Why Is Humana (HUM) Down 8.5% Since Last Earnings Report?

It has been about a month since the last earnings report for Humana (HUM). Shares have lost about 8.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Humana due for a breakout? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Humana Inc. before we dive into how investors and analysts have reacted as of late.

Humana Incurs Q4 Loss, Revenues Up Y/Y on CenterWell Unit Strength

Humana incurred a fourth-quarter 2025 adjusted loss of $3.96 per share, narrower than the Zacks Consensus Estimate of a loss of $4.01 per share but wider than the prior-year quarter’s loss of $2.16 per share.

Adjusted revenues improved 11.8% year over year to $32.6 billion. The top line outpaced the consensus mark by 2.4%.

The quarterly results benefited on the back of premium gains and a robust performance from the CenterWell segment, which saw a revenue jump supported by its pharmacy and primary care businesses. However, the upside was partly offset by escalating operating expenses, a sharp drop in investment income and a decline in overall medical membership.

Q4 Operational Update

Humana’s premiums totaled $30.9 billion, which advanced 11.3% year over year, and came higher than the Zacks Consensus Estimate of $30.2 billion and our estimate of $29.8 billion. Services revenues rose 28.6% year over year to $1.5 billion, higher than the consensus mark of $1.4 billion. Investment income of $132 million plunged 55.6% year over year in the quarter under review. The metric lagged the consensus mark of $273 million and our estimate of $295.7 million.

The benefit ratio came in at 93%, which deteriorated 150 basis points (bps) year over year. Total operating expenses increased 12% year over year to $33.3 billion, higher than our estimate of $31.8 billion. The year-over-year increase was due to higher benefits and operating costs. Adjusted operating cost ratio of 13% improved 20 bps year over year.

Humana incurred a net loss of $776 million, wider than the prior-year quarter’s loss of $683 million.

Q4 Segmental Update

Insurance

The segment’s adjusted revenues rose 11.3% year over year to $31.3 billion in the fourth quarter on the back of improved per-member premiums derived from HUM’s Medicare and state-based contract businesses. An expanding customer base in stand-alone prescription drug plans also drove the performance.

The unit incurred an adjusted operating loss of $923 million, wider than the prior-year quarter’s loss of $575 million. The adjusted benefit ratio deteriorated 120 bps year over year to 93.1%. Adjusted operating cost ratio of 10.8% improved 20 bps year over year.

Total medical membership of the segment was 15 million as of Dec. 31, 2025, which fell 8.2% year over year. The metric fell short of the Zacks Consensus Estimate of 15.1 million and our estimate of 15.2 million.

CenterWell

The unit recorded revenues of $6 billion in the quarter under review, which improved 16.2% year over year and surpassed the Zacks Consensus Estimate of $5.5 billion. The metric benefited from higher revenues stemming from the company’s pharmacy and primary care businesses.

Adjusted operating income dropped 10.4% year over year to $345 million. The operating cost ratio of 94.2% deteriorated 170 bps year over year due to the ongoing implementation of the v28 risk model update within the company’s primary care business and higher volumes in CenterWell Specialty Pharmacy.

Humana’s Financial Update (As of Dec. 31, 2025)

Humana exited the fourth quarter with cash and cash equivalents of $4.2 billion, which soared 89.1% from the 2024-end level. Total assets of $48.9 billion increased 5.2% from the figure at 2024-end.

Long-term debt amounted to $12.4 billion, up 11% from the figure as of Dec. 31, 2024. Debt to capitalization improved 80 bps year over year to 41.1% at the fourth-quarter end.

Total stockholders’ equity of $17.7 billion advanced 7.8% from the 2024-end figure.

HUM generated net cash from operations of $921 million in 2025, which plunged 68.9% from the 2024 figure.

HUM’s Capital Deployment Update

Humana bought back shares worth $151 million in 2025. It also paid dividends of $430 million during 2025.

Full-Year Update

Adjusted revenues of $129.8 billion grew 10.7% year over year in 2025. Adjusted earnings per share (EPS) rose 5.7% year over year to $17.14.

Premiums of $122.8 billion improved 9.6% year over year. The benefit ratio came in at 90.2% for 2025, which deteriorated 40 bps year over year.

2026 View

Revenues are estimated to be a minimum of $160 billion, which implies an 23.4% increase from the 2025 reported figure. The Insurance segment’s revenues are forecasted at a minimum of $155 billion. Revenues of the CenterWell segment are expected to be at a minimum of $25 billion.

Adjusted EPS is projected to be at least $9.00, which indicates a 47.5% decline from the 2025 figure. GAAP EPS is projected to be at least $8.89.

Management anticipates Individual Medicare Advantage membership to witness growth of around 25% in 2026. Group Medicare Advantage membership is expected to record an increase of roughly 150,000.

Membership from the Individual Medicare stand-alone PDP is expected to increase around 1,000,000 this year. State-based contracts are expected to witness membership growth within 25,000-100,000.

The GAAP benefit ratio for the Insurance segment is likely to be 92.75%, with a variability margin of plus or minus 25 basis points. The GAAP consolidated adjusted operating cost ratio is anticipated to be at 10%, with a variability margin of plus or minus 25 basis points.

GAAP cash flow from operations is estimated within $2.5-$2.9 billion. Meanwhile, capital expenditures are projected to be roughly $650 million. The adjusted effective tax rate is expected to be around 25.5% while the weighted average share count is anticipated at around 121 million.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Humana has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock has a grade of A on the value side, putting it in the top quintile for value investors.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Humana has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Humana belongs to the Zacks Medical - HMOs industry. Another stock from the same industry, Molina (MOH), has gained 17.7% over the past month. More than a month has passed since the company reported results for the quarter ended December 2025.

Molina reported revenues of $11.38 billion in the last reported quarter, representing a year-over-year change of +8.3%. EPS of -$2.75 for the same period compares with $5.05 a year ago.

For the current quarter, Molina is expected to post earnings of $2.16 per share, indicating a change of -64.5% from the year-ago quarter. The Zacks Consensus Estimate has changed -40.6% over the last 30 days.

Molina has a Zacks Rank #5 (Strong Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.

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This article originally published on Zacks Investment Research (zacks.com).

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