Core Viewpoint - Humana reported an expanded loss in Q4 due to rising medical costs and anticipates a significant decline in profits for 2026 due to a drop in the quality rating of its Medicare plans [1][2] Financial Performance - The company reported a loss of $1.01 billion, equating to a loss of $6.61 per share, compared to a loss of $862 million or $5.76 per share in the same period last year [1] - Adjusted loss per share was $3.96, slightly better than the analyst expectation of a $4 loss [1] - Revenue increased from $29.21 billion to $32.52 billion, surpassing Wall Street's expectation of $32.04 billion [1] Medical Cost Factors - The payout ratio rose from 92.1% last year to 93.1%, indicating increased medical costs [1] - Factors such as higher utilization of medical services and rising drug costs have pressured profits, particularly due to Humana's reliance on Medicare Advantage plans [1] Future Projections - The company expects adjusted earnings per share to be at least $9 for 2026, while analysts project $11.91 [2] - Humana anticipates a growth of approximately 25% in individual Medicare Advantage plan membership in 2026, driven by customer-oriented benefits strategies and improved customer service models [2]

Financial Data and Key Metrics Changes - The company reported adjusted EPS of $17.14 for 2025, exceeding initial guidance of approximately $16.25 [17] - The full-year insurance segment benefit ratio was 90.4%, slightly better than guidance [18] - For 2026, the company expects full-year adjusted EPS of at least $9, with a year-over-year decline anticipated due to a stars headwind [19] Business Line Data and Key Metrics Changes - The company experienced approximately 1 million member growth, or 20%, during the Annual Enrollment Period (AEP) [8] - Retention rate improved by over 500 basis points year-over-year, with over 70% of new sales coming from switches from competitor plans [9] - The company expects individual Medicare Advantage (MA) membership growth of approximately 25% for full year 2026 [10] Market Data and Key Metrics Changes - The company absorbed approximately 12% of members impacted by competitor plan exits, which is less than its market share [9] - Nearly 30% of new sales were bounce-back members, indicating a positive mix of new sales [9] Company Strategy and Development Direction - The company remains committed to a consumer-centric strategy, focusing on maximizing customer lifetime value and member retention [6] - Plans are designed to be priced for sustainable margins, moving away from loss leader strategies [8] - The company is expanding its Medicaid and CenterWell footprint, with Medicaid now spanning 13 states [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational capacity to absorb growth and maintain quality care for members [10] - The company is adapting to the funding environment and expects to unlock earnings potential by 2028 [15] - Management acknowledged the challenges posed by the Advance Rate Notice but emphasized a commitment to protect consumers [15] Other Important Information - The company is focused on capital efficiency and plans to fund membership growth and strategic acquisitions while maintaining credit ratings [24] - A new President of Medicare Advantage, Aaron Martin, joined the company, bringing extensive healthcare experience [16] Q&A Session Summary Question: Can you expand on the level of earnings outside of MA underwriting? - Management indicated that earnings associated with CenterWell will contribute positively, with significant tailwinds expected from new membership [30] Question: How is the typical progress of margins for new members over time? - Management noted that margins typically improve significantly from year one to year two, with ongoing improvements expected in subsequent years [35] Question: What are the expectations for 2026 compared to Investor Day? - Management highlighted that the biggest difference is the embedded conservatism in their numbers, leading to a broader haircut in guidance [45] Question: How did the D-SNP membership growth compare to expectations? - The absolute number of new D-SNP members exceeded expectations, although the percentage growth was slightly lower [48] Question: What is the impact of the stars headwind on margins? - Management explained that the stars headwind affects both new and existing members, with similar margins expected for both cohorts [32] Question: How will the company adjust to the rate notice? - Management stated that they will adapt to the final rate notice and advocate for appropriate funding levels [59]

Financial Data and Key Metrics Changes - The company reported adjusted EPS of $17.14 for 2025, exceeding initial guidance of approximately $16.25 [17] - The full-year insurance segment benefit ratio was 90.4%, slightly better than guidance [18] - For 2026, the company expects full-year adjusted EPS of at least $9, with a year-over-year decline anticipated due to a $3.5 billion headwind from Stars [19][21] Business Line Data and Key Metrics Changes - The company grew by approximately 1 million members, or 20%, during the Annual Enrollment Period (AEP) [8] - Retention rate improved by over 500 basis points year-over-year, with over 70% of new sales coming from switches from competitor plans [9] - The company expects individual Medicare Advantage (MA) membership growth of approximately 25% for full year 2026 [10] Market Data and Key Metrics Changes - The company absorbed approximately 12% of members impacted by competitor plan exits, which is less than its market share [9] - Nearly 30% of new sales were bounce-back members, indicating a positive mix of new sales [9] Company Strategy and Development Direction - The company remains committed to a consumer-centric strategy and aims to unlock earnings potential by 2028 [5][6] - Focus areas include product and experience, clinical excellence, operational efficiency, and capital allocation [6] - The company is expanding its Medicaid and CenterWell footprint, with Medicaid now spanning 13 states [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational capacity to absorb growth and emphasized the importance of maintaining quality care for members [10] - The company is aware of the fiscal pressures on Medicare Advantage and is prepared to adapt to the funding environment [15] - Management remains optimistic about achieving top quartile Stars results by 2028 [12] Other Important Information - The company plans to announce a strategic acquisition in the primary care space [14] - Aaron Martin joined the company as President of Medicare Advantage, bringing extensive healthcare experience [16] Q&A Session Summary Question: Can you expand on the level of earnings outside of MA underwriting? - Management indicated that earnings associated with CenterWell will contribute positively, with significant tailwinds expected from new membership [30] Question: How do you estimate the progress of new members' margins over time? - Management expects substantial margin improvement in the first year due to reduced marketing load and improved medical benefit ratios [35] Question: What are the expectations for D-SNP membership growth? - The absolute number of new D-SNP members exceeded expectations, although the percentage growth was slightly lower [48] Question: How did expectations for 2026 change since Investor Day? - The primary difference is the embedded conservatism in the guidance, reflecting known headwinds and tailwinds [45] Question: What is the impact of the Stars headwind on margins? - The Stars headwind for 2026 is approximately $3.5 billion, affecting both individual and group MA margins [21] Question: How will the company adjust to the rate notice? - Management stated they will adapt to the final rate notice and advocate for appropriate funding levels [59]

Financial Data and Key Metrics Changes - The company reported adjusted EPS of $17.14 for 2025, exceeding initial guidance of approximately $16.25 [16] - The full-year insurance segment benefit ratio was 90.4%, slightly better than guidance [17] - For 2026, the company expects full-year adjusted EPS of at least $9, with a year-over-year decline anticipated due to a stars headwind [18] Business Line Data and Key Metrics Changes - The company grew by approximately 1 million members, or 20%, during the Annual Enrollment Period (AEP) [6] - Retention rate improved over 500 basis points year-over-year, with over 70% of new sales coming from switches from competitor plans [6][8] - The company expects individual Medicare Advantage (MA) membership growth of approximately 25% for full year 2026 [8] Market Data and Key Metrics Changes - The company absorbed approximately 12% of members impacted by competitor plan exits, which is less than its market share [7] - Nearly 30% of new sales were bounce-back members, indicating a positive mix of new sales [8] Company Strategy and Development Direction - The company remains committed to a consumer-centric strategy that adapts to the funding environment to unlock earnings potential by 2028 [4] - Focus areas include maximizing customer lifetime value, clinical excellence, operational efficiency, and capital allocation [5] - The company is expanding its Medicaid and CenterWell footprint, with Medicaid now spanning 13 states [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational capacity to absorb growth and emphasized the importance of maintaining quality care for members [9] - The company is aware of the fiscal pressures on Medicare Advantage and is committed to protecting consumers while adapting to the funding environment [13] - Management expects to continue making progress on stars performance and adapting to the final rate notice [13] Other Important Information - The company announced the appointment of Aaron Martin as President of Medicare Advantage, who will elevate to the president of insurance role upon George's retirement [14] - The company is focused on maintaining a stable and compelling MA margin while unlocking earnings potential by 2028 [23] Q&A Session Summary Question: Can you expand on the level of earnings outside of MA underwriting? - Management indicated that earnings associated with CenterWell will contribute positively, with significant tailwinds expected from new membership [27] Question: How do you estimate the margin progression for new members? - Management expects substantial margin improvement in the first year due to lower marketing loads and improved medical benefit ratios over time [33] Question: What are the expectations for D-SNP membership growth? - The absolute number of new D-SNP members exceeded expectations, although the percentage growth was slightly lower [46] Question: How will the company adjust to the rate notice? - Management stated that they will adapt to the final rate notice and advocate for appropriate funding levels for members [56] Question: What is the company's strategy regarding membership growth versus margin? - The focus is on achieving the right long-term margin profile while retaining as many members as possible, rather than solely pursuing new member growth [87]

Financial Performance - Humana reported a 4Q25 net loss per share of $6.61 on a GAAP basis and an adjusted net loss per share of $3.96, with FY 2025 EPS of $9.84 on a GAAP basis and $17.14 on an adjusted basis[4]. - FY 2025 consolidated revenues were $129.664 billion, up from $117.761 billion in FY 2024, reflecting a year-over-year increase of approximately 10.2%[10]. - Humana Inc. reported consolidated revenues of $32,515 million for Q4 2025, a 11.8% increase from $29,213 million in Q4 2024[61]. - The adjusted consolidated revenues for FY 2025 were $129,789 million, up 10.7% from $117,210 million in FY 2024[61]. - The net loss per share for Q4 2025 was $6.61, compared to a loss of $5.76 per share in Q4 2024[63]. - Operating cash flows for FY 2025 were $921 million, significantly lower than $2,966 million in FY 2024[65]. - The company reported a net income of $1,203 million for FY 2025, slightly down from $1,214 million in FY 2024[65]. - For the year ended December 31, 2025, total revenues were $129,664 million, compared to $117,761 million in 2024, marking a growth of 10.1%[68][69]. - The income from operations for the year ended December 31, 2025, was $2,704 million, compared to $2,562 million in 2024, reflecting an increase of 5.5%[68][69]. Membership Growth - The company expects approximately 25% growth in individual Medicare Advantage membership for FY 2026, driven by new sales and improved retention strategies[4]. - CenterWell Senior Primary Care grew by 100,600 patients, or over 25%, in 2025, including approximately 32,000 patients from the acquisition of The Villages Health[4]. - The individual Medicare Advantage membership increased by 20% to approximately 6,280,000 in January 2026, reflecting net membership gains during the 2026 Annual Election period[31]. - Group Medicare Advantage membership rose by 28% to approximately 730,000 in January 2026, driven by net membership additions from the 2026 selling season[32]. - As of December 31, 2025, Humana's total Medicare Advantage membership reached 5,817.7 thousand, a decrease of 6.3% from 6,207.5 thousand in 2024[70]. - The Individual Medicare Advantage membership included 760,500 Dual Eligible Special Need Plans (D-SNP) members, reflecting a net decrease of 176,600 members or 19% from 937,100 in 2024[71]. - The company anticipates a growth of approximately 25% in year-end medical membership and an increase of about 150,000 in Group Medicare Advantage membership for FY 2026[57]. Cost and Efficiency - The GAAP operating cost ratio improved to 13.7% in 4Q25 from 14.4% in 4Q24, driven by higher premiums and membership growth in state-based contracts[10]. - The operating cost ratio for the insurance segment improved slightly to 10.8% in 4Q25 from 11.0% in 4Q24, while FY 2025 was 9.1%, down from 9.2% in FY 2024[21]. - The operating cost ratio for the year ended December 31, 2025, was 12.0%, compared to 11.8% in 2024, indicating a slight increase[68][69]. - The company anticipates continued administrative cost efficiencies and operating leverage from increased revenues due to the impact of the IRA[22]. - The consolidated operating cost ratio is expected to be 10.0% +/- 25 basis points for FY 2026[57]. Insurance Segment Performance - The 4Q25 Insurance segment GAAP benefit ratio was 93.1%, while the FY 2025 benefit ratio was 90.4%, slightly better than the guidance range of 90.1% to 90.5%[4]. - Insurance segment revenues for 4Q25 reached $31,343 million, a 11.5% increase from $28,170 million in 4Q24, and FY 2025 revenues were $124,563 million, up 9.5% from $113,764 million in FY 2024[21]. - The benefit ratio for the insurance segment was 93.1% in 4Q25, compared to 92.1% in 4Q24, and remained stable at 90.4% for both FY 2025 and FY 2024[21]. - Insurance segment reported a GAAP loss from operations of $927 million in 4Q25, compared to a loss of $646 million in 4Q24, while adjusted (non-GAAP) loss was $923 million[48]. - The benefit ratio for the insurance segment is projected at 92.75% +/- 25 basis points for FY 2026[57]. Debt and Capitalization - Humana's debt-to-total capitalization increased to 41.1% at December 31, 2025, up from 40.3% at September 30, 2025, primarily due to the net loss in 4Q25[18]. - The debt-to-total capitalization ratio improved to 41.1% in FY 2025 from 41.9% in FY 2024[64]. Future Projections - Humana anticipates FY 2026 GAAP EPS guidance of at least $8.89 and at least $9.00 on an adjusted basis, reflecting a year-over-year decline due to Star Ratings headwinds[8]. - For FY 2026, the company projects total revenues of at least $160 billion, with the insurance segment expected to generate at least $155 billion[57]. - The effective tax rate for FY 2026 is projected to be approximately 25.5%[57]. - Cash flows from operations are expected to be between $2.5 billion and $2.9 billion for FY 2026[57]. CenterWell Segment Performance - CenterWell segment revenues for 4Q25 were $5,962 million, a 16.2% increase from $5,130 million in 4Q24, and FY 2025 revenues were $22,473 million, up 12.7% from $19,936 million in FY 2024[34]. - CenterWell segment's GAAP income from operations for FY 2025 was $1.339 billion, slightly up from $1.329 billion in FY 2024, with adjusted (non-GAAP) income at $1.558 billion[50]. - The operating cost ratio for the CenterWell segment increased to 94.2% in 4Q25 from 92.5% in 4Q24, while FY 2025 was 93.1%, up from 92.2% in FY 2024[34]. Operational Metrics - Days in claims payable (DCP) decreased to 31.9 days at December 31, 2025, down from 37.8 days at December 31, 2024[18]. - Total assets increased to $48,909 million as of December 31, 2025, compared to $46,479 million a year earlier[64]. - The total primary care patients served increased to 491,100 as of December 31, 2025, a year-over-year growth of 25.8% from 390,500 in 2024[75]. - The total admissions for same-store home solutions grew by 2.3% year-over-year, reaching 428,342 for the year ended December 31, 2025[77]. - The generic dispense rate for Medicare was 90.5% for the year ended December 31, 2025, slightly down from 91.0% in 2024[74]. - The CenterWell segment's pharmacy solutions generated $12,959 million in revenue for the year ended December 31, 2025, up from $11,628 million in 2024, marking a 11.4% increase[74].

Core Insights - Humana reported a wider fourth-quarter loss due to rising medical costs impacting margins in its core Medicare Advantage business [1] Company Summary - The increase in medical costs has been a significant factor contributing to the company's financial performance challenges [1]

Core Insights - Humana has forecasted annual profit below Wall Street estimates due to anticipated impacts from lower quality ratings for its Medicare Advantage plans targeting older adults [1] Company Summary - Humana is facing challenges with its Medicare Advantage plans, which are expected to receive lower quality ratings, leading to a negative impact on profitability [1]

Core Insights - Humana Inc. reported consolidated pretax results and net earnings per share (EPS) for the fourth quarter of 2025 and the full year of 2025, comparing them to the same periods in 2024 [1] Financial Performance - The consolidated (loss) income before income taxes and equity in net losses for 4Q25 and FY 2025 was detailed in the report, indicating a comparison with 4Q24 and FY 2024 [1]

Core Insights - Humana Inc. (HUM) is expected to report a loss of $4.01 per share for Q4 2025, with revenues projected at $31.9 billion, indicating a year-over-year revenue growth of 9.2% despite a significant earnings decline of 85.7% [1][2]. Financial Performance - The consensus estimate for Humana's full-year 2025 revenues is $128.9 billion, reflecting a 10% increase year-over-year, while the EPS for the current year is estimated at $17.07, indicating a 5.3% gain year-over-year [3]. - Humana's earnings have beaten consensus estimates in three of the last four quarters, with an average surprise of 7.5% [3]. Earnings Predictions - The current Earnings ESP for Humana is 0.00%, and it holds a Zacks Rank of 4 (Sell), suggesting low odds for an earnings beat this quarter [4]. - The Zacks Consensus Estimate for premiums indicates an 8.9% increase year-over-year, while service revenues are expected to grow by 22.2% [6]. Revenue and Membership Trends - Despite revenue growth, Humana is projected to experience a sharp decline in earnings due to falling insurance and investment income, with medical membership expected to drop by 7.6% year-over-year [7][10]. - The operating income from the CenterWell unit is estimated to grow by 6.4%, while the Insurance unit's operating income is expected to decrease by 9.7% [8]. Cost and Expense Analysis - Total operating costs are anticipated to rise by 7% in Q4, exceeding $31.8 billion, contributing to the expected decline in net income [9]. - The overall benefits expense ratio is projected to worsen to 93.26%, compared to 91.5% a year ago [10].

Group 1 - Molina Healthcare (MOH) experienced a significant decline, reaching a nearly six-year low after reporting an unexpected loss due to rising health benefit costs [1] - Centene (CNC) also reported a loss, which was anticipated, indicating challenges within the health insurance sector [1] - Molina expects its Affordable Care Act Marketplace membership to decrease from 713,000 at the end of Q3, highlighting potential issues in enrollment [1]