Humana's Q2 2025 Earnings Call: Unpacking Key Contradictions in Stars Performance, Medicaid Strategy, and Investment Spending

Stars performance and timing, Medicaid performance and strategy, investment spending and impact on earnings, 2025 MA member growth expectations, and Stars rating improvement strategy and impact on investment spending are the key contradictions discussed in Humana's latest 2025Q2 earnings call.



Strong Financial Performance in 2025:
- Humana raised its full-year 2025 EPS outlook from approximately $16.25 to approximately $17, reflecting solid performance in Q2 and first half.
- This improvement was driven by better-than-expected individual MA membership and CenterWell Pharmacy outperformance.

Medicare Advantage Membership and Plan Experience:
- Individual MA membership declined less than expected, with bounce-back members returning to Humana, improving retention.
- Humana is focusing on enhancing member experience through initiatives like simplifying prior authorizations and partnering with Epic for better member care transparency.

Cost Trends and Revenue Growth:
- Medical cost trends in Q2 were in line with expectations, and CenterWell Pharmacy revenue grew higher than expected.
- Revenue growth was supported by higher-than-expected patient growth in CenterWell and better-than-expected membership decline assumptions.

Stars and Clinical Excellence:
- Humana is progressing well in its Stars ratings, focusing on closing care gaps and improving quality and experience for members.
- The company remains optimistic about achieving its Stars targets, awaiting planned preview data for BY '27.

Transformative Efforts and Cost Management:
- Humana is pursuing operational efficiencies through an early retirement program and outsourcing of shared services, aiming to create a more agile organization.
- These efforts are part of a broader strategy to enhance operating leverage and enable scalable growth.