Scooping the Numbers: Humana Nails Q1 with Lower Costs and Exit from Some Medicare Plans
Reduced Expenses and Adjustments in Medicare Advantage Plans Bolster Humana's Performance
Hey there! Today, we're diving into Humana's (HUM) Q1 2025 earnings – and they ain't half bad! Humana reported better-than-anticipated results, thanks to a focus on cutting costs and abandoning certain unprofitable Medicare Advantage plans.
The health insurer's earnings per share clocked in at a hefty $11.58, blowing past the $10.05 average estimate. Furthermore, their revenue rose a robust 8% year-over-year, hitting an impressive $32.11 billion.
Humana also shared some not-so-fancy news: their year-to-date membership dropped by a hair-raising 446,000, but this was pretty much what they predicted. The losses were primarily due to the insurer's decision to chuck some unprofitable Medicare Advantage plans and counties – approximately 560,000 members took the hit.
To keep costs in check, Humana took steps to lower the insurance segment benefit ratio, a measure of how much they shell out in claims compared to premiums. The number dropped from 89.3% to 87.4%, meeting their earlier projections.
Despite the solid results, Humana wasn't quite confident about the rest of the year. They kept their full-year adjusted EPS projection at around $16.25, but they did drop their GAAP EPS guidance to about $14.68 from $15.88.
Finishing strong, shares of Humana have seen a 2.5% uptick in 2025. If you're keen to learn more about Humana's Q1 nitty-gritty, give our website a gander!
The Lowdown on Humana's Membership Wobbles:
Why did Humana lose so many members in Q1? A variety of factors dragged on the health insurer's membership:
- Exiting unprofitable Medicare Advantage plans:
- Humana is ditching roughly 550,000 individual Medicare Advantage members, making a beeline for segments with higher lifetime value[1][2].
- In this whittling process, they're also parting ways with around 140,000 duals (Dual Special Needs Plans)[3].
- Lower Star Ratings in Medicare Advantage plans:
- The Centers for Medicare & Medicaid Services (CMS) snubbed Humana's appeal on the 2025 Star Ratings, impacting quality bonus payments for 2026[1][4].
- Ratings for some plans, such as the H5216 plan, took a nosedive[1][4].
- Operational and strategic shifts:
- Humana is grinding through some aggressive transformation moves, shifting towards higher-margin, sustainable segments to boost long-term earnings[3].
- These changes might lead to short-term membership fluctuations[3].
- Financial woes and guidance:
- Humana has logged losses in the recent quarters. In Q1, they posted a whopping $693 million loss[4].
In a nutshell, Humana's Q1 2025 results are a complex mix of strategic changes aimed at improving long-term profitability, which can involve short-term membership and financial adjustments. But remember, this analysis is just the tip of the iceberg – dig deeper with us!
- Humana, in an effort to concentrate on segments with higher lifetime value, has decided to exit around 550,000 individual Medicare Advantage members to focus on more profitable trading ventures.
- Alongside this, approximately 140,000 duals (Dual Special Needs Plans) are also being let go as part of the health insurer's strategic shift.
- The Centers for Medicare & Medicaid Services (CMS) denied Humana's appeal on the 2025 Star Ratings, causing a drop in their quality bonus payments for 2026 and negatively impacting certain plans, such as the H5216 plan.
- As Humana undergoes an aggressive transformation to increase long-term earnings, operational and strategic changes may lead to short-term membership fluctuations.
- Financial struggles have been plaguing Humana in recent quarters, with Q1 reporting a significant loss of $693 million.
