Health insurer Humana released its second-quarter results for the 2026 fiscal year, detailing its plan to boost profit margins through strategic market exits and cost management initiatives. The company reaffirmed its full-year guidance for adjusted earnings per share of at least $9.00.

The second-quarter report showed adjusted earnings per share of $7.61, surpassing the consensus analyst estimate of $7.23. Revenue reached $40.89 billion, a 26.2% increase compared to the same period last year. This growth was primarily driven by membership expansion in Medicare and strong performance from the CenterWell healthcare services division. Net income for the quarter was $694 million, up 27% year-over-year.

Achieving the 2028 Profit Target

To meet its goal of achieving a sustainable pre-tax profit margin of at least 3% by 2028, Humana plans to exit certain Medicare Advantage plans in 2027. This move is expected to impact approximately 600,000 members. Chief Financial Officer Celeste Mellet stated that the decision is designed to protect high-value plans and ensure necessary progress on margin goals. The company anticipates it can re-enroll a significant portion of these members, similar to its experience in 2025.

Operational Efficiency and Cost Trends

On the operational front, the consolidated operating cost ratio improved by 120 basis points year-over-year in the second quarter. The company expects a full-year improvement of approximately 150 basis points. Medical and pharmacy cost trends remain within the 7% to 8% range, with some favorable cost trends noted in hospital services. Additionally, Humana has agreed to sell its minority stake in Gentiva for approximately $900 million, with the transaction expected to close in the fourth quarter. Chief Executive Officer Jim Rechtin expressed confidence in the company's Medicare Advantage bidding strategy for 2027, believing it will drive progress toward the 2028 pre-tax profit margin target.