{"schemaVersion":1,"research":true,"symbol":"hum","name":"Humana","topic":"moat","path":"/stock/hum/moat","status":"published","version":4,"updatedAt":"2026-10-18T13:32:29.829Z","locked":false,"publicFairValue":false,"fairValue":null,"moat":{"verdict":"none","summary":"The passages establish low entry barriers, annual customer switching flexibility and intense premium competition. Humana demonstrates retention improvement, administrative efficiencies and CenterWell growth, but no durable relative cost advantage or customer dependency. Realized 2026 pricing and recontracting helped offset claims trends, although government funding contributed materially and the Star Ratings headwind weakened underwriting results. These are operating capabilities, not an established company-wide moat.","advantages":[{"mechanism":"cost_advantage","claim":"Integrated care and administrative scale provide demonstrated operating efficiencies, but the passages do not establish a sustained cost advantage over competitors.","durability":"Unproven. Value-based membership increased in absolute terms, while its share of individual Medicare Advantage membership declined from 68% to 64%. Administrative efficiencies partly reflect membership growth and improved government funding.","risks":"Higher benefit ratios, less favorable claims reserve development, transformation costs and government payment changes can absorb administrative savings. CenterWell growth includes acquisitions.","invalidation":"The potential advantage would be undermined if administrative cost improvements reverse or integrated care fails to improve claims economics after accounting for funding, member mix and reserve development. Reconsidering the no-moat verdict would require sustained comparable evidence of superior costs and outcomes.","competitors":[],"evidenceIds":["e6","e7","e8"],"counterEvidenceIds":["e3","e9","e10","e11"]},{"mechanism":"switching_costs","claim":"Reported retention improvement supports customer appeal, but annual switching flexibility prevents establishing meaningful switching costs.","durability":"The disclosed improvement covers one annual election comparison; its absolute retention level and persistence are unavailable.","risks":"Competitive premiums, benefit changes and provider relationships can influence customer choices. Improved retention does not demonstrate dependency.","invalidation":"The loyalty case would weaken if the reported retention improvement reverses in subsequent election periods. A switching-cost advantage would require demonstrated persistent friction or dependency beyond satisfaction and repeat enrollment.","competitors":[],"evidenceIds":["e5"],"counterEvidenceIds":["e1","e2"]}],"evidence":[{"id":"e1","sourceId":"filing-1","location":"Business: entry barriers and annual switching","excerpt":"We believe that barriers to entry in our markets are not substantial, so the addition of new competitors can occur relatively easily, and customers enjoy significant flexibility in moving between competitors through the Medicare Annual Enrollment Period."},{"id":"e2","sourceId":"filing-1","location":"Business: premium competition","excerpt":"In addition to the challenge of controlling health care costs, we face intense competitive pressure to contain premium prices."},{"id":"e3","sourceId":"filing-1","location":"Business: competitors' membership and financial resources","excerpt":"Many of our competitors have a larger membership base and/or greater financial resources than our health plans in the markets in which we compete."},{"id":"e4","sourceId":"filing-1","location":"Business: government control over revenues and costs","excerpt":"These governmental policies and decisions, which we cannot predict with certainty, directly shape the premiums or other revenues to us under the programs, the eligibility and enrollment of our members, the services we provide to our members, and our administrative, health care services, and other costs associated with these programs."},{"id":"e5","sourceId":"filing-3","location":"Stockholder letter: Individual MA retention improvement","excerpt":"Member retention in Individual MA has improved by more than 500 basis points since the previous year’s Annual Election Period."},{"id":"e6","sourceId":"filing-2","location":"MD&A: value-based membership","excerpt":"At June 30, 2026, approximately 4,118,700 members, or 64%, of our individual Medicare Advantage members were in value-based relationships under our integrated care delivery model, as compared to 3,542,300 members, or 68%, at June 30, 2025."},{"id":"e7","sourceId":"filing-2","location":"MD&A: Insurance administrative cost efficiencies","excerpt":"The Insurance segment operating cost ratio decreased 120 basis points from 8.3% for the 2025 quarter to 7.1% for the 2026 quarter and decreased 110 basis points from 8.3% for the 2025 period to 7.2% for the 2026 period primarily reflecting operating leverage associated with increased revenues from membership growth across the Medicare businesses in 2026 combined with an improved MA benchmark funding rate and increased Part D direct subsidy resulting from the IRA, as well as the progress on our previously discussed tactical cost cutting and transformation initiatives combined with the beneficial impact of prior value creation initiatives that have driven administrative cost efficiencies."},{"id":"e8","sourceId":"filing-2","location":"MD&A: CenterWell quarterly cost improvements","excerpt":"Operating Costs The CenterWell segment operating cost ratio decreased 30 basis points from 92.7% for the 2025 quarter to 92.4% for the 2026 quarter primarily due to the continued maturation of the v28 mitigation activities within the primary care business and the progress on our tactical cost cutting and transformation initiatives combined with the beneficial impact of prior value creation initiatives that have driven administrative cost efficiencies."},{"id":"e9","sourceId":"filing-2","location":"MD&A: Insurance benefit ratio and reserve development","excerpt":"The Insurance segment benefit ratio increased 130 basis points from 89.9% for the 2025 quarter to 91.2% for the 2026 quarter and increased 160 basis points from 88.7% for the 2025 period to 90.3% for the 2026 period primarily reflecting the BY 2026 Star Ratings revenue headwind, the effect of the individual MA membership growth during the most recent AEP and OEP as the new members, on average, run at a higher benefit ratio as compared to retained members (excluding the impact of the BY 2026 Star Ratings headwind) and the anticipated lower favorable prior-period medical claims reserve development in 2026."},{"id":"e10","sourceId":"filing-2","location":"Financial statement notes: transformation charges","excerpt":"As a result of these initiatives, we recorded charges of $56 million and $154 million for the three and six months ended June 30, 2026, respectively, and $29 million and $53 million for the three and six months ended June 30, 2025, respectively, within operating costs in the consolidated statements of income."},{"id":"e11","sourceId":"filing-2","location":"MD&A: acquisition-related CenterWell external growth","excerpt":"44 Table of Contents Services Revenue CenterWell external services revenue increased $0.4 billion, or 32.4%, from $1.2 billion in the 2025 quarter to $1.6 billion in the 2026 quarter and increased $0.7 billion, or 32.2%, from $2.3 billion in the 2025 period to $3.0 billion in the 2026 period primarily reflecting the continued expansion of our payor-agnostic client base, primarily associated with the primary care business as a result of recent acquisitions, partially offset by the final year of the phase-in of the v28 risk model revision."},{"id":"e12","sourceId":"filing-2","location":"MD&A: realized MA pricing and recontracting","excerpt":"These factors were partially offset by the 2026 individual MA pricing, inclusive of the MA funding environment (excluding the BY 2026 Star Ratings headwind) combined with our ongoing clinical excellence efforts, more than offsetting the assumption of claims trend (with largely stable benefits year-over-year), and the benefit of our group Medicare Advantage recontracting efforts for the 2026 plan year."},{"id":"e13","sourceId":"filing-2","location":"MD&A: premium growth and government funding","excerpt":"Premiums Revenue Consolidated premiums revenue increased $8.1 billion, or 26.4%, from $30.7 billion in the 2025 quarter to $38.8 billion in the 2026 quarter and increased $15.3 billion, or 25.0%, from $61.2 billion in the 2025 period to $76.5 billion in the 2026 period primarily reflecting membership growth across the Medicare businesses in 2026, higher per member Medicare Advantage (MA) and stand-alone PDP premiums largely driven by an increase in MA benchmark funding from the Centers for Medicare and Medicaid Services (CMS) and the increased Part D direct subsidy as a result of the Inflation Reduction Act (IRA)."},{"id":"e14","sourceId":"filing-2","location":"MD&A: consolidated quarterly and first-half results","excerpt":"Change Three months ended June 30, Six months ended June 30, Three months ended June 30, 2026 vs 2025 Six months ended June 30, 2026 vs 2025 2026 2025 2026 2025 $ % $ % ($ in millions, except per common share results) Revenues: Insurance premiums $ 38,834 $ 30,716 $ 76,543 $ 61,230 $ 8,118 26.4% $ 15,313 25.0% Services: Insurance 199 206 446 458 (7) (3.4)% (12) (2.6)% CenterWell 1,581 1,194 3,009 2,276 387 32.4% 733 32.2% Corporate — — 2 — — —% 2 100.0% Total services revenue 1,780 1,400 3,457 2,734 380 27.1% 723 26.4% Net investment income 253 272 515 536 (19) (7.0)% (21) (3.9)% Total revenues 40,867 32,388 80,515 64,500 8,479 26.2% 16,015 24.8% Operating expenses: Benefits 35,370 27,565 69,077 54,100 7,805 28.3% 14,977 27.7% Operating costs 3,978 3,547 8,002 6,927 431 12.2% 1,075 15.5% Depreciation and amortization 159 178 322 361 (19) (10.7)% (39) (10.8)% Total operating expenses 39,507 31,290 77,401 61,388 8,217 26.3% 16,013 26.1% Income from operations 1,360 1,098 3,114 3,112 262 23.9% 2 0.1% Interest expense 197 157 390 317 40 25.5% 73 23.0% Other expense, net 211 200 177 363 11 5.5% (186) (51.2)% Income before income taxes and equity in net losses 952 741 2,547 2,432 211 28.5% 115 4.7% Provision for income taxes 238 179 633 585 59 33.0% 48 8.2% Equity in net losses (21) (19) (37) (62) 2 10.5% (25) (40.3)% Net income $ 693 $ 543 $ 1,877 $ 1,785 $ 150 27.6% $ 92 5.2% Diluted earnings per common share $ 5.73 $ 4.51 $ 15.55 $ 14.81 $ 1.22 27.1% $ 0.74 5.0% Benefit ratio (a) 91.1% 89.7% 90.2% 88.4% 1.4% 1.8% Operating cost ratio (b) 9.8% 11.0% 10.0% 10.8% (1.2)% (0.8)% Effective tax rate 25.6% 24.7% 25.2% 24.6% 0.9% 0.6% (a)Represents benefits expense as a percentage of premiums revenue."},{"id":"e15","sourceId":"filing-1","location":"MD&A: consolidated 2025 and 2024 results","excerpt":"Consolidated Change 2025 2024 Dollars Percentage (dollars in millions, except per common share results) Revenues: Insurance premiums $ 122,825 $ 112,104 $ 10,721 9.6 % Services: Insurance 1,017 966 51 5.3 % CenterWell 4,816 3,465 1,351 39.0 % Total services revenue 5,833 4,431 1,402 31.6 % Investment income 1,006 1,226 (220) (17.9) % Total revenues 129,664 117,761 11,903 10.1 % Operating expenses: Benefits 110,812 100,664 10,148 10.1 % Operating costs 15,450 13,696 1,754 12.8 % Depreciation and amortization 698 839 (141) (16.8) % Total operating expenses 126,960 115,199 11,761 10.2 % Income from operations 2,704 2,562 142 5.5 % Loss on sale of business 67 — 67 100.0 % Interest expense 631 660 (29) (4.4) % Other expense, net 451 181 270 149.2 % Income before income taxes and equity in net losses 1,555 1,721 (166) (9.6) % Provision for income taxes 250 413 (163) (39.5) % Equity in net losses (102) (94) 8 8.5 % Net income $ 1,203 $ 1,214 $ (11) (0.9) % Diluted earnings per common share $ 9.84 $ 9.98 $ (0.14) (1.4) % Benefit ratio (a) 90.2 % 89.8 % 0.4 % Operating cost ratio (b) 12.0 % 11.8 % 0.2 % Effective tax rate 17.4 % 25.5 % (8.1) % (a)Represents total benefits expense as a percentage of premiums revenue."},{"id":"e16","sourceId":"filing-2","location":"Consolidated statements of stockholders' equity","excerpt":"6 Humana Inc. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY—(Continued) (Unaudited) Common Stock Capital In Excess of Par Value Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders' Equity Noncontrolling Interests Total Equity Issued Shares Amount (dollars in millions, share amounts in thousands) Six months ended June 30, 2026 Balances, December 31, 2025 198,719 $ 33 $ 3,600 $ 29,075 $ (633) $ (14,418) $ 17,657 $ 80 $ 17,737 Net income 1,880 1,880 (3) 1,877 Distribution to noncontrolling interest holders, net — (13) (13) Other comprehensive loss (118) (118) (118) Common stock repurchases — (108) (108) (108) Dividends and dividend equivalents — (214) (214) (214) Stock-based compensation 116 116 116 Restricted stock unit vesting 1 — (12) 12 — — Stock option exercises — — (3) 3 — — Balances, June 30, 2026 198,720 $ 33 $ 3,701 $ 30,741 $ (751) $ (14,511) $ 19,213 $ 64 $ 19,277 Six months ended June 30, 2025 Balances, December 31, 2024 198,719 $ 33 $ 3,463 $ 28,317 $ (1,067) $ (14,371) $ 16,375 $ 70 $ 16,445 Net income 1,789 1,789 (4) 1,785 Distribution to noncontrolling interest holders, net — (5) (5) Other comprehensive income 284 284 284 Common stock repurchases — (109) (109) (109) Dividends and dividend equivalents — (215) (215) (215) Stock-based compensation 110 110 110 Restricted stock unit vesting — — (16) 16 — — Balances, June 30, 2025 198,719 $ 33 $ 3,557 $ 29,891 $ (783) $ (14,464) $ 18,234 $ 61 $ 18,295 See accompanying notes to condensed consolidated financial statements."},{"id":"e17","sourceId":"filing-2","location":"Consolidated statements of cash flows","excerpt":"7 Humana Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the six months ended June 30, 2026 2025 (in millions) Cash flows from operating activities Net income $ 1,877 $ 1,785 Adjustments to reconcile net income to net cash provided by operating activities: Losses (gains) on investment securities, net 26 (13) Equity in net losses 37 62 Stock-based compensation 116 110 Depreciation 363 396 Amortization 19 30 Impairment of property and equipment 25 14 Impairment of indefinite-lived intangible assets — 32 Changes in operating assets and liabilities, net of effect of businesses acquired and dispositions: Receivables (2,392) (1,800) Other assets (902) (658) Benefits payable 2,909 620 Other liabilities 1,241 1,010 Unearned revenues (107) 14 Other, net 8 — Net cash provided by operating activities 3,220 1,602 Cash flows from investing activities Proceeds from sale of business, net 40 — Acquisitions, net of cash acquired (930) (1) Purchases of property and equipment, net (253) (209) Purchases of investment securities (4,230) (1,941) Proceeds from maturities of investment securities 1,561 1,617 Proceeds from sales of investment securities 1,050 1,243 Changes in securities lending collateral receivable (64) (48) Net cash (used in) provided by investing activities (2,826) 661 Cash flows from financing activities Receipts (payments) from contract deposits, net 547 (579) Proceeds from issuance of notes, net 990 1,481 Repayments of notes (281) (771) Proceeds (repayments) from issuance of commercial paper, net 1,300 (5) Debt issue costs (16) (5) Change in book overdraft 45 (105) Common stock repurchases (108) (109) Dividends paid (214) (214) Changes in securities lending payable 64 48 Changes in rebate factor payable — (123) Other (28) (62) Net cash provided by (used in) financing activities 2,299 (444) Increase in cash and cash equivalents 2,693 1,819 Cash and cash equivalents at beginning of period 4,200 2,221 Cash and cash equivalents at end of period $ 6,893 $ 4,040 See accompanying notes to condensed consolidated financial statements."},{"id":"e18","sourceId":"filing-2","location":"Liquidity: parent cash and short-term investments","excerpt":"Cash, cash equivalents, and short-term investments at the parent company were $1.6 billion at June 30, 2026 compared to $1.5 billion at December 31, 2025."},{"id":"e19","sourceId":"filing-2","location":"Liquidity: payment timing, financing and cash uses","excerpt":"This increase primarily reflects the timing of an approximately $1.05 billion Medicaid state-directed payment that settled shortly after June 30, 2026, net proceeds from the issuance of junior subordinated notes and commercial paper, partially offset by cash paid for acquisitions, capital contributions to certain subsidiaries, repayments of senior notes, cash dividends to shareholders, capital expenditures, and common stock repurchases."},{"id":"e20","sourceId":"filing-2","location":"Debt notes: revolving credit agreement","excerpt":"In May 2025, we entered into an amended and restated 5-year, $5.0 billion unsecured revolving credit agreement."},{"id":"e21","sourceId":"filing-2","location":"Liquidity: issuer assertion of excess statutory capital","excerpt":"We continue to maintain significant levels of aggregate excess statutory capital and surplus in our state-regulated operating subsidiaries."},{"id":"e22","sourceId":"filing-6","location":"Regulatory requirements: state capital requirement bases","excerpt":"Although minimum required levels of equity are largely based on premium volume, product mix, and the quality of assets held, minimum requirements vary significantly at the state level."},{"id":"e23","sourceId":"filing-2","location":"Financial statement notes: investment and intangible impairments","excerpt":"10 Table of Contents Humana Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (Unaudited) In addition, we recorded impairment charges related to minority-interest investments of $21 million within net investment income in our condensed consolidated statements of income for the three and six months ended June 30, 2026 and $32 million, relating to indefinite-lived intangible assets, within operating costs in our condensed consolidated statements of income for the three and six months ended June 30, 2025."},{"id":"e24","sourceId":"filing-2","location":"MD&A: CenterWell revenue and operating income","excerpt":"CenterWell Segment Change Three months ended June 30, Six months ended June 30, Three months ended June 30, 2026 vs 2025 Six months ended June 30, 2026 vs 2025 2026 2025 2026 2025 $ % $ % ($ in millions) Revenues: Services: Home solutions $ 360 $ 360 $ 703 $ 695 $ — —% $ 8 1.2% Pharmacy solutions 382 321 679 599 61 19.0% 80 13.4% Primary care 839 513 1,627 982 326 63.5% 645 65.7% Total external revenues 1,581 1,194 3,009 2,276 387 32.4% 733 32.2% Intersegment revenues: Home solutions 629 563 1,312 1,060 66 11.7% 252 23.8% Pharmacy solutions 3,411 2,814 6,266 5,380 597 21.2% 886 16.5% Primary care 1,169 966 2,303 1,916 203 21.0% 387 20.2% Intersegment revenues 5,209 4,343 9,881 8,356 866 19.9% 1,525 18.3% Total revenues $ 6,790 $ 5,537 $ 12,890 $ 10,632 $ 1,253 22.6% $ 2,258 21.2% Income from operations $ 466 $ 344 $ 755 $ 736 $ 122 35.5% $ 19 2.6% Operating cost ratio 92.4% 92.7% 93.4% 92.0% (0.3)% 1.4% Income from operations CenterWell income from operations increased $122 million, or 35.5%, from $344 million in the 2025 quarter to $466 million in the 2026 quarter and increased $19 million, or 2.6%, from $736 million in the 2025 period to $755 million in the 2026 period primarily due to the same factors impacting the CenterWell segment's revenue and operating cost ratio as more fully described below."},{"id":"e25","sourceId":"filing-1","location":"Liquidity: completed primary care acquisition","excerpt":"On February 13, 2026, we completed the acquisition of a primary care business for consideration of approximately $941 million."},{"id":"e26","sourceId":"filing-3","location":"Executive compensation: outstanding time-based and performance-based awards","excerpt":"At December 31, 2025, the NEOs have stock options and restricted stock units (with both time-based and performance-based vesting) outstanding under our Stock Plan."},{"id":"e27","sourceId":"filing-3","location":"Compensation governance: existing clawback policy","excerpt":"Maintain a Clawback Policy that complies with regulatory requirements and applies to all incentive-based compensation in connection with improper conduct"},{"id":"e28","sourceId":"filing-3","location":"Compensation governance: prohibition on hedging and pledging","excerpt":"No hedging or pledging of Humana securities by associates (including executive officers and directors)"},{"id":"e29","sourceId":"filing-3","location":"Corporate governance: independent chairman and separate CEO","excerpt":"Hilzinger’s effectiveness as our Chairman, status as an independent director and previous service as our Lead Director and the current challenges faced by the Company, the Board believes that separating the chief executive officer and board chairman positions provides the Company with the right foundation to pursue the Company’s strategic and operational objectives, while maintaining effective independent oversight and objective evaluation of the performance of the Company."},{"id":"e30","sourceId":"filing-3","location":"Corporate governance: independent compensation committee","excerpt":"Our severance arrangements and Stock Plan are subject to the ongoing oversight of the Board and its Compensation Committee, which is composed entirely of independent directors, with advice from an independent compensation consultant."},{"id":"e31","sourceId":"filing-2","location":"Regulatory matters: historical fines and practice changes","excerpt":"Some of these reviews have historically resulted in fines imposed on us and some have required changes to some of our practices."},{"id":"e32","sourceId":"filing-6","location":"Liquidity: March 2026 parent cash and investments","excerpt":"Cash, cash equivalents, and short-term investments at the parent company were $111 million at March 31, 2026 compared to $1.5 billion at December 31, 2025."},{"id":"e33","sourceId":"filing-1","location":"Stockholders' equity: actual historical repurchases","excerpt":"Excluding shares acquired in connection with employee stock plans, share repurchases were as follows during the years ended December 31, 2025, 2024 and 2023: 2025 2024 2023 Authorization Date Purchase Not to Exceed Shares Cost Shares Cost Shares Cost (in millions) February 2024 $ 3,000 0.4 $ 100 0.2 $ 74 — $ — February 2023 $ 3,000 — $ — 1.7 $ 676 3.1 $ 1,500 February 2021 $ 3,000 — $ — — $ — — $ — Total repurchases 0.4 $ 100 1.9 $ 750 3.1 $ 1,500 In connection with employee stock plans, we acquired 0.2 million common shares for $51 million in 2025, 0.2 million common shares for $46 million in 2024, and 0.2 million common shares for $73 million in 2023."},{"id":"e34","sourceId":"filing-1","location":"Schedule I: parent-only cash flows and capital contributions","excerpt":"SCHEDULE I—PARENT COMPANY FINANCIAL INFORMATION CONDENSED STATEMENTS OF CASH FLOWS For the year ended December 31, 2025 2024 2023 (in millions) Net cash provided by operating activities $ 2,495 $ 3,454 $ 3,042 Cash flows from investing activities: Acquisitions, net of cash acquired (81) (89) (233) Proceeds from sale of business 115 — — Capital contributions to operating subsidiaries (1,024) (1,698) (792) Purchases of property and equipment, net (440) (426) (761) Purchases of investment securities (3) (16) (17) Proceeds from sale of investment securities 8 — 41 Maturities of investment securities 27 32 67 Changes in securities lending collateral (2) — — Other — (50) — Net cash used in investing activities (1,400) (2,247) (1,695) Cash flows from financing activities: Proceeds from issuance of senior notes, net 1,476 2,225 2,537 Repayments of senior notes (948) (1,107) (1,832) (Repayments) proceeds from issuance of commercial paper, net (5) (907) 211 Repayment of term loan — — (500) Change in book overdraft (27) (5) 2 Common stock repurchases (151) (817) (1,573) Dividends paid (430) (431) (431) Changes in securities lending payable 2 — — Proceeds from stock option exercises and other (13) (86) (125) Net cash used in financing activities (96) (1,128) (1,711) Increase (decrease) in cash and cash equivalents 999 79 (364) Cash and cash equivalents at beginning of year 329 250 614 Cash and cash equivalents at end of year $ 1,328 $ 329 $ 250 See accompanying notes to the parent company financial statements."},{"id":"e35","sourceId":"filing-1","location":"Commitments: binding purchase obligations","excerpt":"We have purchase obligation commitments of $1.2 billion in 2026, $953 million in 2027, $595 million in 2028, $298 million in 2029, and $273 million in 2030."},{"id":"e36","sourceId":"filing-1","location":"Business: generic competitor categories","excerpt":"Our competitors vary by local market and include other managed care companies, national insurance companies, and other HMOs and PPOs."},{"id":"e37","sourceId":"filing-3","location":"Compensation discussion: named compensation peers","excerpt":"Following its annual review, the Committee determined that no modifications were needed and subsequently approved the following peer group (the “Peer Group”) for 2025 compensation decisions: ​ ​ ​ ​ ​ ​ ​ 50 ​ ​ Humana | 2026 Proxy Statement • Compensation Discussion and Analysis ​ TABLE OF CONTENTS​​ ​ Managed Care Peers ​ ​ ​ Healthcare Services & Facilities Peers ​ ​ ​ Financial & Insurance Peers ​ ​ ☐ Centene Corporation ​ ​ ​ ☐ Cencora ​ ​ ​ ☐ Aflac, Inc."},{"id":"e38","sourceId":"filing-1","location":"Business: federal revenue concentration","excerpt":"During 2025, 83% of our total premiums and services revenue were derived from contracts with the federal government, including 14% derived from our individual Medicare Advantage contracts in Florida with the Centers for Medicare and Medicaid Services, or CMS, under which we provided health insurance coverage to approximately 1.0 million members as of December 31, 2025."},{"id":"e39","sourceId":"filing-2","location":"Intangible assets note: 2025 impairment","excerpt":"We recorded an impairment charge of $128 million relating to our indefinite-lived intangible assets in 2025."}],"changes":["Retain the previous none verdict: affirmative disclosures of low barriers and annual switching establish a weak structural position rather than merely insufficient evidence.","Give explicit weight to favorable realized 2026 pricing, recontracting and administrative efficiencies; these qualify the prior pricing assessment without establishing durable pricing power.","Add insurer-specific financial and capital allocation assessments, leaving capital adequacy ungraded because regulatory capital amounts, ratios and exact denominators are absent."],"limitations":["The assessment uses only supplied passages. Sources retain their filed dates; no retrieval date is treated as publication.","Competitive disclosures identify generic categories. Named compensation peers are not established product-market competitors, so competitor arrays remain empty.","Retention improvement and explanations of pricing, clinical effectiveness and cost savings are issuer-reported. Comparative costs, absolute retention rates and sustained relative outcomes are unavailable.","Statutory capital sufficiency is asserted without quantified capital, applicable requirements or a defined RBC denominator. No regulatory headroom is inferred.","Investment composition, duration matching, detailed reserve development and reinsurance recoverability are insufficiently disclosed. Deposit-accounted insurance arrangements are not treated as demonstrated GAAP reinsurance protection.","Actual outstanding equity awards and existing governance policies support management assessment, but executive ownership amounts and detailed realized incentive payouts are absent. Proposed 2026 plan provisions are not treated as adopted based on the March proxy.","The March proxy contains an April approval statement inconsistent with its filing chronology; that statement is not relied upon.","All financial grades use filings dated within 550 days of October 18, 2026. First-half earnings are not annualized, parent cash flows are not consolidated cash flows, and accounting equity is not regulatory capital."],"qualityAssessments":[{"category":"moat","checks":[{"criterion":"structural_advantage","grade":0,"rationale":"Explicitly low entry barriers and annual switching flexibility contradict structural protection; operating scale does not establish superiority over better-resourced competitors.","evidenceIds":["e1","e3","e7"]},{"criterion":"durability","grade":1,"rationale":"Integrated care has substantial deployment, but its membership penetration declined and government payment changes have produced a realized underwriting headwind.","evidenceIds":["e6","e9"]},{"criterion":"customer_dependency","grade":1,"rationale":"Reported retention improved by more than 500 basis points, but customers retain annual switching flexibility and no dependency is demonstrated.","evidenceIds":["e1","e5"]},{"criterion":"erosion_resilience","grade":1,"rationale":"Administrative savings and positive earnings partly cushion pressure, but benefit ratios worsened and first-half operating income was essentially flat despite substantial revenue growth.","evidenceIds":["e7","e9","e14"]}]},{"category":"pricing_power","checks":[{"criterion":"realized_pricing","grade":2,"rationale":"2026 MA pricing, clinical efforts and group recontracting helped offset assumed claims trends with largely stable benefits. Government benchmark funding and subsidies materially contributed, limiting attribution to discretionary pricing power.","evidenceIds":["e12","e13"]},{"criterion":"retention","grade":2,"rationale":"The issuer reports a direct improvement exceeding 500 basis points in Individual MA retention. Absolute retention and persistence are absent, while annual switching remains easy.","evidenceIds":["e5","e1"]},{"criterion":"margin_resilience","grade":1,"rationale":"First-half benefit ratio increased to 90.2% from 88.4%; administrative efficiencies kept operating income broadly stable but did not prevent underwriting deterioration.","evidenceIds":["e14","e9","e7"]},{"criterion":"contractual_freedom","grade":1,"rationale":"Government decisions directly shape premiums and costs, and federal contracts supplied 83% of 2025 premiums and services revenue. Recontracting demonstrates some flexibility within these constraints.","evidenceIds":["e4","e38","e12"]}]},{"category":"strong_management","checks":[{"criterion":"capital_discipline","grade":2,"rationale":"Actual repurchases fell sharply in 2025 while parent capital contributions continued. Positive cash generation supports spending, but acquisition outlays, financing and the March parent liquidity trough show competing demands on capital.","evidenceIds":["e33","e34","e17","e32"]},{"criterion":"incentive_alignment","grade":2,"rationale":"Actual outstanding awards include time-based and performance-based vesting; existing clawback and anti-hedging policies support alignment. Ownership amounts, realized payouts and detailed performance calibration are missing.","evidenceIds":["e26","e27","e28"]},{"criterion":"execution","grade":2,"rationale":"Reported retention gains and administrative efficiencies demonstrate progress. Operating results are mixed: first-half net income improved, but operating income was essentially flat and transformation charges increased. Execution is assessed partly from indirect operating evidence.","evidenceIds":["e5","e7","e14","e10"]},{"criterion":"governance","grade":2,"rationale":"An independent chairman, separate CEO and independent compensation committee establish oversight mechanisms. Historical regulatory fines and required practice changes temper confidence in demonstrated effectiveness; allegations are not treated as findings.","evidenceIds":["e29","e30","e31"]}]}],"financialAssessments":[{"category":"financial_strength","checks":[{"criterion":"capital_adequacy","grade":null,"rationale":"The issuer asserts significant excess statutory capital, and state requirements depend on premium volume, product mix and asset quality. No quantified statutory capital, applicable minimum or exact solvency denominator permits an adequacy grade.","evidenceIds":["e21","e22"]},{"criterion":"liquidity_funding","grade":2,"rationale":"June consolidated cash reached $6.893 billion, operating cash flow was positive and a $5 billion revolving agreement exists. However, increased borrowing, restricted subsidiary transfers and a $1.05 billion payment settling after quarter-end qualify the apparent liquidity improvement; parent liquidity had fallen to $111 million in March.","evidenceIds":["e17","e18","e19","e20","e32"]},{"criterion":"asset_liability_risk","grade":2,"rationale":"Claims experience is mixed: favorable prior-period development continued at a lower level, while benefit ratios increased. Minority-investment impairments add adverse investment evidence. Detailed reserve adequacy, portfolio exposures and asset/liability matching are unavailable, limiting this grade.","evidenceIds":["e9","e23","e14"]},{"criterion":"earnings_resilience","grade":2,"rationale":"2025 net income remained near $1.2 billion and first-half 2026 consolidated net income increased to $1.877 billion. Earnings stayed positive through disclosed pressures, but worsening claims ratios and essentially flat first-half operating income show limited resilience to funding and claims changes.","evidenceIds":["e15","e14","e9"]}]},{"category":"capital_allocation","checks":[{"criterion":"capital_efficiency","grade":2,"rationale":"2025 attributable earnings of $1.203 billion against average opening and closing GAAP stockholders' equity imply approximately 7.1% accounting ROE. First-half attributable earnings subsequently improved. These mixed returns use consolidated shareholder equity, not statutory capital, and do not demonstrate exceptional efficiency.","evidenceIds":["e15","e16"]},{"criterion":"distributions_and_buffers","grade":2,"rationale":"First-half dividends of $214 million and repurchases of $108 million were below reported earnings, while stockholders' equity increased. However, parent payment timing, borrowing and the March liquidity trough qualify buffer strength; statutory headroom remains unquantified.","evidenceIds":["e16","e17","e19","e32"]},{"criterion":"dilution_and_cost","grade":2,"rationale":"Stock-based compensation increased to $116 million from $110 million, while diluted EPS growth roughly tracked attributable earnings growth, suggesting limited net dilution in this comparison. Financing costs worsened: first-half interest expense rose to $390 million from $317 million alongside additional borrowing.","evidenceIds":["e16","e14","e17"]},{"criterion":"investment_discipline","grade":2,"rationale":"The approximately $941 million primary care acquisition and ongoing reinvestment expanded CenterWell's external business, but first-half segment operating income grew only 2.6% against 21.2% revenue growth. Investment and intangible impairments and binding purchase commitments temper the growth evidence; acquisition-specific returns remain unproven.","evidenceIds":["e25","e11","e24","e23","e39","e35"]}]}],"qualityPolicy":"quality-scores-2","sourcePolicy":"issuer-evidence-4","financialAssessmentPolicy":"financial-industry-1","financialSector":"insurance","basisHash":"9c33010fad72b6a12368a6a0a664d953c480ada0d11fedb5d853a87e03db3d72","updatedAt":"2026-10-18T13:32:29.829Z","sources":[{"id":"filing-1","url":"https://www.sec.gov/Archives/edgar/data/49071/000004907126000009/hum-20251231.htm","publishedAt":"2026-02-19","sha256":"76099f293183154dfcd71dedea4ceaa585b3947c84341ed8f6c9cd1d0a2fa174","dateKind":"filed"},{"id":"filing-2","url":"https://www.sec.gov/Archives/edgar/data/49071/000004907126000050/hum-20260630.htm","publishedAt":"2026-07-29","sha256":"f3729d57e1beb0dbb127d7a9994974b0ceacbb6d56de30dfee5823697863806e","dateKind":"filed"},{"id":"filing-3","url":"https://www.sec.gov/Archives/edgar/data/49071/000110465926024393/tm2518709-2_def14a.htm","publishedAt":"2026-03-06","sha256":"bfcc27ecedf3c2837b5b0e7c1002e11ca79cdfad14d037e5f93ab477aa88b184","dateKind":"filed"},{"id":"filing-4","url":"https://www.sec.gov/Archives/edgar/data/49071/000004907125000007/hum-20241231.htm","publishedAt":"2025-02-20","sha256":"e7b8ccb5a49b54dcce0dc35d34f1ad611dea783804e7eb3c8dfa12ecb4e6b57d","dateKind":"filed"},{"id":"filing-5","url":"https://www.sec.gov/Archives/edgar/data/49071/000004907124000012/hum-20231231.htm","publishedAt":"2024-02-15","sha256":"9c3bd4116056e1153dcd30f7225574d158d979bf16ac43384748a8f235148a89","dateKind":"filed"},{"id":"filing-6","url":"https://www.sec.gov/Archives/edgar/data/49071/000004907126000023/hum-20260331.htm","publishedAt":"2026-04-29","sha256":"85999202de7d276f6e2ae96e16c10bd17d02bf8e03589aefcd6627f4f60c8fc8","dateKind":"filed"}],"model":"gpt-6.1-sol","providerId":"codex:115a5093bb3001a5412bfa6505ba4a462c146b58d255548116f6d8c2cc283a40","usage":{"input_tokens":91221,"cached_input_tokens":0,"cache_write_input_tokens":0,"output_tokens":4254,"reasoning_output_tokens":174},"basisSupplement":{"previousHash":"e1c7d51d51e083c47f764f23f6688edb415b493fded760a18c96af0315a263cd","checkedAt":"2026-10-18T16:49:32.080Z","rule":"dated historical and missing inputs only; accepted observations and research date retained"}},"signals":[{"period":"2021","end":"2021-12-31","values":{"gross_margin":null,"operating_margin":3.7898487912934606,"roic":null,"fcf_margin":1.1388808629490514,"sbc_revenue":0.21670037561398442},"issues":{"peg":"TTM earnings per diluted share growth is zero or negative; a growth-adjusted multiple requires positive growth.","pfcf_growth":"TTM FCF per diluted share growth is zero or negative; a growth-adjusted multiple requires positive growth.","ev_sales":"Not applicable to banks and insurers: these ratios use an industrial-company capital model.","ev_ebitda":"Not applicable to banks and insurers: these ratios use an industrial-company capital model.","software_capex":"Separately disclosed software and intangible investment is unavailable in the extracted statements for this period.","gross_margin":"The reported inputs required for this metric are unavailable in the extracted statements for this period.","ebitda_margin":"Not applicable to banks and insurers: these ratios use an industrial-company capital model.","roic":"Not applicable to banks and insurers: these ratios use an industrial-company capital model.","roce":"Not applicable to banks and insurers: these ratios use an industrial-company capital model.","roiic":"Not applicable to banks and insurers: these ratios use an industrial-company capital model.","roic_wacc":"Not applicable to banks and insurers: these ratios use an industrial-company capital model.","net_debt_ebitda":"Not applicable to banks and insurers: these ratios use an industrial-company capital model.","interest_coverage":"Not applicable to banks and insurers: these ratios use an industrial-company capital model."}},{"period":"2022","end":"2022-12-31","values":{"gross_margin":null,"operating_margin":4.091741143533972,"roic":null,"fcf_margin":3.7331754064821796,"sbc_revenue":0.2325831807903521},"issues":{"peg":"TTM earnings per diluted share growth is zero or negative; a growth-adjusted multiple requires positive growth.","ev_sales":"Not applicable to banks and insurers: these ratios use an industrial-company capital model.","ev_ebitda":"Not applicable to banks and insurers: these ratios use an industrial-company capital model.","software_capex":"Separately disclosed software and intangible investment is unavailable in the extracted statements for this period.","gross_margin":"The reported inputs required for this metric are unavailable in the extracted statements for this period.","ebitda_margin":"Not applicable to banks and insurers: these ratios use an industrial-company capital model.","roic":"Not applicable to banks and insurers: these ratios use an industrial-company capital model.","roce":"Not applicable to banks and insurers: these ratios use an industrial-company capital model.","roiic":"Not applicable to banks and insurers: these ratios use an industrial-company capital model.","roic_wacc":"Not applicable to banks and insurers: these ratios use an industrial-company capital model.","net_debt_ebitda":"Not applicable to banks and insurers: these ratios use an industrial-company capital model.","interest_coverage":"Not applicable to banks and insurers: these ratios use an industrial-company capital model."}},{"period":"2023","end":"2023-12-31","values":{"gross_margin":null,"operating_margin":3.772538402241149,"roic":null,"fcf_margin":2.798616203207551,"sbc_revenue":0.16451388497189162},"issues":{"peg":"TTM earnings per diluted share growth is zero or negative; 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