Why Is Humana (HUM) Up 19.2% Since Last Earnings Report?

Core Viewpoint - Humana's recent earnings report indicates a mixed performance, with adjusted earnings per share missing estimates while revenues showed growth. The company faces challenges from rising benefit costs and a decline in Medicare Advantage membership, but the CenterWell unit's strong performance provides some offset [2][3][4]. Financial Performance - Humana reported Q2 2025 adjusted earnings of $6.27 per share, missing the consensus estimate by 0.8%, and a year-over-year decrease of 9.9% [2]. - Adjusted revenues reached $32.4 billion, reflecting a 10.2% year-over-year increase and surpassing the consensus mark by 1.9% [2]. - Total operating expenses rose to $31.3 billion, a 10.2% increase year-over-year, driven by higher benefits and operating costs [6]. Operational Insights - Premiums improved by 9.1% year-over-year to $30.7 billion, exceeding estimates [4]. - Services revenues climbed 27.3% year-over-year to $1.4 billion, also beating consensus estimates [4]. - The benefit ratio deteriorated by 70 basis points year-over-year to 89.7%, influenced by higher benefit ratios from state-based contracts and a decline in Medicare Advantage membership [5]. Segment Performance - The Insurance segment recorded adjusted revenues of $31.1 billion, up 9.6% year-over-year, supported by improved Medicare premiums and an expanding customer base [7]. - CenterWell revenues increased by 11.9% year-over-year to $5.5 billion, benefiting from higher pharmacy and primary care revenues [9]. Financial Position - As of June 30, 2025, Humana had cash and cash equivalents of $4 billion, an 81.9% increase from the end of 2024 [11]. - Total assets rose to $50.4 billion, an 8.3% increase from the previous year [11]. - Long-term debt increased to $12.6 billion, up 12.9% from December 31, 2024 [11]. Future Outlook - Adjusted EPS for 2025 is forecasted at around $17.00, up from a previous estimate of $16.25, indicating a 4.9% rise from 2024 [14]. - Revenues are estimated to be a minimum of $128 billion, reflecting an 8.7% increase from 2024 [15]. - Individual Medicare Advantage membership is expected to decline by up to 500,000 in 2025, while group membership is anticipated to remain flat [16].