Humana Inc. (NYSE:HUM)

Current Provision Trend

The current provision exhibited notable fluctuations over the analyzed periods. Starting at 601 million USD in 2019, it significantly increased to 1112 million USD in 2020. Following this peak, a sharp decline to 470 million USD was observed in 2021. However, the provision rose again in the subsequent years, reaching 862 million USD by the end of 2022 and continuing to increase to 1000 million USD in 2023. This indicates substantial volatility, with a general upward trajectory from 2021 onward.

Deferred Expense (Benefit) Pattern

This item showed a marked decline from a positive expense to a negative benefit over the timeframe. Initially, in 2019, the deferred expense was 162 million USD. It increased slightly to 195 million USD in 2020 but then sharply dropped to 15 million USD in 2021. Subsequently, the item transitioned into a deferred benefit, recording -100 million USD in 2022 and further deepening to -164 million USD in 2023. This shift from deferred expense to deferred benefit suggests changes in timing differences or tax positions impacting deferred taxes.

Provision for Income Taxes Overview

The total provision for income taxes mirrored the combined effect of current and deferred amounts. It increased substantially from 763 million USD in 2019 to 1307 million USD in 2020, aligning with the rise in the current provision and deferred expense. In 2021, this provision dropped significantly to 485 million USD, corresponding with the fall in both current and deferred components. The provision then rose again, reaching 762 million USD in 2022 and 836 million USD in 2023, reflecting the upward trend in current provision despite the growing deferred benefit.

Summary Insight

The data reveals considerable variability in current tax provisions, with a peak in 2020 likely influenced by broader fiscal or operational factors. The deferred expense shifted from positive to negative, indicating a reversal or realization of deferred tax assets or liabilities. Despite fluctuations in components, the overall income tax provision follows a pattern of increasing in 2020, dropping in 2021, then gradually rising through 2023. These trends suggest dynamic tax management and changing temporary differences affecting tax liabilities over time.

Federal Statutory Tax Rate

The federal statutory tax rate remained stable across the five-year period from 2019 to 2023, consistently at 21%. This indicates no changes in the federally mandated tax rate applicable to the company during these years.

Effective Income Tax Rate

The effective income tax rate exhibited noticeable fluctuations over the same period. Starting at 21.99% in 2019, it increased significantly in 2020 to 27.96%, reflecting a higher tax burden or fewer deductions in that year. In 2021, the rate dropped sharply to 14.19%, suggesting potentially greater tax benefits or credits utilized. The rate then rebounded to 21.38% in 2022 and rose further to 25.18% in 2023.

Overall, the effective income tax rate shows a varying pattern that deviates from the constant federal statutory rate, highlighting the impact of other factors affecting tax expense, such as state taxes, tax credits, deductions, or changes in the company's taxable income composition.

Net Operating Loss Carryforward

There is significant volatility over the periods. The value decreased from 42 million in 2019 to 32 million in 2020, then sharply increased to 291 million in 2021. Subsequently, it declined to 105 million in 2022 and further to 84 million in 2023, indicating fluctuation in loss carryforwards possibly linked to taxable income variations.

Compensation and Other Accrued Expense

This liability displayed a steady rise from 111 million in 2019 to 171 million in 2020 and 186 million in 2021. It then decreased to 158 million in 2022 before increasing again to 218 million in 2023, suggesting workforce-related expenses have generally increased with some year-to-year adjustments.

Benefits Payable

The benefits payable showed a decreasing trend from 89 million in 2019 to 67 million in 2021, then reversed course by rising sharply to 103 million in 2022 and further to 150 million in 2023, reflecting growing short-term benefit obligations in recent years.

Deferred Acquisition Costs

This asset consistently increased from 22 million in 2019 to 26 million in 2020, 33 million in 2021, reaching 43 million in 2022 and remaining steady in 2023. The upward trend suggests accumulating costs related to acquiring new contracts or customers.

Jobs Tax Credits

Available data begins in 2021 with 33 million, decreasing to 22 million in 2022, and is not reported in 2019, 2020, or 2023. This inconsistent reporting limits trend analysis but indicates recognition of some tax credit benefits during the middle periods.

Other Assets and Liabilities

Reported under "Other," amounts increased from 8 million in 2019 to 25 million in 2021 before declining to 16 million in subsequent years for assets, while liabilities under "Other" gradually increased negatively from -3 million in 2019 to -16 million in 2023. This suggests miscellaneous items have slightly grown in magnitude, with liabilities becoming more significant.

Unearned Revenues

Unearned revenues rose from 8 million in 2019 to 12 million in 2020, then declined steadily to 8 million in 2021, 7 million in 2022, and 5 million in 2023, indicating a gradual reduction in prepayments or deferred revenue balances.

Capital Loss Carryforward

Only recorded in 2019 at 1 million and absent thereafter, suggesting limited or no subsequent capital loss carryforwards.

Investment Securities (Assets)

No data exists prior to 2022, when investment securities appeared at 454 million and slightly decreased to 419 million in 2023, indicating new or growing investment holdings in recent years.

Deferred Income Tax Assets

A substantial increase is noted from 281 million in 2019 to 339 million in 2020, further soaring to 643 million in 2021, 908 million in 2022, and 935 million in 2023. This growth suggests accumulation of deductible temporary differences and carryforwards enhancing future tax benefits.

Valuation Allowance

The valuation allowance showed a somewhat irregular pattern, decreasing in magnitude from -45 million in 2019 to -37 million in 2020, then increasing negatively to -65 million in 2021, with slight improvements to -57 million in 2022 followed by a decline to -73 million in 2023. This reflects varied assessments of realizability of deferred tax assets across periods.

Net Deferred Income Tax Assets, Net of Valuation Allowance

These net assets displayed strong growth from 236 million in 2019 to 302 million in 2020, then climbed sharply to 578 million in 2021, 851 million in 2022, and plateaued at 862 million in 2023, indicating increased anticipated future tax benefits after impairment considerations.

Depreciable Property and Intangible Assets

Reported as negative values, the balances increased in absolute terms from -329 million in 2019 to -449 million in 2020, dramatically increased to -1,072 million in 2021, then decreased to -740 million in 2022 and -642 million in 2023. This fluctuation may relate to changes in accumulated depreciation, impairment, or reclassification activities.

Prepaid Expenses

Reported negatively, prepaid expenses expanded consistently from -64 million in 2019 to -91 million in 2020, -102 million in 2021, -132 million in 2022, and reached -156 million in 2023, indicating higher amounts of prepaid costs over time.

Investment Securities (Liabilities)

Negative values were reported in earlier years with -181 million in 2019, worsening to -418 million in 2020, then improving to -98 million in 2021, followed by a lack of data afterwards. This inconsistency suggests reclassification or changes in reporting.

Deferred Income Tax Liabilities

These liabilities increased significantly in magnitude from -577 million in 2019 to -961 million in 2020 and further to -1,276 million in 2021, but then decreased to -878 million in 2022 and -814 million in 2023, indicating shifting timing differences impacting future tax payments.

Net Deferred Income Tax Assets (Liabilities)

The net figure shows a substantial decline from -341 million in 2019 to -659 million in 2020 and further to -698 million in 2021, implying net deferred tax liabilities. However, this trend reversed considerably in 2022 to -27 million and finally to a positive 48 million in 2023, showing an improving tax asset position over the last two years.

Deferred Income Tax Assets

Data for deferred income tax assets classified as other long-term assets is only available for the year ending December 31, 2023, showing a value of 48 million US dollars. The absence of earlier data limits trend analysis for this item.

Deferred Income Tax Liabilities

The deferred income tax liabilities, classified under other long-term liabilities, show a fluctuating trend over the available years. In 2019, the liability stands at 341 million US dollars. This figure nearly doubles to 659 million in 2020 and further increases slightly to 698 million in 2021. However, there is a significant decrease in 2022 to 27 million US dollars. Data for 2023 is not reported, making it unclear whether the decline continued or if there was any recovery.

Trend Observations

The data reveals considerable volatility in deferred income tax liabilities with a sharp rise from 2019 through 2021, followed by an abrupt drop in 2022. The introduction or reporting of deferred income tax assets in 2023 suggests possible changes in accounting practices, tax strategies, or recognition timing that may be affecting deferred tax positions.

Insights

The considerable fluctuations in deferred income tax liabilities could reflect underlying changes in temporary differences between accounting income and taxable income or adjustments made due to tax law changes or reassessments. The presence of deferred tax assets in 2023 indicates potential future tax benefits previously unreported or newly recognized, which might offset liabilities not captured fully in the data.

Total Assets

Total assets demonstrated a consistent upward trend from 2019 to 2023, increasing from approximately $29.1 billion to $47.0 billion. There was a notable acceleration in growth between 2020 and 2021. Although reported and adjusted total assets closely align, a minor discrepancy appears in 2023, with adjusted assets slightly lower than reported figures.

Total Liabilities

Total liabilities also increased steadily over the period, rising from roughly $17.0 billion in 2019 to $30.7 billion in 2023. The most significant increases occurred between 2020 and 2021. Adjusted liabilities are consistently lower than reported liabilities each year, reflecting deferred tax adjustments, with the largest difference seen in 2021.

Stockholders’ Equity

Stockholders’ equity showed a general upward trajectory but with some fluctuations. It grew from about $12.0 billion in 2019 to $16.3 billion in 2023. The peak equity value was recorded in 2021. Adjusted equity values are slightly higher than reported figures, except in 2022 where the adjusted figure is marginally higher but still lower than the prior year’s values, indicating some volatility possibly related to tax adjustments.

Net Income Attributable to Humana

Net income exhibited variability over the five years, peaking in 2020 with adjusted net income at approximately $3.6 billion before declining in the subsequent years. Both reported and adjusted net income follow a similar pattern, but adjusted figures consistently exceed the reported numbers, except in the last year, 2023, when both measures declined significantly to their lowest levels in the period examined. This decrease may indicate operational challenges or increased costs impacting profitability.

General Insights

Overall, the data reflects growth in the company’s asset and liability base, indicating expansion or increased financing activities. The equity growth suggests sustained creation of shareholder value despite fluctuations, while the net income trend points to challenges in maintaining profitability beyond 2020. The adjustments for deferred taxes slightly alter key balance sheet and income figures, pointing to material tax timing differences that affect financial statement presentation.

Net Profit Margin

The reported net profit margin demonstrates a consistent decline over the analyzed period, decreasing from 4.2% in 2019 to 2.36% in 2023. Similarly, the adjusted net profit margin follows the same downward trend, falling from 4.46% to 2.21%. This suggests a deterioration in profitability relative to sales, both on a reported and adjusted basis, indicating potential pressures on cost management or revenue generation efficiency.

Total Asset Turnover

The total asset turnover ratio experienced a decline from 2.21 in 2019 to 1.87 by 2021, indicating reduced efficiency in using assets to generate sales. However, there was a noticeable recovery in subsequent years, rising to 2.24 in 2023, exceeding the initial level in 2019. Both reported and adjusted ratios mirror this pattern precisely, reflecting improvements in asset utilization during the latter part of the period.

Financial Leverage

Financial leverage increased steadily throughout the period, moving from 2.42 in 2019 to 2.89 in 2023 on a reported basis, and from 2.35 to 2.9 on an adjusted basis. This increasing leverage trend indicates a growing reliance on debt or liabilities relative to equity, which potentially raises financial risk but may also amplify returns if managed appropriately.

Return on Equity (ROE)

The reported ROE exhibited a peak in 2020 at 24.53%, followed by a sharp decline to 15.31% by 2023. Adjusted ROE shows a similar pattern, with a high of 24.76% in 2020 descending to 14.34% in 2023. The decline in ROE corresponds with lower net profit margins and increasing leverage, suggesting that despite increased financial leverage, profitability has been insufficient to sustain higher equity returns.

Return on Assets (ROA)

The ROA decreased significantly over the period, with reported values falling from 9.31% in 2019 to 5.29% in 2023, and adjusted ROA decreasing from 9.87% to 4.95%. This decline points to diminishing overall asset profitability, consistent with observed reductions in net profit margins and initial asset turnover decreases, albeit later partially recovering in asset efficiency.

Net Income Trends

The reported net income attributable to Humana experienced an increase from 2,707 million US dollars in 2019 to a peak of 3,367 million US dollars in 2020. However, from 2020 onwards, there is a consistent decline over the following three years, reaching 2,489 million US dollars by the end of 2023. The adjusted net income follows a similar trajectory, increasing from 2,869 million US dollars in 2019 to 3,562 million US dollars in 2020, then dropping progressively to 2,325 million US dollars by 2023.

Profit Margin Analysis

The reported net profit margin shows a declining trend across the period analyzed, starting at 4.2% in 2019 and increasing slightly to 4.43% in 2020. After 2020, the margin steadily decreases each year, falling to 2.36% in 2023. Similarly, the adjusted net profit margin rises from 4.46% in 2019 to 4.69% in 2020, but like the reported margin, it subsequently declines to 2.21% in 2023.

Comparative Insights

Both reported and adjusted figures depict a peak in performance in 2020, followed by a downward trend through 2023. Adjusted net income and margins are consistently slightly higher than reported figures each year, indicating that adjustments related to income taxes provide a modest upward revision to profitability metrics. The declining profit margins from 2021 onward suggest increasing cost pressures or revenue challenges affecting profitability despite fluctuations in net income.

Overall Assessment

The data indicates that Humana's profitability improved in 2020 but has weakened steadily over the subsequent three years. Both net income and net profit margins have decreased, signaling potential challenges in maintaining financial performance levels achieved during the peak year. The consistency between reported and adjusted measures suggests that tax adjustments have a relatively stable impact on the financial outcomes.

The analysis of the financial data over the five-year period reveals several notable trends regarding the total assets and asset turnover ratios.

Total Assets

Reported total assets showed a steady increase from US$29,074 million in 2019 to US$47,065 million in 2023. After a significant rise between 2019 and 2021, the assets slightly declined in 2022 before climbing again in 2023, reaching the highest level in the reported period. Adjusted total assets closely mirror the reported figures, with minimal differences, indicating that deferred income tax adjustments had a negligible impact on the total asset values.

Total Asset Turnover

The reported total asset turnover ratio exhibits a fluctuating trend over the years. It started at 2.21 in 2019, declined gradually to 1.87 by 2021, suggesting reduced efficiency in generating revenue from assets during this period. However, a recovery is observed in 2022 and 2023 with ratios rising to 2.15 and 2.24, respectively, implying an improvement in asset utilization efficiency. The adjusted total asset turnover ratios are identical to the reported ratios, confirming that adjustments for deferred income taxes do not affect the turnover efficiency metrics.

Asset Trends

There is a steady increase in both reported and adjusted total assets from 2019 through 2023, with the value rising from approximately 29.1 billion US dollars in 2019 to over 47 billion US dollars in 2023. A peak is noted in 2021, followed by a slight dip in 2022, then a recovery in 2023. This pattern suggests overall growth in asset base despite a minor contraction period.

Equity Developments

Reported stockholders’ equity demonstrates an upward trend over the five-year span, increasing from just over 12 billion US dollars in 2019 to around 16.3 billion in 2023. Adjusted equity figures follow a similar trajectory but consistently show marginally higher values than reported equity until 2023, where adjusted equity slightly lags behind reported equity. The equity growth indicates strengthening shareholder value, with some fluctuations visible around the 2022 period.

Financial Leverage

Both reported and adjusted financial leverage ratios indicate a rising leverage trend from 2019 through 2023. The reported financial leverage ratio increases from 2.42 to 2.89, while the adjusted leverage goes from 2.35 to 2.9 in the same period. Notably, adjusted financial leverage remains below reported leverage in earlier years, converging and slightly exceeding reported leverage by 2023. This upward leverage trend suggests increased reliance on debt financing relative to equity over time.

Comparison of Reported vs. Adjusted Figures

The close alignment between reported and adjusted total assets throughout the period indicates minor adjustments attributable to deferred income taxes or other accounting considerations. Adjusted stockholders’ equity is generally higher than reported values until 2023, highlighting adjustments that may positively affect equity figures except for the latest year where this trend reverses slightly. The financial leverage ratio adjustments follow a similar pattern, reflecting the impact of deferred tax adjustments on the balance sheet structure and leverage metrics.

The financial data reveals several notable trends in the net income, stockholders' equity, and return on equity for the examined periods.

Net Income

Both reported and adjusted net income exhibit a peak in 2020, with reported net income rising from 2,707 million US dollars in 2019 to 3,367 million, and adjusted net income increasing from 2,869 million to 3,562 million. However, subsequent years show a consistent decline. Reported net income decreased to 2,933 million in 2021, continuing to 2,806 million in 2022 and further down to 2,489 million in 2023. Adjusted net income mirrors this trend, falling to 2,948 million in 2021, then to 2,706 million in 2022 and 2,325 million in 2023. This downward trend after 2020 suggests diminishing profitability adjusted for income tax impacts.

Stockholders’ Equity

The reported stockholders’ equity increased steadily from 12,037 million US dollars in 2019 to 16,080 million in 2021, then slightly decreased to 15,311 million in 2022 before rising again to 16,262 million in 2023. Adjusted stockholders’ equity follows a similar pattern, increasing from 12,378 million in 2019 to 16,778 million in 2021, then dropping to 15,338 million in 2022 and slightly declining to 16,214 million in 2023. Overall, equity demonstrates growth over the five-year span, with minor fluctuations around 2022.

Return on Equity (ROE)

Both reported and adjusted ROE peaked in 2020 at 24.53% and 24.76%, respectively, reflecting high profitability relative to equity. After 2020, ROE experienced a steady decline: reported ROE dropped to 18.24% in 2021, maintained around 18.33% in 2022, and declined further to 15.31% in 2023. Adjusted ROE trends similarly, falling from 17.57% in 2021 to 17.64% in 2022, and then down to 14.34% in 2023. This indicates a decreasing efficiency in generating profits from equity over the most recent years.

In summary, the data highlights a strong performance with rising net income and ROE in 2020, followed by consistent declines in profitability metrics through 2023. Conversely, stockholders’ equity exhibits steady growth with minor fluctuations, suggesting capital base expansion despite the reduced profitability and return on equity levels in later years.

Net Income Trends

The reported net income attributable to the company demonstrated an increase from 2019 to 2020, rising from 2,707 million USD to 3,367 million USD. This positive growth was followed by a decline in subsequent years, with net income decreasing to 2,933 million USD in 2021, 2,806 million USD in 2022, and further to 2,489 million USD in 2023. The adjusted net income followed a similar pattern, increasing to 3,562 million USD in 2020 before decreasing steadily over the next three years to 2,325 million USD by 2023.

Total Assets Evolution

Total assets, both reported and adjusted, showed consistent growth over the five-year period. From 29,074 million USD in 2019, assets increased to 34,969 million USD in 2020, then significantly rose to 44,358 million USD in 2021. A slight decrease occurred in 2022 to 43,055 million USD, followed by a renewed increase to around 47,000 million USD in 2023. The adjusted asset values closely mirrored the reported figures, suggesting no material differences in this regard.

Return on Assets (ROA) Patterns

ROA, both reported and adjusted, peaked in 2020 at 9.63% and 10.19% respectively. Thereafter, it exhibited a consistent downward trend over the following three years, falling to 6.61% (reported) and 6.65% (adjusted) in 2021, and further declining to 5.29% (reported) and 4.95% (adjusted) by 2023. The adjusted ROA figures were slightly higher than reported ROA until 2021, after which adjusted ROA dipped below the reported measure.

Overall Insights

The data reveals a period of financial strength and growth with increased net income and ROA up to 2020, followed by a marked decline in profitability metrics through 2023 despite growth in total assets. The rising asset base contrasted with decreasing returns, indicating a potential reduction in asset efficiency or increased costs affecting profitability. Adjusted figures, accounting for income tax considerations, generally followed the trends of reported numbers but highlight some variability in profitability measurements.