Humana, a major health insurance provider, reported a third-quarter profit of $195 million. This result, while lower than the $480 million reported in the same period last year, is largely attributed to stabilizing medical costs that have landed within the company’s projections. This development offers a glimpse of relief for Humana and the broader health insurance industry, which has been grappling with rising expenses, particularly in Medicare Advantage plans.
Understanding Medicare Advantage and Rising Costs
Medicare Advantage plans are government-contracted health insurance options that offer seniors additional benefits beyond standard Medicare, such as disease management, nurse hotlines, and sometimes include vision, dental, and wellness programs. These plans have become a significant part of Humana’s business, but have also been a driver of increased costs. The industry, including Humana, has been working to manage these expenses by re-evaluating and exiting certain plans and geographical areas that are proving unprofitable.
Key Financial Highlights of the Quarter
Here’s a breakdown of Humana’s third-quarter performance:
- Net Income: $195 million (down from $480 million year-over-year)
- Earnings Per Share: $1.62 (down from $3.98 year-over-year)
- Revenue: $32.6 billion (up from $29.4 billion year-over-year)
- Benefit Expense Ratio: 91.1% (compared to 89.9% in the third quarter of last year) – This ratio reflects the percentage of premium revenue used to cover medical expenses.
Humana executives emphasized that the company’s benefit ratio of 91.1% aligns with its previously stated guidance, indicating effective cost management.
Improved Medicare Advantage Enrollment Picture
Despite facing challenges, Humana is seeing a more encouraging trend in its Medicare Advantage enrollment. The company now expects a decline of approximately 425,000 Individual Medicare Advantage members for the full year 2025. This is an improvement over its earlier projection of a loss of “up to 500,000” members. The company attributes this positive shift to stronger member retention and better-than-expected sales, suggesting successful efforts in attracting and keeping members.
Growth in Healthcare Services Business
Humana’s CenterWell healthcare services business continues to expand rapidly. The business added 56,600 patients during the quarter, representing a growth of nearly 15%. The company highlighted that CenterWell Pharmacy is also contributing significantly to this growth, with increased demand for its specialized medication services and direct-to-consumer offerings.
Looking Ahead with Confidence
Humana’s leadership expressed confidence in the company’s strategy and future prospects. By focusing on the needs of its consumers, the company is creating value for members, patients, and investors. Humana reaffirms its full-year 2025 adjusted earnings per share outlook of approximately $17.00 and maintains its guidance for an insurance segment benefit ratio of 90.1% to 90.5%. This shows a solid foundation and continued focus on achieving its financial goals.
“Our strategy of putting the consumer at the heart of everything we do is working, with solid year to date performance and strong momentum heading into the Annual Election Period,” said Humana president and chief executive officer Jim Rechtin.
In conclusion, Humana’s third-quarter results demonstrate a degree of stability and positive momentum. While profits are down compared to last year, the company’s successful cost management, improved Medicare Advantage enrollment picture, and growth in healthcare services provide a promising outlook for the remainder of 2025 and beyond. The focus on consumer needs remains central to Humana’s strategy, positioning it for continued growth and value creation
