Humana (HUM -4.54%), one of the largest U.S. health insurers with a major focus on Medicare Advantage and integrated healthcare services, reported its second quarter 2025 results on July 30, 2025. The most notable headline was an adjusted earnings per share (EPS) of $6.27, and revenue of $32.4 billion, both topping Wall Street estimates of $5.92 (Non-GAAP EPS) and $31.9 billion (GAAP revenue), respectively. Despite exceeding expectations, adjusted EPS fell from $6.96 in the prior year period, while GAAP revenue rose from $29.54 billion in Q2 2024, showing robust top-line growth year over year but ongoing earnings pressure. The company raised its adjusted EPS guidance and revenue targets, reflecting management’s confidence in the company’s core strategy even as challenges remain in margin performance and Medicare Advantage membership trends.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $6.27 | $5.92 | $6.96 | -9.9 % |
| Revenue (GAAP) | $32.4 billion | $31.87 billion | $29.5 billion | 9.8 % |
| Benefit Ratio (Non-GAAP) | 89.7 % | 88.9 % | 0.8 pp | |
| Operating Cost Ratio (Non-GAAP) | 10.9 % | 10.5 % | 0.4 pp | |
| Income Before Income Taxes (Non-GAAP) | $1.02 billion | $1.13 billion | -9.7 % |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview and Recent Strategic Focus
Humana is a major health insurer known for its concentration in Medicare Advantage—a type of health insurance plan for seniors and certain disabled individuals, provided through contracts with the U.S. government. In recent years, it has prioritized government contracts, with a particular emphasis on Medicare Advantage, Medicaid, and related services, which accounted for 85% of premiums and services revenue in FY2024.
The company’s CenterWell segment is at the heart of its push into integrated care delivery. CenterWell houses three major lines: primary care, pharmacy solutions, and home health services. This approach channels additional healthcare services to Humana members, aiming for better outcomes through more coordinated care. Strategic efforts in recent quarters have been centered on rationalizing the membership base, exiting less profitable employer health products, and investing in value-based care models—all in pursuit of sustainable earnings growth and operational discipline.
Quarter Highlights: Financial Performance and Strategic Developments
Humana’s results showed GAAP revenue growth and a non-GAAP earnings beat against analyst expectations. Revenue climbed by approximately 9.6% year over year to $32.4 billion (GAAP). However, adjusted EPS (non-GAAP) dropped by roughly 10% year over year.
The benefit ratio, which measures the share of premium dollars spent on healthcare services for members, rose to 89.7% on a GAAP basis. An increase in this ratio (Insurance segment benefit ratio, as reported on a GAAP basis) suggests more is being spent on medical care relative to insurance premiums received, and was in line with the company's previously disclosed expectation of approximately 90 percent. The operating cost ratio (adjusted, non-GAAP), representing administrative and other non-medical expenses as a share of revenue, also increased to 10.9% from 10.5% in the prior year period.
One standout this quarter was the CenterWell segment. The company attributed about one-third of its quarterly performance beat to stronger-than-expected results in CenterWell’s pharmacy and primary care operations. The segment’s pharmacy solutions landed new access agreements with 17 limited distribution drugs and received the MMIT Patient Choice award for the seventh time in eight years. CenterWell’s primary care services are projected to deliver 50,000 to 70,000 net new patients—a notable jump from previous expectations, supporting a 15% midpoint growth rate.
While growth in Medicaid continues, Medicare Advantage remains central. The company revised its outlook for Medicare Advantage membership declines, now expecting a contraction of up to 500,000 members rather than the previously forecast 550,000 decline. This revision indicates that while membership losses persist due to the exit from unprofitable plans, the scale of contraction may be less than initially feared. Management’s focus remains on prioritizing long-term, high-value customer relationships over headline membership growth, which it expects will eventually yield improved margin performance.
There were several material one-time items during the quarter. Put/call valuation adjustments for investments not fully consolidated on Humana’s balance sheet totaled $200 million, compared to $68 million in Q2 2024. These adjustments do not impact the core operating momentum but do widen the gap between GAAP and adjusted EPS. The company also recognized $32 million in impairment charges.
Regulatory risks remained in focus. The company reiterated that ongoing litigation related to Medicare plan quality scores—called Star Ratings—could affect bonus payments in 2026, with major implications for future revenues. Management stated that no progress had been made in resolving the litigation but that operational improvements, such as enhanced care delivery and improved health screenings, were being made to address Star-related metrics.
Product Segment Explanations and Operational Context
Medicare Advantage is a government-backed health insurance product that allows private insurers to provide Medicare benefits to eligible individuals. These plans are essential to Humana’s revenue and are highly dependent on government reimbursement rates and policy decisions. Medicaid, another government program aimed at low-income individuals, has seen growth within Humana’s portfolio, aided by new state contracts and expansions.
CenterWell comprises three main product types. CenterWell Primary Care offers medical checkups and ongoing care to seniors. CenterWell Pharmacy acts as a retail and specialty pharmacy provider, handling both prescription fulfilment and medication management. CenterWell Home consolidates home health services, sending nurses and therapists to members’ homes for ongoing care. The strategy for CenterWell is integration—the business uses data and care coordination to help flag and address health needs sooner, resulting in improved outcomes and potential cost savings.
Looking Forward: Guidance and Watchpoints
Humana raised its guidance for adjusted EPS to approximately $17.00, an increase from the previous target of $16.25. Revenue guidance (GAAP) was also raised to at least $128 billion from a prior range of $126–128 billion. At the same time, GAAP EPS guidance was lowered to about $13.77, largely due to technical investment valuation adjustments and non-core items, not to worsening operations.
Management reiterated that critical risks continue to warrant attention. These include possible further membership declines in Medicare Advantage, persistent margin pressures stemming from elevated benefit and operating cost ratios, and the unresolved litigation on Star Ratings that could hit bonus payments and future revenues. The outlook also assumes ongoing investment in integrated care platforms such as CenterWell and successful cost-management initiatives, especially as the Medicaid business grows. HUM does not currently pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
