Humana Affirms 2025 Adjusted EPS Guidance Despite Lower GAAP Outlook—Medicare Membership Decline Now Smaller Than Expected
Adjusted EPS Holds Firm at $17.00 as Core Business Remains Solid
Humana Inc. delivered third quarter 2025 results that underline its operational strength, even as the company revised its GAAP EPS guidance downward for the full year. For the third quarter, Humana reported a GAAP EPS of $1.62 and an Adjusted EPS of $3.24. Year-to-date, Adjusted EPS stands at $21.10, compared to $18.35 at this time last year. The insurer now expects full-year 2025 Adjusted EPS of approximately $17.00—unchanged from prior forecasts—while updating GAAP EPS guidance to approximately $12.26, down from $13.77 previously.
Insurance Segment Metrics and Operating Costs Remain Stable
The Insurance segment's benefit ratio came in at 91.1% for the quarter, in line with expectations. Operating cost ratios showed slight year-over-year movement but remain within guided ranges. Consolidated revenues grew to $32.65 billion for Q3 2025 (up from $29.40 billion a year ago), reinforcing the company’s core growth, particularly as the CenterWell and Medicaid businesses continue to expand.
| Metric | Q3 2025 | Q3 2024 | YTD 2025 | YTD 2024 |
|---|---|---|---|---|
| GAAP EPS | $1.62 | $3.98 | $16.43 | $15.72 |
| Adjusted EPS | $3.24 | $4.16 | $21.10 | $18.35 |
| Insurance Benefit Ratio (Adj.) | 91.1% | 90.5% | 89.5% | 89.8% |
| Operating Cost Ratio (Consolidated, Adj.) | 11.8% | 11.3% | 11.1% | 10.7% |
| Consolidated Revenues ($B) | 32.65 | 29.40 | 97.15 | 88.55 |
Medicare Advantage Membership Decline Now Smaller Than Expected
One bright spot in the update: Humana improved its outlook for Medicare Advantage membership. The company now expects a decline of approximately 425,000 members for the year, an improvement from the earlier estimate of a decline up to 500,000 members. This shift is credited to stronger retention and better-than-expected sales performance heading into the important Annual Election Period.
Strategic Initiatives Drive Growth at CenterWell and Medicaid
Growth in CenterWell Primary Care—up by nearly 15% year-to-date—and continued expansion of CenterWell Pharmacy underscore management’s long-term strategy to diversify earnings and strengthen relationships across payor types. The Medicaid business and preparations for the Michigan and Illinois integrated dual eligible plans are also advancing, as is South Carolina’s Medicaid carve-in for dual eligibles set to launch in 2026.
Risks: Medicare Star Ratings and Regulatory Uncertainties Remain Headwinds
Despite these positive operational signals, investors should be aware of continuing risks. Humana's 2025 Medicare Star Ratings will decline, with management warning this will impact 2026 quality bonus payments from CMS and potentially weigh on future revenues and operating cash flows. The company is evaluating its legal options after an unfavorable court ruling on the Star Ratings, but no resolution has been achieved yet.
Key Takeaway: Adjusted Earnings Remain Intact as Company Focuses on Retention and Expansion
For now, Humana’s ability to meet its adjusted profit goals despite regulatory and competitive challenges stands out. While GAAP results are impacted by several non-core charges and litigation-related items, the steady hand in Adjusted earnings, improved Medicare Advantage projections, and growing CenterWell footprint should give investors a degree of reassurance.
What’s Next?
The company will discuss these results further in a webcast at 8:00 a.m. ET today, accessible on the Humana Investor Relations website. Investors and stakeholders may want to watch for further updates on the Medicare Star Ratings dispute, regulatory risks, and the company’s continued efforts to grow its non-Medicare business lines over the coming quarters.
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