Humana Inc. (NYSE:HUM)

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Humana Inc., effective income tax rate (EITR) reconciliation

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
	Federal statutory tax rate	21.00%	21.00%	21.00%	21.00%	21.00%
	Effective income tax rate	25.18%	21.38%	14.19%	27.96%	21.99%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The effective income tax rate (EITR) exhibited significant volatility between 2019 and 2023, contrasting with a constant federal statutory tax rate of 21.00% throughout the analyzed period. This variance suggests the impact of periodic adjustments, tax credits, or changes in the composition of taxable income.

Historical Rate Fluctuations: Between 2019 and 2020, the EITR increased from 21.99% to a peak of 27.96%, marking the highest tax burden relative to statutory rates in the period. This was followed by a sharp contraction in 2021, where the rate fell to 14.19%, representing a significant deviation below the 21.00% statutory benchmark.
Recent Alignment and Divergence: In 2022, the EITR stabilized at 21.38%, aligning closely with the federal statutory rate. However, this alignment was short-lived, as the rate rose again to 25.18% by December 31, 2023, indicating a renewed increase in the effective tax liability relative to the statutory baseline.

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Humana Inc., components of deferred tax assets and liabilities

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net operating loss carryforward	84)	105)	291)	32)	42)
Compensation and other accrued expense	218)	158)	186)	171)	111)
Benefits payable	150)	103)	67)	87)	89)
Deferred acquisition costs	43)	43)	33)	26)	22)
Jobs tax credits	—)	22)	33)	—)	—)
Other	16)	16)	25)	11)	8)
Unearned revenues	5)	7)	8)	12)	8)
Capital loss carryforward	—)	—)	—)	—)	1)
Investment securities	419)	454)	—)	—)	—)
Deferred income tax assets	935)	908)	643)	339)	281)
Valuation allowance	(73)	(57)	(65)	(37)	(45)
Deferred income tax assets, net of valuation allowance	862)	851)	578)	302)	236)
Depreciable property and intangible assets	(642)	(740)	(1,072)	(449)	(329)
Prepaid expenses	(156)	(132)	(102)	(91)	(64)
Investment securities	—)	—)	(98)	(418)	(181)
Other	(16)	(6)	(4)	(3)	(3)
Deferred income tax liabilities	(814)	(878)	(1,276)	(961)	(577)
Net deferred income tax assets (liabilities)	48)	(27)	(698)	(659)	(341)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The net deferred tax position underwent a significant transition from 2019 to 2023, shifting from a substantial net liability to a net asset position. Net deferred income tax liabilities peaked at 698 million USD in 2021 before reversing to a net asset of 48 million USD by December 31, 2023.

Growth in Deferred Tax Assets: Gross deferred income tax assets demonstrated a consistent upward trend, rising from 281 million USD in 2019 to 935 million USD in 2023. This expansion was largely supported by increases in compensation and other accrued expenses, which grew from 111 million USD to 218 million USD, and benefits payable, which increased from 89 million USD to 150 million USD. Net operating loss carryforwards experienced a significant spike in 2021, reaching 291 million USD, before declining to 84 million USD by 2023.
Dynamics of Deferred Tax Liabilities: Total deferred income tax liabilities peaked in 2021 at 1,276 million USD and subsequently decreased to 814 million USD by 2023. The primary driver of this volatility was depreciable property and intangible assets, which reached a maximum liability of 1,072 million USD in 2021 before receding to 642 million USD in 2023. Conversely, liabilities associated with prepaid expenses grew steadily from 64 million USD in 2019 to 156 million USD in 2023.
Shift in Investment Securities Tax Position: A reversal in the tax impact of investment securities is observed. Between 2019 and 2021, investment securities were recorded as deferred tax liabilities, ranging from 181 million USD to 98 million USD. By 2022, this position shifted to a deferred tax asset, recording 454 million USD in 2022 and 419 million USD in 2023.
Valuation Allowance and Net Asset Realization: The valuation allowance remained modest relative to the gross assets, fluctuating between 37 million USD and 73 million USD over the period. Consequently, the deferred income tax assets, net of valuation allowance, grew substantially from 236 million USD in 2019 to 862 million USD in 2023.

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Humana Inc., deferred tax assets and liabilities, classification

US$ in millions

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
	Deferred income tax assets (classified as Other long-term assets)	48)	—)	—)	—)	—)
	Deferred income tax liabilities (classified as Other long-term liabilities)	—)	27)	698)	659)	341)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The financial data reveals a significant reversal in the company's deferred tax position between 2019 and 2023, transitioning from a substantial net liability to a net asset position.

Deferred Income Tax Liabilities: A period of growth in deferred tax liabilities was observed from 2019 to 2021, with the balance increasing from 341 million US dollars to a peak of 698 million US dollars. This growth was followed by a precipitous decline in 2022, where liabilities fell to 27 million US dollars. By December 31, 2023, no deferred income tax liabilities were reported.
Deferred Income Tax Assets: No deferred income tax assets were recognized during the period from 2019 through 2022. However, as of December 31, 2023, a deferred income tax asset of 48 million US dollars was recorded under other long-term assets.
Net Tax Position Transition: The overall trend indicates a complete shift in the balance sheet classification of deferred taxes. The company moved from a peak liability position of 698 million US dollars in 2021 to a net asset position of 48 million US dollars by the end of 2023, suggesting a significant reversal of temporary differences or changes in tax valuations.

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Humana Inc., Financial Data: Reported vs. Adjusted

Humana Inc., adjustments to financial statements

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Adjustment to Total Assets
Total assets (as reported)	47,065)	43,055)	44,358)	34,969)	29,074)
Less: Noncurrent deferred tax assets, net	48)	—)	—)	—)	—)
Total assets (adjusted)	47,017)	43,055)	44,358)	34,969)	29,074)
Adjustment to Total Liabilities
Total liabilities (as reported)	30,747)	27,685)	28,255)	21,241)	17,037)
Less: Noncurrent deferred tax liabilities, net	—)	27)	698)	659)	341)
Total liabilities (adjusted)	30,747)	27,658)	27,557)	20,582)	16,696)
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported)	16,262)	15,311)	16,080)	13,728)	12,037)
Less: Net deferred tax assets (liabilities)	48)	(27)	(698)	(659)	(341)
Stockholders’ equity (adjusted)	16,214)	15,338)	16,778)	14,387)	12,378)
Adjustment to Net Income Attributable To Humana
Net income attributable to Humana (as reported)	2,489)	2,806)	2,933)	3,367)	2,707)
Add: Deferred income tax expense (benefit)	(164)	(100)	15)	195)	162)
Net income attributable to Humana (adjusted)	2,325)	2,706)	2,948)	3,562)	2,869)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The financial data reveals a shifting relationship between reported and adjusted figures from 2019 to 2023, specifically regarding the removal of deferred taxes. A consistent growth trend is observed in total assets, which increased from 29,074 million US dollars in 2019 to 47,065 million US dollars in 2023.

Liability and Equity Adjustments: A significant divergence between reported and adjusted total liabilities occurred between 2019 and 2021. In 2021, the adjustment resulted in a reduction of liabilities by 698 million US dollars. This divergence diminished substantially by 2022 and was eliminated by 2023, where reported and adjusted liabilities converged at 30,747 million US dollars. Correspondingly, adjusted stockholders' equity was higher than reported equity from 2019 to 2022, peaking in 2021 with an increase of 698 million US dollars, before shifting to a lower adjusted value in 2023.
Net Income Variance: The impact of adjustments on net income attributable to the company underwent a reversal over the five-year period. From 2019 to 2021, adjusted net income consistently exceeded reported net income, with the largest positive variance of 195 million US dollars occurring in 2020. However, a transition occurred in 2022 and 2023, during which adjusted net income became lower than reported figures. In 2023, adjusted net income was 164 million US dollars lower than the reported 2,489 million US dollars.
Asset-Equity Dynamics: While total assets grew steadily, the gap between reported and adjusted asset values remained negligible throughout the period, with only a minor difference of 48 million US dollars appearing in 2023. This indicates that the primary effect of the deferred tax adjustments was concentrated on the liability and equity accounts rather than the asset base.

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Humana Inc., Financial Ratios: Reported vs. Adjusted

Humana Inc., adjusted financial ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net Profit Margin
Reported net profit margin	2.36%	3.03%	3.54%	4.43%	4.20%
Adjusted net profit margin	2.21%	2.93%	3.56%	4.69%	4.46%
Total Asset Turnover
Reported total asset turnover	2.24	2.15	1.87	2.17	2.21
Adjusted total asset turnover	2.24	2.15	1.87	2.17	2.21
Financial Leverage
Reported financial leverage	2.89	2.81	2.76	2.55	2.42
Adjusted financial leverage	2.90	2.81	2.64	2.43	2.35
Return on Equity (ROE)
Reported ROE	15.31%	18.33%	18.24%	24.53%	22.49%
Adjusted ROE	14.34%	17.64%	17.57%	24.76%	23.18%
Return on Assets (ROA)
Reported ROA	5.29%	6.52%	6.61%	9.63%	9.31%
Adjusted ROA	4.95%	6.28%	6.65%	10.19%	9.87%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

An analysis of financial performance from 2019 to 2023 reveals a general contraction in profitability margins and returns, occurring alongside a steady increase in financial leverage. The removal of deferred taxes provides a nuanced perspective on these metrics, demonstrating that while operational efficiency in asset utilization has remained stable, bottom-line returns have faced consistent downward pressure.

Profitability Margins: Both reported and adjusted net profit margins peaked in 2020 before entering a sustained decline. The reported net profit margin decreased from a high of 4.43% in 2020 to 2.36% by the end of 2023. Adjusted margins followed a nearly identical trajectory, starting at 4.46% in 2019 and falling to 2.21% in 2023, indicating that the exclusion of deferred taxes does not mitigate the overall trend of margin compression.
Return on Equity (ROE) and Return on Assets (ROA): Returns on investment have exhibited a significant downward trend over the five-year period. Reported ROE declined from a peak of 24.53% in 2020 to 15.31% in 2023. Similarly, reported ROA dropped from 9.63% in 2020 to 5.29% in 2023. The adjusted figures indicate that the impact of deferred taxes was more pronounced in earlier years; for instance, adjusted ROA was higher than reported in 2019 and 2020. However, by 2023, the adjusted ROA (4.95%) fell below the reported value (5.29%), suggesting a shift in the impact of tax adjustments over time.
Asset Utilization and Financial Leverage: Total asset turnover remained relatively stable and showed no variance between reported and adjusted figures. After a decline to 1.87 in 2021, the ratio recovered to 2.24 by 2023. In contrast, financial leverage demonstrates a persistent upward trend, increasing from a reported 2.42 in 2019 to 2.89 in 2023. This indicates an increasing reliance on leverage to support the asset base.
Comparative Impact of Deferred Tax Adjustments: The removal of deferred taxes has no effect on asset turnover but introduces variance in profitability and leverage metrics. While adjustments initially bolstered ROA and ROE in the 2019-2020 period, the trend reversed in later years, with adjusted returns becoming lower than reported returns by 2023. Financial leverage adjustments also converged over time, with the gap between reported and adjusted leverage narrowing significantly between 2019 and 2023.

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Humana	2,489)	2,806)	2,933)	3,367)	2,707)
External revenues	105,305)	92,488)	82,877)	76,001)	64,387)
Profitability Ratio
Net profit margin¹	2.36%	3.03%	3.54%	4.43%	4.20%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Humana	2,325)	2,706)	2,948)	3,562)	2,869)
External revenues	105,305)	92,488)	82,877)	76,001)	64,387)
Profitability Ratio
Adjusted net profit margin²	2.21%	2.93%	3.56%	4.69%	4.46%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Net profit margin = 100 × Net income attributable to Humana ÷ External revenues
= 100 × 2,489 ÷ 105,305 = 2.36%

² Adjusted net profit margin = 100 × Adjusted net income attributable to Humana ÷ External revenues
= 100 × 2,325 ÷ 105,305 = 2.21%

A comprehensive review of the financial performance from 2019 to 2023 reveals a peak in profitability during the 2020 fiscal year, followed by a consistent multi-year decline in both net income and profit margins.

Net Income Trajectory: Reported net income rose from 2,707 million USD in 2019 to a peak of 3,367 million USD in 2020. This peak was followed by a sustained decrease over the subsequent three years, falling to 2,489 million USD by December 31, 2023. A similar pattern is evident in adjusted net income, which reached its highest point at 3,562 million USD in 2020 before declining steadily to 2,325 million USD in 2023.
Net Profit Margin Contraction: The reported net profit margin experienced a peak of 4.43% in 2020, subsequently declining each year to reach 2.36% by the end of 2023. The adjusted net profit margin mirrored this trend, starting at 4.46% in 2019, peaking at 4.69% in 2020, and contracting significantly to 2.21% in 2023. This downward trend indicates a substantial narrowing of the profit captured relative to total revenue over the five-year observation period.
Variance Between Reported and Adjusted Metrics: From 2019 through 2021, adjusted net income consistently remained higher than reported net income, indicating that non-recurring expenses or specific accounting adjustments had a negative impact on reported figures. However, a reversal occurred in the latter part of the period; in 2022 and 2023, adjusted net income fell below reported net income. In 2023, reported net income was 2,489 million USD, while adjusted net income was lower at 2,325 million USD, signaling a shift in the composition of the adjustments affecting the bottom line.

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
External revenues	105,305)	92,488)	82,877)	76,001)	64,387)
Total assets	47,065)	43,055)	44,358)	34,969)	29,074)
Activity Ratio
Total asset turnover¹	2.24	2.15	1.87	2.17	2.21
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
External revenues	105,305)	92,488)	82,877)	76,001)	64,387)
Adjusted total assets	47,017)	43,055)	44,358)	34,969)	29,074)
Activity Ratio
Adjusted total asset turnover²	2.24	2.15	1.87	2.17	2.21

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Total asset turnover = External revenues ÷ Total assets
= 105,305 ÷ 47,065 = 2.24

² Adjusted total asset turnover = External revenues ÷ Adjusted total assets
= 105,305 ÷ 47,017 = 2.24

The analysis of asset utilization between 2019 and 2023 reveals a period of significant asset expansion accompanied by fluctuations in operational efficiency as measured by asset turnover.

Total Asset Trends: Total assets exhibited a consistent long-term upward trajectory, increasing from US$ 29,074 million in 2019 to US$ 47,065 million by 2023. The most substantial expansion occurred between 2020 and 2021, during which assets grew by approximately 26.8%. A marginal contraction was observed in 2022, followed by a return to growth in 2023.
Adjusted Total Asset Turnover Analysis: The adjusted total asset turnover ratio experienced a period of volatility, declining from 2.21 in 2019 to a trough of 1.87 in 2021. This downward trend suggests that asset growth temporarily outpaced revenue growth during the 2021 fiscal year. Subsequently, a recovery phase was observed, with the ratio rising to 2.15 in 2022 and further improving to 2.24 in 2023, ultimately exceeding the baseline level recorded in 2019.
Comparison of Reported and Adjusted Metrics: There is a high degree of convergence between reported and adjusted figures. For the majority of the period, the values are identical. In 2023, adjusted total assets were US$ 48 million lower than reported assets, yet this variance was insufficient to alter the adjusted total asset turnover ratio relative to the reported ratio.

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Total assets	47,065)	43,055)	44,358)	34,969)	29,074)
Stockholders’ equity	16,262)	15,311)	16,080)	13,728)	12,037)
Solvency Ratio
Financial leverage¹	2.89	2.81	2.76	2.55	2.42
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets	47,017)	43,055)	44,358)	34,969)	29,074)
Adjusted stockholders’ equity	16,214)	15,338)	16,778)	14,387)	12,378)
Solvency Ratio
Adjusted financial leverage²	2.90	2.81	2.64	2.43	2.35

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Financial leverage = Total assets ÷ Stockholders’ equity
= 47,065 ÷ 16,262 = 2.89

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= 47,017 ÷ 16,214 = 2.90

An analysis of the financial structure from 2019 to 2023 reveals a consistent upward trajectory in both total assets and financial leverage. Total assets experienced significant growth, rising from 29,074 million USD in 2019 to 47,065 million USD by the end of 2023, despite a marginal contraction in 2022. This expansion of the asset base was accompanied by a steady increase in stockholders' equity, which grew from 12,037 million USD to 16,262 million USD over the same period.

Asset and Equity Adjustments: Reported and adjusted total assets remained identical from 2019 through 2022, with a negligible divergence occurring only in 2023. In contrast, adjusted stockholders' equity consistently differed from reported equity. From 2019 to 2021, adjusted equity was higher than reported equity, suggesting that specific accounting adjustments provided a more favorable view of the capital base during those years. However, this gap narrowed significantly by 2022 and 2023, where reported and adjusted equity values converged.
Financial Leverage Trends: A steady increase in financial leverage is observed across both reported and adjusted metrics. Reported financial leverage rose incrementally from 2.42 in 2019 to 2.89 in 2023. Similarly, adjusted financial leverage increased from 2.35 to 2.90. This trend indicates a progressive increase in the proportion of assets financed through liabilities relative to equity.
Convergence of Leverage Ratios: A notable pattern is the convergence of reported and adjusted leverage ratios. In 2019, a gap of 0.07 existed between the two metrics, with the adjusted ratio being lower. By 2022, the reported and adjusted leverage ratios converged exactly at 2.81. By 2023, the ratios remained nearly identical at 2.89 and 2.90, respectively, indicating that the adjustments previously applied to equity and assets had a diminishing impact on the overall leverage profile over the five-year period.

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Humana	2,489)	2,806)	2,933)	3,367)	2,707)
Stockholders’ equity	16,262)	15,311)	16,080)	13,728)	12,037)
Profitability Ratio
ROE¹	15.31%	18.33%	18.24%	24.53%	22.49%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Humana	2,325)	2,706)	2,948)	3,562)	2,869)
Adjusted stockholders’ equity	16,214)	15,338)	16,778)	14,387)	12,378)
Profitability Ratio
Adjusted ROE²	14.34%	17.64%	17.57%	24.76%	23.18%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ ROE = 100 × Net income attributable to Humana ÷ Stockholders’ equity
= 100 × 2,489 ÷ 16,262 = 15.31%

² Adjusted ROE = 100 × Adjusted net income attributable to Humana ÷ Adjusted stockholders’ equity
= 100 × 2,325 ÷ 16,214 = 14.34%

An analysis of the financial metrics from 2019 to 2023 reveals a general contraction in profitability and capital efficiency, despite a net increase in the equity base over the period.

Net Income Performance: Both reported and adjusted net income reached a peak in 2020, with reported income at US$ 3,367 million and adjusted income at US$ 3,562 million. Since 2020, a consistent downward trajectory has been observed. By December 31, 2023, reported net income declined to US$ 2,489 million, while adjusted net income fell to US$ 2,325 million, marking a significant reduction from the 2020 highs.
Equity Position: Stockholders' equity showed an overall upward trend, growing from a reported US$ 12,037 million in 2019 to US$ 16,262 million in 2023. The most substantial growth occurred between 2020 and 2021, where reported equity rose from US$ 13,728 million to US$ 16,080 million. A brief contraction occurred in 2022 before the equity base expanded again in 2023. Adjusted equity figures mirrored this pattern closely, peaking in 2021 at US$ 16,778 million.
Return on Equity (ROE) Analysis: ROE reached its maximum in 2020, with reported ROE at 24.53% and adjusted ROE at 24.76%. Subsequently, a sustained decline in efficiency is evident. By the end of 2023, reported ROE dropped to 15.31% and adjusted ROE fell to 14.34%. This decline in ROE is driven by the combined effect of diminishing net income and an expanding equity base, which together compressed the return generated on shareholder investments.

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Humana	2,489)	2,806)	2,933)	3,367)	2,707)
Total assets	47,065)	43,055)	44,358)	34,969)	29,074)
Profitability Ratio
ROA¹	5.29%	6.52%	6.61%	9.63%	9.31%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Humana	2,325)	2,706)	2,948)	3,562)	2,869)
Adjusted total assets	47,017)	43,055)	44,358)	34,969)	29,074)
Profitability Ratio
Adjusted ROA²	4.95%	6.28%	6.65%	10.19%	9.87%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ ROA = 100 × Net income attributable to Humana ÷ Total assets
= 100 × 2,489 ÷ 47,065 = 5.29%

² Adjusted ROA = 100 × Adjusted net income attributable to Humana ÷ Adjusted total assets
= 100 × 2,325 ÷ 47,017 = 4.95%

A comprehensive review of the financial performance from 2019 to 2023 reveals a significant decline in asset utilization efficiency. While the asset base expanded substantially over the five-year period, net income peaked in 2020 and subsequently entered a downward trend, leading to a consistent contraction in the return on assets.

Net Income Trends: Both reported and adjusted net income exhibited a similar trajectory, reaching a peak in 2020 at 3,367 million and 3,562 million US dollars, respectively. Following this peak, a steady decline is observed, with adjusted net income falling to 2,325 million US dollars by December 31, 2023. This represents a contraction in profitability despite the growth in the company's overall scale.
Asset Base Expansion: Total assets grew aggressively between 2019 and 2023. Adjusted total assets increased from 29,074 million US dollars in 2019 to 47,017 million US dollars in 2023. This expansion reflects a significant increase in the capital employed by the organization, though the growth did not translate into proportional increases in net earnings.
Adjusted ROA Performance: The adjusted return on assets (ROA) serves as a primary indicator of efficiency, showing a peak of 10.19% in 2020 before falling sharply. By 2023, the adjusted ROA declined to 4.95%. This downward trajectory is the result of a dual pressure: the simultaneous decrease in adjusted net income and the increase in the total asset denominator.
Reported vs. Adjusted Metrics Variance: A consistent gap exists between reported and adjusted figures. In 2020, the adjusted ROA was 0.56 percentage points higher than the reported ROA. However, by 2023, the adjusted ROA of 4.95% was lower than the reported ROA of 5.29%, suggesting a shift in the nature of the adjustments affecting net income relative to the asset base toward the end of the period.

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