Q3 2025 Earning Insights: Humana
- November 7, 2025
- Humana Earnings Release Q3 2025
Looking for deeper analysis?
Our Consolidated Earnings Report offers expanded insights across all major payers and is available to subscribers and clients.
Table of Contents
Executive Summary
Humana’s Q3 2025 earnings reveal a company in strategic transition, fundamentally shifting from growth-at-all-costs to lifetime value optimization—even as it beats earnings expectations and faces investor skepticism about ambiguous growth targets.
The company delivered EPS of $3.24 (vs. $2.83 forecast, +14.49% surprise) on revenue of $32.65B (+2.03% above forecast), yet the stock fell 5.38% in premarket trading. This disconnect captures the market’s concern: Humana refuses to provide specific 2026 membership growth targets, instead emphasizing “customer lifetime value” and “NPV maximization” while stating new sales are at the “high end of anticipated range.”
Key Strategic Themes:
- Growth Philosophy Shift: Explicit move away from membership targets toward lifetime value, with willingness to “slow new sales” if volume risks member experience
- Contract Deconsolidation: Reducing H5216 concentration from 43-45% of members to create portfolio diversification and reduce single-contract risk
- Stars Recovery Trajectory: Confident in return to top quartile by bonus year 2028; seeing 600K more gaps closed YoY in current measurement year
- Benefit Stability Strategy: After two years of benefit cuts, maintaining stable benefits to drive retention and reduce plan-to-plan switching
- Channel Mix Optimization: Shifting toward owned distribution, select partners, and digital—correlated with higher LTV and engagement
- Cost Trends: Expecting continued elevation in 2026 (mid-single digits medical, low double digits Rx), but pricing confidence remains
Bottom Line:
Humana is playing the long game, prioritizing sustainable profitability over short-term enrollment wins. The company expects individual MA margin (ex-Stars) to double in 2026 vs 2025 and targets 3%+ pretax margins “over time.” However, the refusal to provide growth guidance creates uncertainty for investors accustomed to clear enrollment targets. Early AEP indicators show “high end” new sales, improved channel mix, reduced plan-to-plan switching, and favorable product mix toward 4+ star contracts—but whether this translates to material growth remains deliberately vague.
What Changed vs. Q2 2025
| Metric | Q3 2025 | Change/Status | Commentary | |
|---|---|---|---|---|
| EPS | $3.24 | +14.49% vs forecast | Beat driven by solid execution and strategic investments | |
| Revenue | $32.65B | +2.03% vs forecast | Membership retention better than expected | |
| Full-Year EPS Guidance | ~$17 | Reaffirmed | Despite $150M in incremental growth investments | |
| Medical Cost Trends | In line | Meeting expectations | Expect continuation into 2026 (mid-single digits) | |
| Debt-to-Capital Ratio | 40.3% | Down from 40.7% Q2 | Target: ~40% long-term | |
| 2026 AEP Progress | Early stages | High end" of range | 2 weeks incomplete data; positive indicators but no growth target | |
Strategic Shift Insights:
- Growth Philosophy: Explicitly deprioritizing membership targets in favor of lifetime value/NPV
- Channel Mix: Meaningfully improved toward owned distribution, select partners, digital
- Product Mix: Higher-than-expected sales in 4+ star plans
- Plan-to-Plan: Significantly reduced Humana plan-to-plan switching YoY (retention proxy)
- Competitor Exits: NOT seeing outsized captures in markets where competitors exited
Market Reaction Context:
Despite beating earnings by 14.49%, stock fell 5.38% premarket. Investor concerns center on: (1) refusal to provide specific 2026 growth targets, (2) ambiguous language around “high end of range” without defining the range, (3) willingness to “slow new sales” if volume risks experience, and (4) continued elevated cost trends into 2026. Market interpreting strategic shift as potential flat-to-modest growth rather than recovery growth story.
Q3 2025 Financial Performance
EPS
vs $2.83 forecast
+14.49% surprise
Q3 Revenue
$32.65B
Full-Year EPS Guidance
(Reaffirmed)
Executive Commentary & Strategic Intent
Challenges: Balancing Growth and Experience
"Our focus is on maximizing customer lifetime value and customer NPV. That's our focus. The way we do that is delivering an exceptional experience that fuels member retention... We welcome new sales. However, we are prepared to take targeted actions to slow new sales if we reach the point where the volume risks negatively impacting member experience."
"We do recognize that you want us to provide a specific growth target. We do not think that focusing on a net growth target is the right metric because growth through retention is desirable, and we will take as much of it as we can. We also will not give a specific number around new sales targets because the amount that we can absorb is dependent upon member product and channel mix."
"There's been a bit of a cycle, right? Which is why there's all this question about, is growth good or is growth not good? That really comes from our approach that says, we're going to grow on plans that frankly don't have a very attractive margin. They're attractive for the customer. We bring them in, and then those plans tend to degrade over time. The problem is if you overgrow on those low-margin plans, you say growth might not be good."
Objectives: Margin Expansion Over Volume
"We remain committed to achieving individual MA pretax margin of at least 3% over time."
"We continue to expect that our margin for individual MA, excluding STARS, will double in 2026 over 2025, and then we'll continue to make progress in 2026 [meant 2027]."
"While we are focused on LTV and NPV, we recognize we can't have a long-term without the short-term. We are balancing the long-term value creation with delivering on the next year or the next quarter."
Targets: Early AEP Performance Indicators
"New sales are at the high end of the range, the high end of the anticipated range of outcomes that we expected in AEP. Channel mix is meaningfully improved relative to prior years. We have greater volume in our own distribution channel with select high-performing partners and in digital distribution."
"We are also seeing favorable product mix, including higher-than-initially-expected sales in plans with four stars and greater. We are not seeing outsized sales in areas where competitors have exited plans."
"We are experiencing significantly reduced Humana plan-to-plan mix, with plan-to-plan sales down year over year. We believe that this is likely an early indicator that our stable benefit strategy and changes to our customer service approach are working to reduce voluntary attrition, though we need more time to validate this assumption."
Next Steps: Execution Roadmap
"We will continue to monitor new sales volume and manage it dynamically. We are prepared to take further mitigating actions, as we did heading into AEP, if it appears that new sales will put member experience at risk."
"We've already decommissioned a number of plans. That is a potential lever, but there are other levers. Keep in mind that we own a big part of our own distribution, including our own marketing. We are able to do other levers beyond commissions if we want to have volume match our operational capacity."
Compliance & Risk Management
"We are disappointed, but we are not surprised by our bonus year 27 STARS results. The results are consistent with our baseline planning scenario, and our outlook remains the same as we previously communicated at our investor conference in June."
"We have taken measures such as taking Part D risk back, where we saw the IRA shift cost in a very significant way. We have been reducing benefits for two years to reset the product so that it is a product that we and our value-based partners want to grow. We are implementing STARS mitigation programs that mitigate the impact of the STARS revenue hit based upon their success and their performance."
DON’T FALL BEHIND
Your competitors already see what’s next.
These reports will plug directly into our Benefit Strategy Simulator™ to test competitive
scenarios by market, Stars, or subsidy impact.
REAL-TIME INTELLIGENCE. STRATEGIC ADVANTAGE
It’s earnings season — and while others wait for industry roundups, our clients already have the insights.
Key executive quotes flagged by theme (Stars, ACA, Medicaid, MLR, Compliance)
Market movements decoded by enrollment, benefit shifts & margin levers
Used by top MA teams to inform 2026 bid strategy & pricing
Deep-dive earnings call analysis within 24–48 hours
