Humana Inc.

Human capital and workforce · Talent acquisition and retention

We face significant competition in attracting and retaining talented employees. Further, managing succession for, and retention of, key executives is critical to our success, and our failure to do so could adversely affect our businesses, operating results and/or future performance.

Project and contract management · Government contract dependency

As a government contractor, we are exposed to risks that may materially adversely affect our business or our willingness or ability to participate in government health care programs...Audits and investigations...could result in the loss of licensure or temporary or permanent exclusion from participating in various government health care programs.

Economic and market conditions · Market volatility and financial crises

The securities and credit markets may experience volatility and disruption, which may adversely affect our business...Ongoing volatility or disruption in the securities and credit markets could impact our investment portfolio...there is a continuing risk that declines in fair value may occur and additional material realized losses from sales or credit related impairments may be recorded in future periods.

Natural and catastrophic events · Pandemic and public health crises

catastrophes, including acts of terrorism, public health emergencies, epidemics or pandemics (such as the spread of COVID-19) or natural disasters (such as hurricanes and earthquakes) which could occur more frequently or with more intense effects as a result of the impact of global climate change.

Legal and litigation · Litigation and legal proceedings

We are involved in various legal actions and governmental and internal investigations, any of which, if resolved unfavorably to us, could result in substantial monetary damages or changes in our business practices...claims relating to the denial of health care benefit payments; claims relating to the denial or rescission of insurance coverage; false claims litigation, such as qui tam lawsuits.

Industry regulation · Licensing and permits

Laws in each of the states (and Puerto Rico) in which we operate our HMOs, PPOs and other health insurance-related services regulate our operations including: capital adequacy and other licensing requirements, policy language describing benefits, mandated benefits and processes, entry, withdrawal or re-entry into a state or market, rate increases.

Customer and revenue · Reimbursement and pricing pressure healthcare or insurance

The premiums from CMS are subject to risk corridor provisions which compare costs targeted in our annual bids to actual prescription drug costs...Variances exceeding certain thresholds may result in CMS making additional payments to us or require us to refund to CMS a portion of the premiums we received.

Market position and competition · Competitive pressure and market share loss

We are in a highly competitive industry. Some of our competitors are more established in the health care industry in terms of a larger market share and have greater financial resources than we do in some markets...we expect that price will continue to be a significant basis of competition.

Strategic execution · Merger acquisition and divestiture risks

Any failure by us to manage acquisitions, divestitures and other significant transactions successfully may have a material adverse effect on our results of operations, financial position, and cash flows...The failure to successfully integrate acquired entities and businesses or failure to produce results consistent with the financial model used in the analysis of our transactions may cause asset write-offs, restructuring costs or other expenses.

Market position and competition · Pricing pressure and margin compression

If we do not design and price our products properly and competitively, if the premiums we charge are insufficient to cover the cost of health care services delivered to our members...our profitability may be materially adversely affected.

Capital structure and performance · Credit rating and cost of capital

Downgrades in our debt ratings, should they occur, may adversely affect our business, results of operations, and financial condition...If our credit ratings were to be lowered, our cost of borrowing likely would increase, our sales and earnings could decrease.

Information management · Data quality and integrity

Our business depends significantly on effective information systems and the integrity and timeliness of the data we use to run our business...If the information we rely upon to run our businesses was found to be inaccurate or unreliable or if we fail to improve service levels or maintain effectively our information systems and data integrity, we could have operational disruptions.

Cybersecurity and data protection · Data privacy and protection regulations

The use of individually identifiable health data by our business is regulated at federal and state levels...Violations of HIPAA or applicable federal or state laws or regulations could subject us to significant criminal or civil penalties, including significant monetary penalties.

Cybersecurity and data protection · Third party data security and vendors

If we, and the third-party service providers on whom we rely, are unable to defend our information technology security systems against cybersecurity attacks or prevent other privacy or data security incidents that result in security breaches that disrupt our operations or in the unintentional dissemination of sensitive personal information or proprietary or confidential information, we could be exposed to significant regulatory fines or penalties, liability or reputational damage.