product offerings have been approved.

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

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

In 2012, CMS released a “Notice of Final Payment Error Calculation Methodology for Part C Medicare Advantage Risk Adjustment Data Validation (RADV) Contract-Level Audits.” The payment error calculation methodology provided that, in calculating the economic impact of audit results for an MA contract, if any, the results of the RADV audit sample would be extrapolated to the entire MA contract after a comparison of the audit results to a similar audit of the government’s traditional fee-for-service Medicare program, or Medicare FFS. We refer to the process of accounting for errors in FFS claims as the "FFS Adjuster." This comparison of RADV audit results to the FFS error rate is necessary to determine the economic impact, if any, of RADV audit results because the government used the Medicare FFS program data set, including any attendant errors that are present in that data set, to estimate the costs of various health status conditions and to set the resulting adjustments to MA plans’ payment rates in order to establish actuarial equivalence in payment rates as required under the Medicare statute. CMS already makes other adjustments to payment rates based on a comparison of coding pattern differences between MA plans and Medicare FFS data (such as for frequency of coding for certain diagnoses in MA plan data versus the Medicare FFS program dataset).

Estimated audit settlements are recorded as a reduction of premiums revenue in our consolidated statements of income, based upon available information. We perform internal contract level audits based on the RADV audit methodology prescribed by CMS. Included in these internal contract level audits is an audit of our Private Fee-For Service business which we used to represent a proxy of the FFS Adjuster which has not yet been finalized. We based our accrual of estimated audit settlements for each contract year on the results of these internal contract level audits and update our estimates as each audit is completed. Estimates derived from these results were not material to our results of operations, financial position, or cash flows. We report the results of these internal contract level audits to CMS, including identified overpayments, if any.

On October 26, 2018, CMS issued a proposed rule and accompanying materials, which we refer to as the “Proposed Rule”, related to, among other things, the RADV audit methodology described above. If implemented, the Proposed Rule would use extrapolation in RADV audits applicable to payment year 2011 contract-level audits and all subsequent audits, without the application of a FFS Adjuster to audit findings. We believe that the Proposed Rule fails to address adequately the statutory requirement of actuarial equivalence, and have provided substantive comments to CMS on the Proposed Rule as part of the notice-and-comment rulemaking process. Whether, and to what extent, CMS finalizes the Proposed Rule, and any related regulatory, industry or company reactions, could have a material adverse effect on our results of operations, financial position, or cash flows.

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

At March 31, 2022, our military services business, which accounted for approximately 1% of our total premiums and services revenue for the three months ended March 31, 2022, primarily consisted of the TRICARE T2017 East Region contract. The T2017 East Region contract comprising 32 states and approximately 6 million TRICARE beneficiaries, under which delivery of health care services commenced on January 1, 2018. The T2017 East Region contract is a 5-year contract set to expire on December 31, 2022 and is subject to renewals on January 1 of each year during its term at the government's option.

The loss of any of the contracts above or significant changes in these programs as a result of legislative or regulatory action, including reductions in premium payments to us, regulatory restrictions on profitability, including reviews by regulatory bodies that may compare our Medicare Advantage profitability to our non-Medicare Advantage business profitability, or compare the profitability of various products within our Medicare Advantage business, and require that they remain within certain ranges of each other, or increases in member benefits or member eligibility criteria without corresponding increases in premium payments to us, may have a material adverse effect on our results of operations, financial position, and cash flows.

As previously disclosed, the Civil Division of the United States Department of Justice provided us with an information request in December 2014, concerning our Medicare Part C risk adjustment practices. The request relates to our oversight and submission of risk adjustment data generated by providers in our Medicare Advantage network, as well as to our business and compliance practices related to risk adjustment data generated by our providers and by us, including medical record reviews conducted as part of our data and payment accuracy compliance efforts, the use of health and well-being assessments, and our fraud detection efforts. We believe that this request for information is in connection with a wider review of Medicare Risk Adjustment generally that includes a number of Medicare Advantage plans, providers and vendors. We continue to cooperate with the Department of Justice. These matters are expected to result in additional qui tam litigation.

As previously disclosed, on January 19, 2016, an individual filed a qui tam suit captioned United States of America ex rel. Steven Scott v. Humana, Inc., in United States District Court, Central District of California, Western Division. The complaint alleges certain civil violations by us in connection with the actuarial equivalence of the plan benefits under Humana’s Basic PDP plan, a prescription drug plan offered by us under Medicare Part D. The action seeks damages and penalties on behalf of the United States under the False Claims Act. The court ordered the qui tam action unsealed on September 13, 2017, so that the relator could proceed, following notice from the U.S. Government that it was not intervening at that time. On January 29, 2018, the suit was transferred to the United States District Court, Western District of Kentucky, Louisville Division. We have substantially completed discovery with the relator who has pursued the matter on behalf of the united States following unsealing. On March 31, 2022, the Court denied the parties' Motions for Summary Judgement. We take seriously our obligations to comply with applicable CMS requirements and actuarial standards of practice, and continue to vigorously defend against these allegations.

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

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

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

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

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

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

We manage our business with three reportable segments: Retail, Group and Specialty, and Healthcare Services. The reportable segments 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 Retail segment consists of Medicare benefits, marketed to individuals or directly via group Medicare accounts. In addition, the Retail segment also includes 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, including Temporary Assistance for Needy Families, or TANF, dual eligible demonstration, and Long-Term Support Services benefits, which we refer to collectively as our state-based contracts. The Group and Specialty segment consists 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 products. In addition, our Group and Specialty segment includes our military services business, primarily our TRICARE T2017 East Region contract. The Healthcare Services segment includes pharmacy, provider, and home services, along with other services and capabilities to promote wellness and advance population health. The operations of the recently acquired full ownership of Kindred at Home, as well as the company's strategic partnership with WCAS to develop and operate senior-focused, payor-agnostic, primary care centers are also included in the Healthcare Services segment.

Our Healthcare Services intersegment revenues primarily relate to managing prescription drug coverage for members of our other segments through Humana Pharmacy Solutions®, or HPS, and includes the operations of Humana Pharmacy, Inc., our mail order pharmacy business. These revenues consist of the prescription price (ingredient cost plus dispensing fee), including the portion to be settled with the member (co-share) or with the government (subsidies), plus any associated administrative fees. Services revenues related to the distribution of

prescriptions by third party retail pharmacies in our networks are recognized when the claim is processed and product revenues from dispensing prescriptions from our mail order pharmacies are recorded when the prescription or product is shipped. Our pharmacy operations, which are responsible for designing pharmacy benefits, including defining member co-share responsibilities, determining formulary listings, contracting with retail pharmacies, confirming member eligibility, reviewing drug utilization, and processing claims, act as a principal in the arrangement on behalf of members in our other segments. As principal, our Healthcare Services segment reports revenues on a gross basis, including co-share amounts from members collected by third party retail pharmacies at the point of service.

In addition, our Healthcare Services intersegment revenues include revenues earned by certain owned providers derived from risk-based and non-risk-based managed care agreements with our health plans. Under risk based agreements, the provider receives a monthly capitated fee that varies depending on the demographics and health status of the member, for each member assigned to these owned providers by our health plans. The owned provider assumes the economic risk of funding the assigned members’ healthcare services. Under non risk-based agreements, our health plans retain the economic risk of funding the assigned members' healthcare services. Our Healthcare Services segment reports provider services revenues associated with risk-based agreements on a gross basis, whereby capitation fee revenue is recognized in the period in which the assigned members are entitled to receive healthcare services. Provider services revenues associated with non-risk-based agreements are presented net of associated healthcare costs.

We present our condensed consolidated results of operations from the perspective of the health plans. As a result, the cost of providing benefits to our members, whether provided via a third party provider or internally through a stand-alone subsidiary, is classified as benefits expense and excludes the portion of the cost for which the health plans do not bear responsibility, including member co-share amounts and government subsidies of $4.0 billion and $3.6 billion for the three months ended March 31, 2022 and 2021, respectively. In addition, depreciation and amortization expense associated with certain businesses in our Healthcare Services segment delivering benefits to our members, primarily associated with our provider services and pharmacy operations, are included with benefits expense. The amount of this expense was $30 million and $26 million for the three months ended March 31, 2022 and 2021, respectively.

Other than those described previously, the accounting policies of each segment are the same and are described in Note 2 to the consolidated financial statements included in our 2021 Form 10-K. Transactions between reportable segments primarily consist of sales of services rendered by our Healthcare Services segment, primarily pharmacy, provider, and home solutions services, to our Retail and Group and Specialty segment customers. Intersegment sales and expenses are recorded at fair value and eliminated in consolidation. Members served by our segments often use the same provider networks, enabling us in some instances to obtain more favorable contract terms with providers. Our segments also share indirect costs and assets. As a result, the profitability of each segment is interdependent. We allocate most operating expenses to our segments. Assets and certain corporate income and expenses are not allocated to the segments, including the portion of investment income not supporting segment operations, interest expense on corporate debt, and certain other corporate expenses. These items are managed at a corporate level. These corporate amounts are reported separately from our reportable segments and are included with intersegment eliminations in the tables presenting segment results below.



	Retail		Group and Specialty		Healthcare Services		Eliminations/ Corporate		Consolidated
Three months ended March 31, 2022	(in millions)
External revenues
Premiums:
Individual Medicare Advantage	$	17,052	$	—	$	—	$	—	$	17,052
Group Medicare Advantage	1,875		—		—		—		1,875
Medicare stand-alone PDP	639		—		—		—		639
Total Medicare	19,566		—		—		—		19,566
Fully-insured	182		972		—		—		1,154
Specialty	—		429		—		—		429
Medicaid and other	1,554		—		—		—		1,554
Total premiums	21,302		1,401		—		—		22,703
Services revenue:


Home solutions	—		—		726		—		726
Provider services	—		—		113		—		113
ASO and other	6		195		—		—		201
Pharmacy solutions	—		—		224		—		224
Total services revenue	6		195		1,063		—		1,264
Total external revenues	21,308		1,596		1,063		—		23,967
Intersegment revenues
Services	—		14		5,177		(5,191)		—
Products	—		—		2,446		(2,446)		—
Total intersegment revenues	—		14		7,623		(7,637)		—
Investment income	43		3		2		(45)		3
Total revenues	21,351		1,613		8,688		(7,682)		23,970
Operating expenses:
Benefits	18,750		1,046		—		(171)		19,625
Operating costs	1,694		413		8,185		(7,406)		2,886

Depreciation and amortization	123		22		53		(28)		170
Total operating expenses	20,567		1,481		8,238		(7,605)		22,681
Income (loss) from operations	784		132		450		(77)		1,289

Interest expense	—		—		—		90		90
Other income, net	—		—		—		(21)		(21)
Income before income taxes and equity in net earnings	784		132		450		(146)		1,220
Equity in net losses	—		—		(4)		—		(4)
Segment earnings	$	784	$	132	$	446	$	(146)	$	1,216
Less: noncontrolling interests	—		—		—		—		—
Segment earnings attributable to Humana	$	784	$	132	$	446	$	(146)	$	1,216



	Retail		Group and Specialty		Healthcare Services		Eliminations/ Corporate		Consolidated
Three months ended March 31, 2021	(in millions)
External Revenues
Premiums:
Individual Medicare Advantage	$	14,815	$	—	$	—	$	—	$	14,815
Group Medicare Advantage	1,755		—		—		—		1,755
Medicare stand-alone PDP	664		—		—		—		664
Total Medicare	17,234		—		—		—		17,234
Fully-insured	178		1,099		—		—		1,277
Specialty	—		434		—		—		434
Medicaid and other	1,179		—		—		—		1,179
Total premiums	18,591		1,533		—		—		20,124
Services revenue:


Home solutions	—		—		24		—		24
Provider services	—		—		91		—		91
ASO and other	5		190		—		—		195
Pharmacy solutions	—		—		156		—		156
Total services revenue	5		190		271		—		466
Total external revenues	18,596		1,723		271		—		20,590
Intersegment revenues
Services	—		10		4,774		(4,784)		—
Products	—		—		2,152		(2,152)		—
Total intersegment revenues	—		10		6,926		(6,936)		—
Investment income	52		4		1		21		78
Total revenues	18,648		1,737		7,198		(6,915)		20,668
Operating expenses:
Benefits	16,299		1,145		—		(148)		17,296
Operating costs	1,451		397		6,910		(6,751)		2,007

Depreciation and amortization	104		21		40		(23)		142
Total operating expenses	17,854		1,563		6,950		(6,922)		19,445
Income from operations	794		174		248		7		1,223

Interest expense	—		—		—		68		68
Other expense, net	—		—		—		115		115
Income (loss) before income taxes and equity in net earnings	794		174		248		(176)		1,040
Equity in net earnings	—		—		21		—		21
Segment earnings (loss)	$	794	$	174	$


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


Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, $0.16 2/3 par value	HUM	New York Stock Exchange


Class of Common Stock			Outstanding at March 31, 2022
$0.16 2/3 par value			126,493,402 shares


		Page
Part I: Financial Information
Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets at March 31, 2022 and December 31, 2021	3

	Condensed Consolidated Statements of Income for the three months ended March 31, 2022 and 2021	4

	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2022 and 2021	5

	Condensed Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2022 and 2021	6

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021	7

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	49

Item 4.	Controls and Procedures	49

Part II: Other Information

Item 1.	Legal Proceedings	50

Item 1A.	Risk Factors	50

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50

Item 3.	Defaults Upon Senior Securities	51

Item 4.	Mine Safety Disclosures	51

Item 5.	Other Information	51

Item 6.	Exhibits	52

	Signatures	53

	Certifications


	March 31, 2022		December 31, 2021
	(in millions, except share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	4,864	$	3,394
Investment securities	13,092		13,192
Receivables, less allowance for doubtful accounts of $69 in 2022 and $83 in 2021	3,174		1,814
Other current assets	5,710		6,493
Total current assets	26,840		24,893
Property and equipment, net	3,189		3,073
Long-term investment securities	392		780
Equity method investments	138		141
Goodwill	11,139		11,092
Other long-term assets	4,610		4,379
Total assets	$	46,308	$	44,358
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Benefits payable	$	9,378	$	8,289
Trade accounts payable and accrued expenses	5,859		4,509
Book overdraft	317		326
Unearned revenues	288		254
Short-term debt	1,690		1,953
Total current liabilities	17,532		15,331
Long-term debt	11,285		10,541
Other long-term liabilities	2,149		2,383
Total liabilities	30,966		28,255

Stockholders’ equity:
Preferred stock, $1 par; 10,000,000 shares authorized; none issued	—		—
Common stock, $0.16 2/3 par; 300,000,000 shares authorized; 198,648,742 shares issued at March 31, 2022 and December 31, 2021	33		33
Capital in excess of par value	3,103		3,082
Retained earnings	23,915		23,086
Accumulated other comprehensive (loss) income	(572)		42
Treasury stock, at cost, 72,155,340 shares at March 31, 2022 and 69,846,758 shares at December 31, 2021	(11,160)		(10,163)
Noncontrolling interests	23		23
Total stockholders’ equity	15,342		16,103
Total liabilities and stockholders’ equity	$	46,308	$	44,358


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


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


	Common Stock			Capital In Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (loss)		Treasury Stock		Noncontrolling Interests		Total Stockholders’ Equity
	Issued Shares	Amount
	(dollars in millions, share amounts in thousands)
Three months ended March 31, 2022
Balances, December 31, 2021	198,649	$	33	$	3,082	$	23,086	$	42	$	(10,163)	$	23	$	16,103
Net income						930						—		930

Other comprehensive loss								(614)						(614)
Common stock repurchases	—			—						(1,024)				(1,024)
Dividends and dividend equivalents				—		(101)								(101)
Stock-based compensation				43										43
Restricted stock unit vesting	—	—		(24)						24				—
Stock option exercises	—	—		2						3				5
Balances, March 31, 2022	198,649	$	33	$	3,103	$	23,915	$	(572)	$	(11,160)	$	23	$	15,342

Three months ended March 31, 2021
Balances, December 31, 2020	198,649	$	33	$	2,705	$	20,517	$	391	$	(9,918)	$	—	$	13,728
Net income						828						—		828

Other comprehensive loss								(283)						(283)
Common stock repurchases	—			—						(30)				(30)
Dividends and dividend equivalents				—		(93)								(93)
Stock-based compensation				39										39
Restricted stock unit vesting	—	—		(33)						33				—
Stock option exercises	—	—		1						—				1
Balances, March 31, 2021	198,649	$	33	$	2,712	$	21,252	$	108	$	(9,915)	$	—	$	14,190


	For the three months ended March 31,
	2022		2021
	(in millions)
Cash flows from operating activities
Net income	$	930	$	828
Adjustments to reconcile net income to net cash provided by operating activities:

Losses (gains) on investment securities, net	76		(10)

Equity in net losses (earnings)	4		(21)
Stock-based compensation	43		39
Depreciation	181		153
Amortization	24		15

Changes in operating assets and liabilities, net of effect of businesses acquired:
Receivables	(1,360)		(1,049)
Other assets	(628)		(1,095)
Benefits payable	1,089		466
Other liabilities	(103)		(151)
Unearned revenues	34		7
Other	12		(19)
Net cash provided by (used in) operating activities	302		(837)
Cash flows from investing activities

Acquisitions, net of cash and cash equivalents acquired	(74)		(123)
Purchases of property and equipment, net	(295)		(290)
Purchases of investment securities	(2,161)		(3,720)
Proceeds from maturities of investment securities	588		692
Proceeds from sales of investment securities	1,294		1,953
Net cash used in investing activities	(648)		(1,488)
Cash flows from financing activities
Receipts from contract deposits, net	2,475		1,015
Proceeds from issuance of senior notes, net	744		—
(Repayments) proceeds from issuance of commercial paper, net	(265)		603


Debt issue costs	(1)		—
Change in book overdraft	(9)		23
Common stock repurchases	(1,024)		(30)
Dividends paid	(91)		(83)
Other	(13)		1
Net cash provided by financing activities	1,816		1,529
Increase (decrease) in cash and cash equivalents	1,470		(796)
Cash and cash equivalents at beginning of period	3,394		4,673
Cash and cash equivalents at end of period	$	4,864	$	3,877


	For the three months ended March 31, 2022
	Private Placements
	(in millions)
Beginning balance at January 1	$	68
Total gains or losses:
Realized in earnings	—
Unrealized in other comprehensive income	(4)
Purchases	17
Sales	(1)
Settlements	—
Balance at March 31	$	80


	March 31, 2022		December 31, 2021
Annualized volatility	22.9	%	22.4	%
Credit spread	1.4	%	0.9	%
Revenue exit multiple	1.5x - 2.5x		1.5x - 2.5x
Weighted average cost of capital	12.5	%	12.5	%
Long term growth rate	3.0	%	3.0	%


	March 31, 2022				December 31, 2021
	Risk Corridor Settlement		CMS Subsidies/ Discounts		Risk Corridor Settlement		CMS Subsidies/ Discounts
	(in millions)
Other current assets	$	139	$	997	$	363	$	1,894
Trade accounts payable and accrued expenses	(52)		(2,046)		(68)		(466)
Net current asset (liability)	87		(1,049)		295		1,428
Other long-term assets	310		—		5		—
Other long-term liabilities	(221)		—		(194)		—
Net long-term asset (liability)	89		—		(189)		—
Total net asset (liability)	$	176	$	(1,049)	$	106	$	1,428


		March 31, 2022						December 31, 2021
	Weighted Average Life	Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
		($ in millions)
Other intangible assets:
Certificates of need	Indefinite	$	1,771	$	—	$	1,771	$	1,771	$	—	$	1,771
Medicare licenses	Indefinite	522		—		522		522		—		522
Customer contracts/ relationships	9.4 years	912		634		278		883		620		263
Trade names and technology	7.0 years	159		100		59		160		97		63
Provider contracts	11.6 years	72		58		14		72		57		15
Noncompetes and other	6.8 years	37		30		7		35		30		5
Total other intangible assets	9.2 years	$	3,473	$	822	$	2,651	$	3,443	$	804	$	2,639


	(in millions)
For the years ending December 31,
2022	$	52
2023	55
2024	48
2025	46
2026	34
2027	25


Record Date	Payment Date	Amount per Share		Total Amount
				(in millions)
2021 payments
12/31/2020	1/29/2021	$	0.6250	$	81
3/31/2021	4/30/2021	0.7000		90
6/30/2021	7/30/2021	0.7000		90
9/30/2021	10/29/2021	0.7000		90
2022 payments
12/31/2021	1/28/2022	$	0.7000	$	90


(Exact name of registrant as specified in its charter)