Humana delivered a second quarter that outpaced Wall Street’s expectations, with management highlighting CenterWell Pharmacy’s strong performance and stable medical cost trends as key drivers. CEO James Rechtin attributed the positive results to “better-than-expected individual Medicare Advantage membership” and a rebound of members who returned to Humana after trying other plans. Management also pointed to efforts streamlining the prior authorization process and investments in improving the member experience as contributors to the quarter’s outcomes.
Is now the time to buy HUM? Find out in our full research report (it’s free).
Humana (HUM) Q2 CY2025 Highlights:
- Revenue: $32.39 billion vs analyst estimates of $31.86 billion (9.6% year-on-year growth, 1.7% beat)
- Adjusted EPS: $6.27 vs analyst estimates of $5.87 (6.9% beat)
- Adjusted EBITDA: $1.36 billion vs analyst estimates of $1.27 billion (4.2% margin, 7.8% beat)
- The company slightly lifted its revenue guidance for the full year to $128 billion at the midpoint from $127 billion
- Management raised its full-year Adjusted EPS guidance to $17 at the midpoint, a 4.6% increase
- Operating Margin: 3.4%, in line with the same quarter last year
- Customers: 14.84 million, up from 14.84 million in the previous quarter
- Market Capitalization: $32.07 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Humana’s Q2 Earnings Call
- Ann Hynes (Mizuho) asked for clarification on which cost trends were outperforming and the specific drivers in Medicaid. CFO Celeste Mellet explained that cost trends were generally in line or better than expected, and Medicaid performance was supported by state mix and the LTSS focus.
- Kevin Fischbeck (Bank of America) inquired about Part D performance and the impact of new CMS regulations. Mellet reported that member and prescription trends were in line with expectations, while Renaudin noted that regulatory changes for 2026 were incorporated into the company’s planning.
- Andrew Mok (Barclays) questioned the implications of industry pullbacks in the PPO market for Humana’s membership and margins. CEO James Rechtin responded that Humana’s benefit reductions and product adjustments have positioned the company to maintain a profitable and stable membership base.
- Stephen Baxter (Wells Fargo) probed inpatient utilization trends in Medicare Advantage. Mellet stated that both admissions and cost per unit were trending in line or better than expected, with no acceleration in utilization pressures.
- Erin Wright (Morgan Stanley) asked about the drivers behind Specialty Pharmacy’s outperformance. Mellet attributed it to strategic changes, expanded drug access, and successful partnerships, especially in the direct-to-consumer segment.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will monitor (1) the pace and impact of Humana’s operational transformation initiatives, (2) progress in Medicaid expansion, especially as new state contracts go live, and (3) sustained growth in CenterWell Pharmacy, particularly in specialty and direct-to-consumer models. Developments in regulatory policy and the Medicare Advantage landscape will also be crucial signposts for tracking the company’s execution.
Humana currently trades at $266.61, up from $232.84 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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