Humana Reaffirms 2025 Earnings Guidance: Senior Management Team to Engage with Investors in September

Humana Inc. reaffirmed its 2025 earnings guidance, projecting diluted EPS of $13.77 and adjusted EPS of $17.00. The company emphasized the importance of adjusted EPS, a non-GAAP measure, for providing a comprehensive view of core operating performance. Humana will refrain from commenting on 2026 Medicare Advantage Star Ratings until the final data is released in October 2025. Investors will closely monitor these developments as the company navigates the evolving healthcare landscape.

Humana Inc. (HUM) has reaffirmed its 2025 earnings guidance, projecting diluted EPS of $13.77 and adjusted EPS of $17.00. The company emphasized the importance of adjusted EPS, a non-GAAP measure, for providing a comprehensive view of core operating performance. Humana will refrain from commenting on 2026 Medicare Advantage Star Ratings until the final data is released in October 2025. Investors will closely monitor these developments as the company navigates the evolving healthcare landscape.

In its most recent earnings report, Humana reported second-quarter 2025 adjusted earnings of $6.27 per share, which missed the Zacks Consensus Estimate by 0.8%. The bottom line decreased 9.9% year over year. Adjusted revenues of $32.4 billion advanced 10.2% year over year, beating the consensus mark by 1.9%. The quarterly results suffered a blow from an elevated expense level, dragging net income. A decline in individual Medicare Advantage membership also led to the downside. Nevertheless, the downside was partly offset by the strong performance of the CenterWell unit on the back of strong pharmacy and primary care businesses [1].

Humana’s premiums improved 9.1% year over year to $30.7 billion, higher than the Zacks Consensus Estimate of $30.2 billion. Services revenues of $1.4 billion climbed 27.3% year over year and beat the consensus mark of $1.31 billion. Investment income came in at $272 million, slipping 8.7% year over year. The benefit ratio deteriorated 70 basis points (bps) year over year to 89.7% in the second quarter. Total operating expenses of $31.3 billion escalated 10.2% year over year, higher than the estimate of $29.9 billion. HUM’s net income totaled $543 million in the quarter under review, which plunged 19.9% year over year [1].

The company's CenterWell unit revenues advanced 11.9% year over year to $5.5 billion in the quarter under review, benefiting from higher revenues stemming from the company’s pharmacy and primary care businesses. Adjusted operating income was $404 million, which increased 2.5% year over year. The operating cost ratio deteriorated 70 bps year over year to 92.7% [1].

Humana exited the second quarter with cash and cash equivalents of $4 billion, which surged 81.9% from the 2024-end level. Total assets of $50.4 billion increased 8.3% from the figure at 2024-end. Long-term debt amounted to $12.6 billion, up 12.9% from the figure as of Dec. 31, 2024. Debt to capitalization improved 290 bps year over year to 40.7% at the second-quarter end. Total stockholders’ equity of $18.2 billion improved 11.4% from the figure at 2024-end. HUM generated net cash from operations of $1.6 billion in the first half of 2025, which dipped 2.1% from the prior-year comparable period. HUM’s Capital Deployment Update Humana bought back shares worth $109 million in the first half of 2025. It also paid dividends of $214 million during the same time frame. As of July 29, 2025, HUM had a share buyback capacity of $2.83 billion [1].

The Insurance segment’s revenues are forecasted at a minimum of $123 billion compared with the earlier guidance of $121-$123 billion. Revenues of the CenterWell segment are expected at a minimum of $21.5 billion compared with the prior outlook of $20.5-$21.5 billion. Management anticipates Individual Medicare Advantage membership to witness a decline of "up to 500,000" in 2025, while the earlier view called for metric to record a decrease of around 550,000. Group Medicare Advantage membership is still expected to stay relatively flat from the 2024-end figure. Membership from the Medicare stand-alone PDP is reiterated to increase around 200,000 this year. State-based contracts are still expected to witness membership growth within 175,000-250,000. The benefit ratio of the Insurance unit continues to be projected between 90.1% and 90.5% for 2025. The consolidated GAAP operating cost ratio continues to be anticipated within the band of 11.3-11.7%. GAAP cash flow from operations continues to be estimated within $2.4 billion and $2.9 billion. Meanwhile, capital expenditures are still projected to be roughly $650 million. The effective tax rate is still expected at around 25% while the weighted average share count is presently anticipated at around 121 million [1].

Since the earnings release, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 13.09% due to these changes. VGM Scores Currently, Humana has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock has a score of B on the value side, putting it in the top 40% for this investment strategy. Overall, the stock has an aggregate VGM Score of B [1].

The company's shares have added about 19.2% in the past month, outperforming the S&P 500. However, investors remain cautious about the recent positive trend and are closely monitoring the company's performance leading up to its next earnings release [1].

References:

[1] https://www.nasdaq.com/articles/why-humana-hum-192-last-earnings-report