Humana Inc. (HUM) shares plummeted over 5% on Tuesday after the health insurer issued a downbeat profit forecast for 2025, weighed down by higher medical costs and lower membership in its Medicare Advantage plans.

The company projected adjusted earnings per share of around $16.25 for the full year, falling short of the consensus estimate of $16.71 among analysts polled by LSEG. Humana cited escalating medical costs and a planned exit from certain unprofitable Medicare Advantage markets as key factors impacting its outlook.

Humana expects its individual Medicare Advantage membership to decline by approximately 550,000, or 10%, in 2025 compared to 2024 levels. This projected drop is attributed to the company's decision to exit some underperforming plans and counties, along with higher-than-anticipated attrition rates in its Medicare-Medicaid dual eligible special needs plans (D-SNPs).