Humana Inc. HUM on Wednesday posted a first-quarter adjusted EPS of $11.58, up from $7.23 a year ago, beating the consensus of $10.07.
Humana sales increased from $29.6 billion to $32.11 billion, slightly missing the consensus of $32.22 billion.
The revenue was driven by higher per-member Medicare and state-based contract premiums. The Medicare increase was primarily driven by an increased direct subsidy due to the Inflation Reduction Act (IRA) and membership growth in the company’s stand-alone PDP and state-based contracts businesses.
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Humana ended the first quarter with 14.84 million in total medical membership, down from 16.35 million in December 2024 and 16.17 million in March 2024. Individual Medicare Advantage membership reached 5.22 million, down from 5.55 million a year ago.
1Q25 Insurance segment benefit ratio of 87.4% aligns with the previously disclosed expectation of approximately 87.5%.
In its prepared remarks, the company said, “We are pleased with a solid start to 2025. Our first quarter Insurance segment benefit ratio of 87.4% reflects medical cost trends that developed in line with our expectations.”
The company states, “We remain committed to achieving an individual Medicare Advantage (MA) pretax margin of ‘at least 3%’ over time and remain confident in our expectation that our 2025 MA pricing will drive the intended underlying margin improvement.”
Guidance: Humana expects 2025 GAAP sales of $126 billion-$128 billion versus the consensus of $126.21 billion.
Sales guidance includes insurance segment sales of $121 billion—$123 billion and center-well segment sales of $20.5 billion—$21.5 billion.
The company said CenterWell Pharmacy was selected as the fulfillment pharmacy for NovoCare Pharmacy, operated by Novo Nordisk A/S’ NVS weight loss medication for cash-pay customers.
The insurer expects an annual membership decline of approximately 550,000 for individual Medicare Advantage, including the company’s decision to exit certain unprofitable plans and counties. Group Medicare Advantage will remain relatively flat, and Medicare stand-alone PDP growth will be approximately 200,000.
Humana reaffirms the 2025 adjusted EPS outlook of $16.25 versus the consensus of $16.35.
For 2025, Humana expects its insurance segment’s benefit ratio guidance of approximately 90.1-90.5%.
The company added, “Looking ahead, the 2026 final MA rate notice better reflects the medical cost trend environment and should enable greater stability within the industry as it serves the 34 million seniors who rely on the MA program.”
Price Action: HUM stock is down 0.80% at $257.28 at the last check on Wednesday.
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