Shares of Humana (HUM) tumbled 5.28% in pre-market trading on Wednesday, as investors reacted to the health insurer's mixed third-quarter earnings report and lowered full-year guidance. Despite beating analyst expectations for the quarter, concerns about rising medical costs and a reduction in the company's earnings outlook weighed heavily on the stock.

Humana reported adjusted earnings of $3.24 per share for the third quarter, surpassing the consensus estimate of $2.93. Revenue also came in strong at $32.65 billion, exceeding analysts' projections of $32 billion. However, the company's medical-loss ratio, which measures the proportion of premiums paid out to cover medical expenses, rose to 91.1% from 89.9% a year earlier, indicating higher medical costs.

The primary driver of the stock's decline appears to be Humana's decision to lower its full-year GAAP earnings forecast. The company now expects earnings of $12.26 per share for 2025, down significantly from its previous guidance of $13.77 per share. While Humana reaffirmed its adjusted earnings outlook of approximately $17 per share, the cut to GAAP earnings has raised concerns about the company's profitability in the face of rising healthcare expenses.

On a more positive note, Humana updated its forecast for Medicare Advantage membership decline, now anticipating a decrease of about 425,000 members for the year, an improvement from its previous estimate of up to 500,000. The company attributed this to stronger retention and better-than-expected sales. However, this silver lining was not enough to offset investor worries about the broader financial picture.