Humana Beats Q3 Earnings on Premium Growth, Updates 2025 View

Core Insights - Humana Inc. reported third-quarter 2025 adjusted earnings of $3.24 per share, exceeding the Zacks Consensus Estimate by 11.3%, but down 22.1% year over year [1] - Adjusted revenues reached $32.65 billion, an 11.4% increase year over year, surpassing the consensus mark by 2.1% [1] - The quarterly results were driven by increased premiums, although offset by higher expenses and a decline in medical memberships [1] Q3 Operational Update - Premiums improved by 9.9% year over year to $30.7 billion, beating the Zacks Consensus Estimate by 1.2% [2] - Services revenues climbed 45.1% year over year to $1.6 billion, exceeding the consensus mark by 15.5% [2] - Investment income was $338 million, a decrease of 1.5% year over year, but above the model estimate of $312.6 million [2] Financial Performance - The benefit ratio deteriorated by 120 basis points year over year to 91.1% in Q3 [3] - Total operating expenses rose 12.5% year over year to $32.2 billion, exceeding the estimate of $31.2 billion [3] - Net income for the quarter was $194 million, down 59.6% year over year [3] Segmental Update - The Insurance segment recorded adjusted revenues of $31.2 billion, a 9.9% year-over-year increase, driven by improved Medicare premiums and an expanding customer base [4] - Adjusted operating income in the Insurance segment fell 17.9% year over year to $270 million [5] - Total medical membership in the segment was 15 million, an 8.3% decline year over year, below the Zacks Consensus Estimate of 15.2 million [5] CenterWell Performance - CenterWell revenues increased 16.6% year over year to $5.9 billion, surpassing the Zacks Consensus Estimate by 7.1% [6] - Adjusted operating income for CenterWell was $358 million, down 18.5% year over year [6] - The operating cost ratio deteriorated by 260 basis points year over year to 93.9% [6] Financial Position - As of September 30, 2025, Humana had cash and cash equivalents of $5.4 billion, up from $2.2 billion at the end of 2024 [9] - Total assets increased to $49.7 billion from $46.5 billion at the end of 2024 [9] - Long-term debt rose to $12.6 billion from $11.1 billion as of December 31, 2024 [9] Guidance and Outlook - Humana reaffirmed 2025 EPS guidance of about $17, expecting an 8.7% revenue growth for the year [8] - The company anticipates a decline of around 425,000 in Individual Medicare Advantage membership for 2025 [14] - The benefit ratio for the Insurance unit is projected between 90.1% and 90.5% for 2025 [15]