Humana Inc. HUM reported first-quarter 2025 adjusted earnings of $11.58 per share, which outpaced the Zacks Consensus Estimate by 16%. The bottom line soared 60.2% year over year. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
Adjusted revenues improved 9.5% year over year to $32.1 billion. However, the top line missed the consensus mark by 0.3%.
The quarterly results benefited on the back of strong premiums resulting from an expanding customer base in stand-alone prescription drug plans (PDP) and state-based contracts businesses. Improved benefit ratios reflected effective Medicare Advantage pricing. Its CenterWell segment also saw solid momentum, with rising revenues from the primary care business. However, the upside was partly offset by a decline in investment income, a fall in overall membership and an elevated operating expense level.
Humana Inc. Price, Consensus and EPS Surprise
Humana Inc. Price, Consensus and EPS Surprise
Humana Inc. price-consensus-eps-surprise-chart | Humana Inc. Quote
Q1 Operational Update
Humana’s premiums of $30.51 billion grew 8% year over year. However, the metric fell short of the Zacks Consensus Estimate of $30.7 billion and our estimate of $30.53 billion. Services revenues advanced 25.6% year over year to $1.3 billion, higher than the consensus mark of $1.2 billion and our estimate of $1.1 billion. Investment income decreased 8.3% year over year to $264 million and missed the consensus estimate of $275.1 million and our estimate of $281.8 million.
The benefit ratio was 87%, which improved 190 basis points (bps) year over year on the back of individual Medicare Advantage pricing, favorable workday impacts and benefit design changes.
Total operating expenses increased 6.1% year over year to $30.1 billion in the first quarter, lower than our estimate of $30.2 billion. The year-over-year increase was due to higher benefits and operating costs. Operating cost ratio of 10.5% deteriorated 30 bps year over year.
HUM’s net income surged 68.1% year over year to $1.24 billion, which beat our estimate of $1.19 billion.
Q1 Segmental Update
Insurance
The segment recorded adjusted revenues of $30.9 billion in the first quarter, which rose 8.9% year over year on the back of improved per-member Medicare premiums coupled with an expanding customer base in stand-alone prescription drug plans and state-based contracts businesses.
The unit’s adjusted operating income soared 74.8% year over year to $1.6 billion. Adjusted benefit ratio of 87.4% improved 200 bps year over year. Adjusted operating cost ratio of 8.2% remained flat year over year.
Total medical membership of the segment was 14.8 million as of March 31, 2025, which declined 8.3% year over year. The metric missed the Zacks Consensus Estimate of 15.6 million and our estimate of 15.9 million.
CenterWell
The segment’s revenues rose 5.7% year over year to $5.1 billion in the quarter under review, which surpassed the Zacks Consensus Estimate of $5 billion and our estimate of $4.9 billion. The metric benefited on the back of higher revenues stemming from the company’s primary care business.
Adjusted operating income of $451 million climbed 34.6% year over year. The operating cost ratio improved 190 bps year over year to 91.1%.
Humana’s Financial Update (As of March 31, 2025)
Humana exited the first quarter with cash and cash equivalents of $4.3 billion, which soared 91.4% from the figure at 2024-end. Total assets of $50.9 billion increased 9.6% from the 2024-end level.
Long-term debt amounted to $12.7 billion, up 14.2% from the figure as of Dec. 31, 2024. Short-term debt totaled $577 million. Debt to capitalization improved 230 bps year over year to 42.8% at the first-quarter end.
Total stockholders’ equity of $17.8 billion advanced 8.4% from the figure at 2024-end.
HUM generated net cash from operations of $331 million in the quarter under review, which tumbled 21.7% year over year.
HUM’s Capital Deployment Update
Humana bought back shares worth $9 million in the first quarter of 2025. It also paid dividends of $108 million during the same time frame.
2025 Outlook
Adjusted earnings per share (EPS) continue to be forecasted at around $16.25, which indicates a 0.2% rise from the 2024 figure. GAAP EPS is currently projected to be roughly $14.68 in 2025, down from the earlier view of $15.88.
Revenues are reiterated to lie within $126-$128 billion, the mid-point of which implies a 7.8% increase from the 2024 figure. The Insurance segment’s revenues continue to be estimated within $121-$123 billion. Revenues of the CenterWell segment continue to be expected in the band of $20.5-$21.5 billion.
Management continues to anticipate Individual Medicare Advantage membership to witness a decline of around 550,000 in 2025. Group Medicare Advantage membership is still expected to stay relatively flat from the 2024-end figure.
Membership from the Medicare stand-alone PDP is reiterated to increase around 200,000 this year. State-based contracts are still expected to witness membership growth within 175,000-250,000.
The benefit ratio of the Insurance unit continues to be projected between 90.1% and 90.5% for 2025. The consolidated GAAP operating cost ratio continues to be anticipated 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 effective tax rate is still expected at around 25% while the weighted average share count continues to be anticipated at around 121.5 million.
HUM’s Zacks Rank
Humana currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Medical Sector Releases
Of the Medical sector players that have reported first-quarter 2025 results so far, the bottom-line results of Encompass Health Corporation EHC, Centene Corporation CNC and HCA Healthcare, Inc. HCA beat the respective Zacks Consensus Estimate.
Encompass Health reported first-quarter 2025 adjusted EPS of $1.37, which outpaced the Zacks Consensus Estimate by 15.1%. The bottom line advanced 22.3% year over year. Net operating revenues rose 10.6% year over year to $1.5 billion. The top line beat the consensus mark by 1.3%. EHC’s net patient revenue per discharge grew 3.9% year over year.
Total discharges were 64,985, which improved 6.3% year over year. Net and comprehensive income advanced 41.6% year over year to $196.5 million in the first quarter. Adjusted EBITDA of $313.6 million improved 14.9% year over year. Encompass Health added 25 beds to its existing hospitals in the quarter under review and inaugurated one de novo hospital.
Centene’s first-quarter 2025 adjusted EPS of $2.90 surpassed the Zacks Consensus Estimate by 22.9%. Moreover, the bottom line climbed 28% year over year. Revenues advanced 15.4% year over year to $46.6 billion. The top line beat the consensus mark by 7.2%. Revenues from Medicaid grew 4% year over year to $22.3 billion, while Medicare revenues of $8.8 billion soared 48% year over year in the quarter under review. Meanwhile, commercial revenues improved 31% year over year to $10.1 billion.
Centene's premiums totaled $41.7 billion, which advanced 17.4% year over year. Service revenues of $777 million decreased 3.8% year over year in the first quarter. Investment and other income dropped 29.9% year over year to $382 million. Total membership was 27.9 million as of March 31, 2025, which dipped 1.7% year over year. Centene’s health benefits ratio (HBR) of 87.5% deteriorated 40 bps year over year in the quarter under review. Adjusted net earnings improved 18.7% year over year to $1.4 billion.
HCA Healthcare reported first-quarter 2025 adjusted EPS of $6.45, which outpaced the Zacks Consensus Estimate of $5.77. The bottom line advanced 20.3% year over year. Revenues rose 5.7% year over year to $18.3 billion. The top line beat the consensus mark by 0.1%. Same-facility equivalent admissions improved 2.6% year over year in the first quarter, while same-facility admissions advanced 2.8% year over year. Same-facility revenue per equivalent admission grew 2.9% year over year.
Same-facility inpatient surgeries increased 0.2% year over year. Same-facility outpatient surgeries dipped 2.1% year over year. Additionally, same-facility emergency room visits rose 4% year over year in the first quarter. Adjusted EBITDA of $3.7 billion increased from the year-ago figure of $3.4 billion. HCA Healthcare operated 192 hospitals and roughly 2,500 ambulatory sites of care across 20 states and the United Kingdom as of March 31, 2025.
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