Humana Beats Q3 Earnings on Premium Growth, Updates 2025 View

Humana Inc. HUM reported third-quarter 2025 adjusted earnings of $3.24 per share, which beat the Zacks Consensus Estimate by 11.3%. The bottom line decreased 22.1% year over year. Adjusted revenues of $32.65 billion advanced 11.4% year over year. The top line beat the consensus mark by 2.1%. The better-than-expected quarterly results were supported by increased premiums, partially offset by elevated expense levels and declining medical memberships.Humana Inc. Price, Consensus and EPS Surprise Humana Inc. price-consensus-eps-surprise-chart | Humana Inc. QuoteQ3 Operational UpdateHumana’s premiums improved 9.9% year over year to $30.7 billion, beating the Zacks Consensus Estimate by 1.2%. Services revenues of $1.6 billion climbed 45.1% year over year and beat the consensus mark by 15.5%. Investment income came in at $338 million, which slipped 1.5% year over year. The metric beat our model estimate of $312.6 million.The benefit ratio deteriorated 120 basis points (bps) year over year to 91.1% in the third quarter. Total operating expenses of $32.2 billion escalated 12.5% year over year, higher than our estimate of $31.2 billion. The year-over-year increase was due to higher benefits and operating costs. Adjusted operating cost ratio deteriorated 50 bps year over year to 11.8%. HUM’s net income totaled $194 million in the quarter under review, which plunged 59.6% year over year.Q3 Segmental UpdateInsuranceThe segment recorded adjusted revenues of $31.2 billion in the third quarter, which improved 9.9% year over year, resulting from improved per-member Medicare premiums coupled with an expanding customer base in stand-alone prescription drug plans and state-based contract businesses.     Adjusted operating income fell 17.9% year over year to $270 million. The adjusted benefit ratio of 91.1% deteriorated 60 bps year over year. Adjusted operating cost ratio improved 10 bps year over year to 9%.Total medical membership of the segment was 15 million as of Sep. 30, 2025, which tumbled 8.3% year over year. The metric lagged the Zacks Consensus Estimate of 15.2 million and our model estimate of 15.7 million.CenterWellRevenues in the unit advanced 16.6% year over year to $5.9 billion in the quarter under review, which outpaced the Zacks Consensus Estimate by 7.1%. The metric benefited from the back of higher revenues stemming from the company’s pharmacy and primary care businesses.  Adjusted operating income was $358 million, which decreased 18.5% year over year. The operating cost ratio deteriorated 260 bps year over year to 93.9%, due to higher volumes in CenterWell Specialty Pharmacy.Humana’s Financial Update (As of Sept. 30, 2025)Humana exited the third quarter with cash and cash equivalents of $5.4 billion, which surged from the 2024-end level of $2.2 billion. Total assets of $49.7 billion increased from the $46.5 billion figure at 2024-end.  Long-term debt amounted to $12.6 billion, up from the $11.1 billion figure as of Dec. 31, 2024. Debt to capitalization improved 160 bps year over year to 40.3% at the third-quarter end. Total stockholders’ equity of $18.5 billion improved from the $16.4 billion figure at 2024-end.  HUM generated net cash from operations of $2.6 billion in the first nine months of 2025, which dipped from the prior-year comparable period’s $3.5 billion.HUM’s Capital Deployment UpdateHumana bought back shares worth $109 million in the first nine months of 2025, indicating no buybacks in the third quarter. It also paid dividends of $321 million during the first three quarters.2025 ViewAdjusted earnings per share (EPS) estimate reiterated at around $17.00, which indicates a 4.9% rise from the 2024 figure. GAAP EPS is projected to be roughly $12.26, down from the earlier view of around $13.77. Revenues are still estimated to be a minimum of $128 billion. The updated guidance implies an 8.7% increase from the 2024 figure. The Insurance segment’s revenues are still forecasted at a minimum of $123 billion. Revenues of the CenterWell segment are still expected at a minimum of $21.5 billion.Management anticipates Individual Medicare Advantage membership to witness a decline of around 425,000 in 2025, while the earlier view called for a decrease of up to 500,000. Group Medicare Advantage membership is still expected to stay relatively flat from the 2024-end figure. Membership from the Medicare stand-alone PDP is expected to increase around 200,000 this year. State-based contracts are now expected to witness membership growth of around 160,000. The benefit ratio of the Insurance unit continues to be projected between 90.1% and 90.5% for 2025. The consolidated adjusted operating cost ratio is anticipated to be 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 adjusted effective tax rate is expected to be around 25% while the weighted average share count is still anticipated at around 121 million.Humana currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.How Did HUM’s Peers Perform in 3Q25?Several healthcare companies, including Centene Corporation CNC, Molina Healthcare, Inc. MOH and Elevance Health, Inc. ELV, have already reported their financial results for the September quarter of 2025. Here’s how they had performed:Centene reported third-quarter 2025 adjusted earnings per share of 50 cents, which beat the Zacks Consensus Estimate of a loss of 21 cents. However, the bottom line fell from the year-ago profit of $1.62 per share.The results benefited from solid premium growth, fueled by expanding membership in the PDP and Commercial Marketplace businesses, along with overall growth in the Marketplace business. However, the upside was partly offset by Centene’s rising medical costs, declining service revenues and year-over-year membership falls in Medicaid and Medicare businesses.Molina reported third-quarter 2025 adjusted EPS of $1.84, which missed the Zacks Consensus Estimate of $3.97. Also, the bottom line fell 69.4% from the year-ago period.The earnings were affected by higher medical care costs and general and administrative expenses. However, Molina’s rising premiums and rate hikes partially offset the negatives.Elevance reported third-quarter 2025 adjusted EPS of $6.03, which surpassed the Zacks Consensus Estimate by 21.1%. Yet, the bottom line dropped 29.9% year over year. The results benefited from the back of strong growth in premiums, product revenues and net investment income. However, the upside was partly offset by a decline in Elevance’s overall medical membership due to Medicaid reverifications and an elevated expense level.Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Humana Inc. (HUM): Free Stock Analysis Report Molina Healthcare, Inc (MOH): Free Stock Analysis Report Centene Corporation (CNC): Free Stock Analysis Report Elevance Health, Inc. (ELV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks