MW Humana's stock falls as Medicaid, health-benefit costs are still problems

By Tomi Kilgore

Profitability on insurance benefits is seen falling more than expected as costs rise, while Medicaid membership is now expected to grow much less than previous forecasts

Humana's stock falls as Medicaid-membership growth outlook was slashed, and as medical costs are still a problem.

Shares of Humana Inc. took a hit in early Wednesday trading, as the health insurer cut its outlook for both Medicaid-membership growth and the profitability of its overall insurance business.

While the company $(HUM)$ has been dealing with those issues for a while, investors may be a little more disappointed in the guidance after Humana's previous quarterly report provided some hope that the worst may be over.

As part of its third-quarter report, the company said it expects the insurance segment benefit ratio, which is the percentage of premiums it collected that are paid out - lower is better - for the fourth quarter to rise to approximately 93.5% from 91.3% in the same period a year ago, to top the average analyst estimate compiled by FactSet of 92.7%. That would be the highest ratio in more than five years, based on available FactSet data back to November 2020.

And for 2025, the company said in its press release that it affirmed its previous guidance range of 90.1% to 90.5%, but in the prepared remarks for the post-earnings call with analysts, the company said the benefit ratio was expected to be at the top end of the guidance range.

For the third quarter, the benefit ratio rose to 91.1% from 89.8%. That matched the FactSet consensus.

Humana also slashed its 2025 Medicaid membership growth outlook to 12% - or by about 160,000 members - from a previous estimate of member growth of 175,000 to 250,000. The company had affirmed its previous growth estimate in late July.

Humana said the expected decline was largely in line with national enrollment trends.

Read: This little-noticed update to Medicaid rules could burden seniors with thousands in medical debt.

The stock dropped 5.8% in premarket trading. That followed an apparent breakout rally of 12.4% the day second-quarter results were released.

On the bright side, Humana said it expects Medicare Advantage membership to decline by approximately 425,000 members in 2025, but that's better than previous guidance for a loss of up to 500,000 members. The company's MA business has also been a source of struggles for more than a year, so any sign of improvement would be welcomed by investors.

For the third quarter, net income fell to $134 million from $651 million, primarily due to costs associated with interest investments and value-creation initiatives. Excluding nonrecurring items, adjusted earnings per share declined to $3.24 from $4.16 but beat the FactSet EPS consensus of $2.93.

The company kept its 2025 guidance for adjusted EPS intact at approximately $17. Since the end of the second quarter, the FactSet consensus for 2025 adjusted EPS has increased to $17.07 from $16.35, in a sign of increasing Wall Street optimism.

Total revenue grew 11.1% to $32.65 billion, above expectations of $32 billion.

Humana's stock has gained 11.1% in 2025 through Tuesday, while the Health Care Select Sector SPDR ETF XLV has tacked on 5.5% and the S&P 500 index SPX has advanced 15.1%.

-Tomi Kilgore

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November 05, 2025 08:21 ET (13:21 GMT)

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