Humana Inc. (NYSE:HUM) released its third-quarter earnings report on Wednesday, with adjusted earnings of $3.24, exceeding the consensus estimate of $2.82.

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The company reported sales of $32.65 billion, up from $29.39 billion a year ago, beating the consensus of $32.01 billion.

Sales increased on higher per-member Medicare and state-based contracts premiums, with the Medicare increase primarily driven by an increased direct subsidy due to the Inflation Reduction Act (IRA), and membership growth in the company’s state-based contracts and stand-alone PDP businesses.

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Humana ended the quarter with 14.99 million in total medical membership, down from 16.36 million a year ago.

Individual Medicare Advantage membership reached 5.24 million, down from 5.66 million a year ago.

The total number of Medicare members was 8.25 million, down from 8.52 million the previous year.

The insurance segment benefit ratio of 91.1% aligns with the previously disclosed expectation of just above 91%.

Guidance

Humana reaffirms its 2025 adjusted earnings guidance of $17.00 per share, compared to the consensus of $17.07. The company also reiterated the Insurance segment benefit ratio guidance of 90.1% to 90.5%, supported by solid execution and results.

Adjusted EPS guidance now contemplates an additional approximately $150 million of incremental investments.

In its prepared remarks on Wednesday, Humana said, “the $150 million of incremental investments is additive to the incremental $100 million discussed last quarter and the ‘few hundred million dollars’ within our initial 2025 guidance.”

Revenue is expected to be at least $128 billion in 2025, in line with the consensus estimate of $128.09 billion.

Humana anticipates a fiscal 2025 decline of approximately 425,000 Individual Medicare Advantage (MA) members, improved from the previous expectation of a loss of up to 500,000, driven by stronger retention and better-than-expected sales.

The fourth-quarter Insurance segment benefit ratio is expected to be approximately 93.5%. The fiscal 2025 Insurance segment benefit ratio is expected to be at the top end of the guidance range of 90.1% to 90.5%, including an approximately 40-basis-point impact of incremental investments.

HUM Price Action: Humana shares were down 6.56% at $263.37 at the time of publication on Wednesday, according to Benzinga Pro data.

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