Humana Inc. (NYSE:HUM) stock rose on Wednesday after the health insurer released its first-quarter earnings.

Earnings Beat Expectations Despite Year-Over-Year Profit Decline

The company reported first-quarter adjusted income of $10.31 per share, down from $11.58 last year and above the consensus estimate of $10.19.

The company reported sales of $39.65 billion, up from $32.11 billion a year ago, beating the consensus of $39.36 billion.

Humana ended the quarter with 17.71 million in total medical membership, up from 14.84 million a year ago.

Individual Medicare Advantage membership reached 6.39 million, up from 5.22 million a year ago.

The total number of Medicare members was 10.98 million, up from 8.22 million the previous year.

Cost Ratios Improve

The insurance segment benefit ratio came in at 89.4%, slightly better than the company's guidance of just under 90%.

The adjusted operating cost ratio of 10.0% and the Insurance Segment operating cost ratio of 7.3% represent 50 basis points (bps) and 90 bps reductions year over year, respectively.

Management Flags Ongoing Margin Pressure And Strategic Adjustments

The reduction is driven by operating leverage from membership growth and revenue, along with cost-cutting and transformation efforts.

“While it remains early, available information to date suggests that medical and pharmacy cost trends are slightly better than our expectations, across both new and existing membership,” Humana said in prepared remarks on Wednesday.

“The gap between funding and medical cost trend is larger going into this season than it was a year ago,” CEO Jim Rechtin said.

“… we will adjust benefits to remain on track to deliver our 2028 commitment of returning to a sustainable margin of at least 3%. And again, we expect to make the necessary progress towards that goal in 2027. We are very aware that we need to make some progress in 2027,” Rechtin said in the earnings conference call.

The CEO said the improved CMS rate notice should bring greater industry stability and benefit seniors, but warned that rising medical costs are still outpacing funding. He added the company will adjust benefits to stay on track for a sustainable margin of at least 3% by 2028, with meaningful progress expected in 2027.

2026 Outlook Highlights Earnings Stability And Continued Growth

Humana affirms fiscal 2026 adjusted earnings per share of at least $9, compared to the Wall Street estimate of $8.72.

The company expects the 2026 Insurance segment benefit ratio to be 92.75%, plus or minus 25 basis points, and the operating cost ratio to be 10%, plus or minus 25 basis points.

Humana continues to expect fiscal 2026 individual Medicare Advantage membership growth of approximately 25% over 2025.

The company expects Group Medicare Advantage growth of approximately 150,000 and Individual Medicare stand-alone PDP growth of roughly 1,000,000.

Humana expects 2026 sales of at least $160 billion.

HUM Price Action: Humana shares were up 1.92% at $234.12 at the time of publication on Wednesday, according to Benzinga Pro data.

Photo by T. Schneider via Shutterstock