Humana (HUM) shares fell ~6% in the premarket on Wednesday after the managed care firm lowered its full-year earnings outlook below consensus with its Q3 2025 results amid continuing headwinds in the Medicare Advantage market.
The Louisville, Kentucky-based company, the second-largest MA insurance provider after industry leader UnitedHealth (UNH), reported better-than-expected financials for Q3 after its revenue improved ~11% YoY to $32.7B during the period.
However, its non-GAAP earnings per share fell ~22% YoY to $3.24 even as its adjusted benefit ratio, which measures the proportion of premiums paid out for medical care, rose to 91.1%, higher than 89.8% in the prior-year period and 90.6% projected by analysts according to Bloomberg data.
Its operating cost ratio reached 12.6% compared to 11.5% in the consensus and the year-ago period, and revenue from its insurance segment rose ~10% YoY to $31.2B while operating income from that unit slipped ~8% YoY to $251.0M.
Looking ahead, Humana (HUM) continues to forecast headwinds in the MA market with a decline of nearly 425K of its membership this year compared to at least a 500K decline in the prior forecast.
However, the company reiterated its 2025 benefit ratio guidance for its insurance unit at 90.1% – 90.5% and reaffirmed its adj. earnings outlook at about $17.00 per share compared to 89.8% and $17.04 in the consensus, respectively.
Its revised GAAP earnings outlook of ‘approximately $12.26,’ down from the prior estimate of ‘approximately $13.77,’ also stood below the $14.46 projected by analysts.