By Josh Nathan-Kazis and Nate Wolf

Humana shares slid sharply Wednesday, despite what was, by all appearances, a fine third-quarter report. It was yet another indication of investors' skittishness around the beleaguered managed-care stocks.

The stock tumbled 8.4% on Wednesday, nearly wiping out what had a been a 10% year-to-date gain as of Tuesday's market close. Humana shares plummeted by more than 40% in 2024.

The company reported third-quarter earnings and sales that beat consensus estimates. Adjusted earnings were $3.24 per share, besting the FactSet consensus estimate of $2.93 per share. Revenue was $32.6 billion, better than the $32 billion consensus estimate.

The medical loss ratio for Humana's insurance division -- a metric that measures the share of premiums paid out to cover medical expenses -- was in line with expectations at 91.1%.

"HUM reported a good quarter," Mizuho analyst Ann Hynes wrote early Wednesday, ahead of the company's investor call.

That notionally good report, however, comes during a rather bad earnings season for the managed-care giants.

The sector has been struggling through political turbulence, amid changes and cuts to the Medicaid program and the plans offered on the Affordable Care Act marketplaces. In addition, many of the companies are scrambling to recover after taking significant earnings hits in 2023 or 2024.

Since the start of managed-care earnings season on Oct. 21, shares of all of the major insurers are down, most by double digits. UnitedHealth Group has fallen about 11%, Cigna Group is down 14%, Elevance Health has slid around 12%, and Molina Healthcare has plummeted 25%.

On Wednesday, Humana maintained its adjusted earnings guidance for 2025, which sits at $17 per share, but cut its GAAP earnings guidance to "approximately $12.26" per share from "approximately $13.77" per share. It maintained its MLR guidance of between 90.1% and 90.5%.

The cut to the full-year GAAP guidance appears to reflect a higher projected tax impact, and an impact of 52 cents a share related to the company's exit from a business line announced in 2023.

Humana declined to provide earnings guidance for next year, but flagged expected declines in the quality ratings of its Medicare Advantage plans as weighing on earnings.

The results come at the tail end of a bumpy earnings season for the large managed-care companies, as Humana seeks to recover from a steep earnings downturn.

The company's problems have been manifold. In 2024, earnings per share plummeted by nearly 40% as higher-than-expected medical costs for seniors enrolled in Medicare Advantage -- the government-funded insurance plans in which Humana specializes -- weighed on the bottom line. At the same time, a cut to the government quality rating of Humana's largest Medicare Advantage plan meant the company would lose out on future government bonuses. And amid all that, a hoped-for acquisition by Cigna failed to materialize.

This year, earnings have looked good, and there have been signs the company is on the road to recovery.

All the worries aren't in the rearview mirror, however.

Humana shares dropped 12% on a single day in September in response to fear that the government's Medicare Advantage quality ratings for 2026 would be tougher than anticipated. The company said in early October that 20% of its members are in Medicare Advantage plans that will have at least four out of five stars in 2026, the top two quality-rating levels, down from 25% the prior year.

Other insurers have fallen in response to their earnings in recent weeks. Cigna shares fell 17% on Oct. 30 after the company flagged worries about profit margins for its pharmacy-benefit-services division.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

November 05, 2025 11:39 ET (16:39 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.