Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Debt Ratios
Coverage Ratios
Humana Inc., solvency ratios
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 analysis of solvency ratios reveals a marked increase in the company's reliance on debt financing, particularly peaking around 2021, followed by a period of slight stabilization. While the overall solvency remains intact, there is a clear trend toward higher leverage and a corresponding decline in the capacity to cover fixed financial obligations.
- Debt Leverage Ratios
- A significant escalation in debt-related ratios occurred between 2020 and 2021. The debt to equity ratio rose from 0.51 to 0.80, and the debt to assets ratio increased from 0.20 to 0.29 during this period. Since 2021, these metrics have experienced a marginal downward trend, with debt to equity settling at 0.74 and debt to assets at 0.26 by December 31, 2023. The inclusion of operating lease liabilities consistently shifts these ratios upward, though the trajectory remains identical to the primary debt metrics.
- Capital Structure and Financial Leverage
- Debt to capital ratios mirrored the pattern of the leverage metrics, peaking in 2021 at 0.44 before slightly receding to 0.42 by 2023. Conversely, financial leverage has demonstrated a consistent and uninterrupted upward trajectory throughout the five-year period, rising from 2.42 in 2019 to 2.89 in 2023. This indicates a steady increase in the proportion of assets financed through debt relative to equity.
- Coverage Ratios
- A pronounced downward trend is observed in the company's ability to service its debt. Interest coverage peaked in 2020 at 17.52 but has since declined steeply to 7.73 by the end of 2023. Similarly, the fixed charge coverage ratio decreased from a high of 12.02 in 2020 to 6.20 in 2023. This contraction suggests that earnings are providing less of a cushion to meet interest and fixed obligations than in previous years.
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Debt to Equity
Humana Inc., debt to equity calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Book overdraft | 353) | 298) | 326) | 320) | 225) | |
| Short-term debt | 1,443) | 2,092) | 1,953) | 600) | 699) | |
| Long-term debt | 10,213) | 9,034) | 10,541) | 6,060) | 4,967) | |
| Total debt | 12,009) | 11,424) | 12,820) | 6,980) | 5,891) | |
| Stockholders’ equity | 16,262) | 15,311) | 16,080) | 13,728) | 12,037) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.74 | 0.75 | 0.80 | 0.51 | 0.49 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Abbott Laboratories | 0.38 | 0.46 | 0.50 | — | — | |
| Elevance Health Inc. | 0.64 | 0.66 | 0.64 | — | — | |
| Intuitive Surgical Inc. | 0.00 | 0.00 | 0.00 | — | — | |
| Medtronic PLC | 0.47 | 0.46 | 0.51 | — | — | |
| UnitedHealth Group Inc. | 0.70 | 0.74 | 0.64 | — | — | |
| Debt to Equity, Sector | ||||||
| Health Care Equipment & Services | 0.55 | 0.57 | 0.55 | — | — | |
| Debt to Equity, Industry | ||||||
| Health Care | 0.82 | 0.72 | 0.80 | — | — | |
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).
1 2023 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity
= 12,009 ÷ 16,262 = 0.74
2 Click competitor name to see calculations.
The solvency profile reflects a period of significant expansion in leverage followed by a phase of relative stabilization. Between 2019 and 2023, the financial structure shifted toward a higher reliance on debt, although equity remained the primary source of funding throughout the observed period.
- Total Debt Trends
- A substantial increase in total debt occurred between 2019 and 2021, where obligations rose from US$ 5,891 million to a peak of US$ 12,820 million. Following this surge, debt levels experienced a moderate decrease in 2022 before increasing slightly to US$ 12,009 million by the end of 2023.
- Stockholders' Equity Growth
- Equity demonstrated a generally upward trajectory, growing from US$ 12,037 million in 2019 to US$ 16,262 million in 2023. A temporary contraction was noted in 2022, with equity decreasing to US$ 15,311 million, before returning to growth in the final year.
- Debt to Equity Ratio Analysis
- The debt to equity ratio remained relatively stable between 2019 and 2020, moving from 0.49 to 0.51. A sharp increase was recorded in 2021, with the ratio peaking at 0.80, directly coinciding with the rapid expansion of total debt. Subsequently, the ratio moderated to 0.75 in 2022 and 0.74 in 2023. This progression indicates a strategic increase in leverage that has since plateaued, maintaining a position where total debt remains below the total value of stockholders' equity.
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Debt to Equity (including Operating Lease Liability)
Humana Inc., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Book overdraft | 353) | 298) | 326) | 320) | 225) | |
| Short-term debt | 1,443) | 2,092) | 1,953) | 600) | 699) | |
| Long-term debt | 10,213) | 9,034) | 10,541) | 6,060) | 4,967) | |
| Total debt | 12,009) | 11,424) | 12,820) | 6,980) | 5,891) | |
| Operating lease liabilities (included within Trade accounts payable and accrued expenses) | 149) | 152) | 185) | 129) | 116) | |
| Operating lease liabilities (included within Other long-term liabilities) | 444) | 456) | 546) | 355) | 332) | |
| Total debt (including operating lease liability) | 12,602) | 12,032) | 13,551) | 7,464) | 6,339) | |
| Stockholders’ equity | 16,262) | 15,311) | 16,080) | 13,728) | 12,037) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 0.77 | 0.79 | 0.84 | 0.54 | 0.53 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Abbott Laboratories | 0.41 | 0.49 | 0.54 | — | — | |
| Elevance Health Inc. | 0.66 | 0.69 | 0.67 | — | — | |
| Intuitive Surgical Inc. | 0.01 | 0.01 | 0.01 | — | — | |
| Medtronic PLC | 0.49 | 0.48 | 0.53 | — | — | |
| UnitedHealth Group Inc. | 0.76 | 0.80 | 0.70 | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Health Care Equipment & Services | 0.58 | 0.61 | 0.58 | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Health Care | 0.85 | 0.76 | 0.83 | — | — | |
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).
1 2023 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Stockholders’ equity
= 12,602 ÷ 16,262 = 0.77
2 Click competitor name to see calculations.
The solvency profile indicates a period of increased leverage followed by a phase of relative stabilization. Between 2019 and 2023, there was a significant expansion in the total debt load, which fundamentally altered the debt-to-equity ratio, although consistent growth in stockholders' equity provided a partial offset to the increase in liabilities.
- Total Debt Trends
- Total debt, including operating lease liabilities, rose from US$ 6,339 million in 2019 to US$ 12,602 million in 2023. A sharp escalation occurred in 2021, where debt increased to US$ 13,551 million, representing an 81% increase over the 2020 level. Following this peak, debt levels experienced a slight contraction in 2022 before increasing again in 2023.
- Stockholders' Equity Progression
- Stockholders' equity exhibited an overall upward trajectory, growing from US$ 12,037 million in 2019 to US$ 16,262 million in 2023. Growth was consistent through 2021, reaching US$ 16,080 million, followed by a moderate decline to US$ 15,311 million in 2022 and a subsequent recovery in 2023.
- Debt to Equity Ratio Analysis
- The debt to equity ratio remained stable and low during 2019 and 2020, recorded at 0.53 and 0.54 respectively. A significant spike to 0.84 was observed in 2021, directly coinciding with the rapid accumulation of debt. In the subsequent two years, the ratio moderated to 0.79 in 2022 and 0.77 in 2023, suggesting a gradual improvement in the balance between borrowed capital and equity.
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Debt to Capital
Humana Inc., debt to capital calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Book overdraft | 353) | 298) | 326) | 320) | 225) | |
| Short-term debt | 1,443) | 2,092) | 1,953) | 600) | 699) | |
| Long-term debt | 10,213) | 9,034) | 10,541) | 6,060) | 4,967) | |
| Total debt | 12,009) | 11,424) | 12,820) | 6,980) | 5,891) | |
| Stockholders’ equity | 16,262) | 15,311) | 16,080) | 13,728) | 12,037) | |
| Total capital | 28,271) | 26,735) | 28,900) | 20,708) | 17,928) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.42 | 0.43 | 0.44 | 0.34 | 0.33 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Abbott Laboratories | 0.28 | 0.31 | 0.34 | — | — | |
| Elevance Health Inc. | 0.39 | 0.40 | 0.39 | — | — | |
| Intuitive Surgical Inc. | 0.00 | 0.00 | 0.00 | — | — | |
| Medtronic PLC | 0.32 | 0.31 | 0.34 | — | — | |
| UnitedHealth Group Inc. | 0.41 | 0.43 | 0.39 | — | — | |
| Debt to Capital, Sector | ||||||
| Health Care Equipment & Services | 0.35 | 0.36 | 0.35 | — | — | |
| Debt to Capital, Industry | ||||||
| Health Care | 0.45 | 0.42 | 0.44 | — | — | |
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).
1 2023 Calculation
Debt to capital = Total debt ÷ Total capital
= 12,009 ÷ 28,271 = 0.42
2 Click competitor name to see calculations.
The analysis of the solvency metrics from 2019 to 2023 reveals a period of significant expansion in both total debt and total capital, resulting in a higher overall leverage profile compared to the start of the period. A marked shift in the capital structure occurred in 2021, followed by a period of stabilization through 2023.
- Total Debt Trends
- Total debt exhibited a consistent upward trajectory over the five-year period, increasing from US$ 5,891 million in 2019 to US$ 12,009 million by the end of 2023. The most substantial increase occurred between 2020 and 2021, where debt levels rose by approximately 83.7%. Although a slight reduction was noted in 2022, debt levels returned to an upward path in 2023.
- Total Capital Expansion
- Total capital grew from US$ 17,928 million in 2019 to US$ 28,271 million in 2023. Similar to the debt trend, a significant peak was reached in 2021 at US$ 28,900 million. The fluctuations in total capital closely mirror the movements in total debt, suggesting that debt issuance was a primary driver of capital growth during this timeframe.
- Debt to Capital Ratio Analysis
- The debt to capital ratio increased from 0.33 in 2019 to 0.42 in 2023. A sharp escalation is observed between 2020 (0.34) and 2021 (0.44), indicating a strategic shift toward increased leverage. Since 2021, the ratio has remained relatively stable, experiencing a marginal decline to 0.43 in 2022 and 0.42 in 2023, which suggests a transition toward a more consistent capital structure after the 2021 expansion.
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Debt to Capital (including Operating Lease Liability)
Humana Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Book overdraft | 353) | 298) | 326) | 320) | 225) | |
| Short-term debt | 1,443) | 2,092) | 1,953) | 600) | 699) | |
| Long-term debt | 10,213) | 9,034) | 10,541) | 6,060) | 4,967) | |
| Total debt | 12,009) | 11,424) | 12,820) | 6,980) | 5,891) | |
| Operating lease liabilities (included within Trade accounts payable and accrued expenses) | 149) | 152) | 185) | 129) | 116) | |
| Operating lease liabilities (included within Other long-term liabilities) | 444) | 456) | 546) | 355) | 332) | |
| Total debt (including operating lease liability) | 12,602) | 12,032) | 13,551) | 7,464) | 6,339) | |
| Stockholders’ equity | 16,262) | 15,311) | 16,080) | 13,728) | 12,037) | |
| Total capital (including operating lease liability) | 28,864) | 27,343) | 29,631) | 21,192) | 18,376) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.44 | 0.44 | 0.46 | 0.35 | 0.34 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Abbott Laboratories | 0.29 | 0.33 | 0.35 | — | — | |
| Elevance Health Inc. | 0.40 | 0.41 | 0.40 | — | — | |
| Intuitive Surgical Inc. | 0.01 | 0.01 | 0.01 | — | — | |
| Medtronic PLC | 0.33 | 0.32 | 0.35 | — | — | |
| UnitedHealth Group Inc. | 0.43 | 0.45 | 0.41 | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Health Care Equipment & Services | 0.37 | 0.38 | 0.37 | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Health Care | 0.46 | 0.43 | 0.45 | — | — | |
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).
1 2023 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 12,602 ÷ 28,864 = 0.44
2 Click competitor name to see calculations.
The company's solvency profile experienced a notable shift between 2019 and 2023, characterized by a substantial increase in total leverage that stabilized in the latter part of the period.
- Total Debt Trends
- Total debt, including operating lease liabilities, rose from US$ 6,339 million in 2019 to a peak of US$ 13,551 million in 2021. Following this peak, debt levels saw a moderate reduction in 2022 before ending the period at US$ 12,602 million in 2023.
- Total Capital Expansion
- Total capital exhibited a consistent overall upward trajectory, growing from US$ 18,376 million in 2019 to US$ 28,864 million in 2023. This expansion indicates a broadening of the total funding base over the five-year window.
- Debt to Capital Ratio Analysis
- The debt to capital ratio remained relatively stable at 0.34 to 0.35 during 2019 and 2020, followed by a sharp increase to 0.46 in 2021. In the final two years of the analysis, the ratio settled at 0.44, suggesting that while the company maintains a higher leverage position than in 2019, the capital structure has reached a point of relative stability.
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Debt to Assets
Humana Inc., debt to assets calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Book overdraft | 353) | 298) | 326) | 320) | 225) | |
| Short-term debt | 1,443) | 2,092) | 1,953) | 600) | 699) | |
| Long-term debt | 10,213) | 9,034) | 10,541) | 6,060) | 4,967) | |
| Total debt | 12,009) | 11,424) | 12,820) | 6,980) | 5,891) | |
| Total assets | 47,065) | 43,055) | 44,358) | 34,969) | 29,074) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.26 | 0.27 | 0.29 | 0.20 | 0.20 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Abbott Laboratories | 0.20 | 0.23 | 0.24 | — | — | |
| Elevance Health Inc. | 0.23 | 0.23 | 0.24 | — | — | |
| Intuitive Surgical Inc. | 0.00 | 0.00 | 0.00 | — | — | |
| Medtronic PLC | 0.27 | 0.27 | 0.28 | — | — | |
| UnitedHealth Group Inc. | 0.23 | 0.23 | 0.22 | — | — | |
| Debt to Assets, Sector | ||||||
| Health Care Equipment & Services | 0.23 | 0.23 | 0.23 | — | — | |
| Debt to Assets, Industry | ||||||
| Health Care | 0.30 | 0.28 | 0.30 | — | — | |
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).
1 2023 Calculation
Debt to assets = Total debt ÷ Total assets
= 12,009 ÷ 47,065 = 0.26
2 Click competitor name to see calculations.
An analysis of the solvency position from 2019 through 2023 reveals a period of initial stability followed by a significant increase in leverage and a subsequent gradual decline in the debt-to-asset relationship.
- Total Debt Evolution
- Total debt remained relatively stable between 2019 and 2020, before experiencing a sharp increase in 2021, where it rose from 6,980 million US$ to 12,820 million US$. Following this peak, debt levels fluctuated slightly, ending the period at 12,009 million US$ in 2023.
- Total Asset Expansion
- A consistent upward trajectory in total assets is observed, growing from 29,074 million US$ in 2019 to 47,065 million US$ by 2023. Despite a minor contraction in 2022, the overall growth in assets has provided a larger base to support the company's debt obligations.
- Debt to Assets Ratio Dynamics
- The debt to assets ratio was constant at 0.20 during 2019 and 2020. A significant spike to 0.29 occurred in 2021, coinciding with the substantial increase in total debt. Since 2021, a downward trend has emerged, with the ratio improving to 0.27 in 2022 and further to 0.26 in 2023, indicating a gradual reduction in the proportion of assets financed through debt.
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Debt to Assets (including Operating Lease Liability)
Humana Inc., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Book overdraft | 353) | 298) | 326) | 320) | 225) | |
| Short-term debt | 1,443) | 2,092) | 1,953) | 600) | 699) | |
| Long-term debt | 10,213) | 9,034) | 10,541) | 6,060) | 4,967) | |
| Total debt | 12,009) | 11,424) | 12,820) | 6,980) | 5,891) | |
| Operating lease liabilities (included within Trade accounts payable and accrued expenses) | 149) | 152) | 185) | 129) | 116) | |
| Operating lease liabilities (included within Other long-term liabilities) | 444) | 456) | 546) | 355) | 332) | |
| Total debt (including operating lease liability) | 12,602) | 12,032) | 13,551) | 7,464) | 6,339) | |
| Total assets | 47,065) | 43,055) | 44,358) | 34,969) | 29,074) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.27 | 0.28 | 0.31 | 0.21 | 0.22 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Abbott Laboratories | 0.22 | 0.24 | 0.26 | — | — | |
| Elevance Health Inc. | 0.24 | 0.24 | 0.25 | — | — | |
| Intuitive Surgical Inc. | 0.01 | 0.01 | 0.01 | — | — | |
| Medtronic PLC | 0.28 | 0.27 | 0.29 | — | — | |
| UnitedHealth Group Inc. | 0.25 | 0.25 | 0.24 | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Health Care Equipment & Services | 0.24 | 0.25 | 0.25 | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Health Care | 0.32 | 0.29 | 0.31 | — | — | |
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).
1 2023 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 12,602 ÷ 47,065 = 0.27
2 Click competitor name to see calculations.
Analysis of solvency ratios from 2019 to 2023 reveals a period of significant balance sheet expansion followed by a gradual stabilization of the leverage profile.
- Total Debt and Asset Growth
- Total debt, including operating lease liabilities, increased from US$ 6,339 million in 2019 to a peak of US$ 13,551 million in 2021. This period of rapid debt accumulation coincided with a substantial increase in total assets, which rose from US$ 29,074 million in 2019 to US$ 44,358 million in 2021. Following this peak, total assets reached a five-year high of US$ 47,065 million in 2023, while debt levels stabilized at US$ 12,602 million.
- Debt to Assets Ratio Trends
- The debt to assets ratio remained relatively stable between 2019 and 2020, moving from 0.22 to 0.21. A sharp increase was observed in 2021, with the ratio peaking at 0.31, reflecting a higher proportion of assets financed through debt. Subsequently, a downward trend occurred, with the ratio declining to 0.28 in 2022 and further to 0.27 by the end of 2023.
- Solvency Implications
- The data indicates a structural shift in the company's solvency profile starting in 2021, characterized by a marked increase in total leverage. However, the gradual reduction of the debt to assets ratio from 0.31 in 2021 to 0.27 in 2023 suggests an ongoing effort to optimize the balance sheet, as asset growth has outpaced the growth of debt obligations in the most recent two-year period.
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Financial Leverage
Humana Inc., financial leverage calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| 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 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Abbott Laboratories | 1.90 | 2.03 | 2.10 | — | — | |
| Elevance Health Inc. | 2.77 | 2.83 | 2.70 | — | — | |
| Intuitive Surgical Inc. | 1.16 | 1.17 | 1.14 | — | — | |
| Medtronic PLC | 1.77 | 1.73 | 1.81 | — | — | |
| UnitedHealth Group Inc. | 3.08 | 3.16 | 2.96 | — | — | |
| Financial Leverage, Sector | ||||||
| Health Care Equipment & Services | 2.43 | 2.46 | 2.37 | — | — | |
| Financial Leverage, Industry | ||||||
| Health Care | 2.70 | 2.57 | 2.69 | — | — | |
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).
1 2023 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity
= 47,065 ÷ 16,262 = 2.89
2 Click competitor name to see calculations.
An analysis of the balance sheet components from 2019 through 2023 reveals a period of significant asset expansion accompanied by a gradual increase in financial gearing. Although a minor contraction occurred in 2022, the overall trajectory for both total assets and stockholders' equity remained positive over the five-year horizon.
- Financial Leverage Trend
- The financial leverage ratio has exhibited a consistent upward trajectory, increasing from 2.42 in 2019 to 2.89 in 2023. This steady rise indicates an increasing reliance on debt or other external obligations to finance the asset base relative to the growth of equity.
- Asset and Equity Growth Dynamics
- Total assets grew from US$ 29,074 million to US$ 47,065 million, while stockholders' equity rose from US$ 12,037 million to US$ 16,262 million. The acceleration in asset growth outpaced the accumulation of equity, which fundamentally drove the increase in the leverage ratio.
- Analysis of the 2022 Fiscal Period
- A simultaneous decline in total assets and stockholders' equity was observed in 2022. However, the financial leverage ratio continued to increase during this period, rising from 2.76 to 2.81. This suggests that equity decreased at a higher rate than total liabilities, thereby increasing the overall leverage despite the reduction in the total size of the balance sheet.
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Interest Coverage
Humana Inc., interest coverage calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Humana | 2,489) | 2,806) | 2,933) | 3,367) | 2,707) | |
| Add: Net income attributable to noncontrolling interest | (5) | (4) | 1) | —) | —) | |
| Add: Income tax expense | 836) | 762) | 485) | 1,307) | 763) | |
| Add: Interest expense | 493) | 401) | 326) | 283) | 242) | |
| Earnings before interest and tax (EBIT) | 3,813) | 3,965) | 3,745) | 4,957) | 3,712) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 7.73 | 9.89 | 11.49 | 17.52 | 15.34 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Abbott Laboratories | 11.46 | 15.89 | 16.41 | — | — | |
| Elevance Health Inc. | 8.49 | 10.13 | 10.93 | — | — | |
| Intuitive Surgical Inc. | — | — | — | — | — | |
| Medtronic PLC | 9.43 | 10.98 | 5.21 | — | — | |
| UnitedHealth Group Inc. | 9.97 | 13.59 | 14.44 | — | — | |
| Interest Coverage, Sector | ||||||
| Health Care Equipment & Services | 10.16 | 13.22 | 12.30 | — | — | |
| Interest Coverage, Industry | ||||||
| Health Care | 7.51 | 14.75 | 14.14 | — | — | |
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).
1 2023 Calculation
Interest coverage = EBIT ÷ Interest expense
= 3,813 ÷ 493 = 7.73
2 Click competitor name to see calculations.
The solvency position regarding interest obligations has experienced a notable decline between 2019 and 2023. While the company maintains a positive capacity to service its debt, the margin of safety has diminished significantly due to a combination of rising finance costs and stagnating operating earnings.
- Earnings Before Interest and Tax (EBIT) Trends
- Operating profitability peaked in 2020 at 4,957 million US dollars. Since that peak, EBIT has experienced volatility, declining to 3,745 million US dollars in 2021 and remaining within a range of 3,813 million to 3,965 million US dollars through 2023. This pattern indicates that core earnings have not grown over the last three fiscal years, returning to levels similar to those observed in 2019.
- Interest Expense Growth
- A consistent and accelerating upward trend is observed in interest expenses. Costs rose from 242 million US dollars in 2019 to 493 million US dollars in 2023. This represents an increase of approximately 103.7% over the five-year period, suggesting either an increase in total debt load or a higher cost of borrowing.
- Interest Coverage Ratio Deterioration
- The interest coverage ratio, which measures the ability to meet interest payments from operating profits, reached a maximum of 17.52 in 2020. However, the ratio has declined steadily in each subsequent year, falling to 11.49 in 2021, 9.89 in 2022, and finally 7.73 in 2023. This downward trajectory confirms a reduction in the financial cushion available to cover fixed interest obligations, driven primarily by the divergence between stagnant EBIT and rising interest costs.
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Fixed Charge Coverage
Humana Inc., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Humana | 2,489) | 2,806) | 2,933) | 3,367) | 2,707) | |
| Add: Net income attributable to noncontrolling interest | (5) | (4) | 1) | —) | —) | |
| Add: Income tax expense | 836) | 762) | 485) | 1,307) | 763) | |
| Add: Interest expense | 493) | 401) | 326) | 283) | 242) | |
| Earnings before interest and tax (EBIT) | 3,813) | 3,965) | 3,745) | 4,957) | 3,712) | |
| Add: Fixed operating lease costs | 145) | 183) | 159) | 141) | 154) | |
| Earnings before fixed charges and tax | 3,958) | 4,148) | 3,904) | 5,098) | 3,866) | |
| Interest expense | 493) | 401) | 326) | 283) | 242) | |
| Fixed operating lease costs | 145) | 183) | 159) | 141) | 154) | |
| Fixed charges | 638) | 584) | 485) | 424) | 396) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 6.20 | 7.10 | 8.05 | 12.02 | 9.76 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Abbott Laboratories | 7.71 | 10.10 | 10.21 | — | — | |
| Elevance Health Inc. | 7.51 | 8.82 | 8.48 | — | — | |
| Intuitive Surgical Inc. | 74.09 | 63.52 | 93.66 | — | — | |
| Medtronic PLC | 6.90 | 7.79 | 4.31 | — | — | |
| UnitedHealth Group Inc. | 7.27 | 8.77 | 8.80 | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Health Care Equipment & Services | 7.55 | 9.07 | 8.36 | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Health Care | 6.08 | 10.95 | 10.48 | — | — | |
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).
1 2023 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 3,958 ÷ 638 = 6.20
2 Click competitor name to see calculations.
The analysis of solvency indicators from 2019 to 2023 reveals a progressive decline in the capacity to cover fixed charges following a peak in 2020. While the company maintained a substantial buffer during the early part of the period, the coverage ratio has contracted steadily over the subsequent three years.
- Earnings Before Fixed Charges and Tax
- Earnings exhibited volatility throughout the period, reaching a peak of US$ 5,098 million in 2020. Following this peak, earnings stabilized within a narrower range, fluctuating between US$ 3,904 million and US$ 4,148 million from 2021 through 2023. This stagnation in earnings growth has limited the company's ability to absorb increasing financial obligations.
- Fixed Charges
- A consistent upward trajectory is observed in fixed charges, which rose from US$ 396 million in 2019 to US$ 638 million by the end of 2023. This represents a steady year-over-year increase in mandatory financial outflows, placing greater pressure on available cash flows.
- Fixed Charge Coverage Ratio
- The fixed charge coverage ratio peaked at 12.02 in 2020 but has since entered a period of continuous decline, falling to 8.05 in 2021, 7.10 in 2022, and 6.20 in 2023. This downward trend is the result of the divergence between relatively flat earnings and steadily climbing fixed charges, indicating a tightening of the solvency margin over the analyzed period.
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