By Josh Nathan-Kazis and Elsa Ohlen

Humana stock was up sharply on Wednesday after the company's second quarter financial report indicated the healthcare insurer is making progress on the problems that have halved its share price over the past 18 months.

Shares were up 10.8% shortly before the market open.

Humana specializes in Medicare Advantage, the government-funded, privately-managed health plans for seniors. As medical spending by seniors rose after the Covid-19 pandemic, and as the federal government has increased its scrutiny of Medicare Advantage, providers like Humana have aken significant earnings hits.

The damage to Humana has been particularly severe. The stock, which was trading above $500 a share in the fall of 2023, and had been a longtime darling of Wall Street analysts, closed Tuesday at $229.82. It was up to $257 after the company's results beat Wall Street expectations.

Second-quarter adjusted earnings came in at $6.27 a share on sales of $32.4 billion. Analysts polled by FactSet had expected earnings of $5.92 a share on sales of $31.9 billion.

The insurance segment's medical-cost ratio -- a closely-tracked metric that calculates the proportion of premiums paid out to cover medical costs -- was 89.9%, in line with consensus estimates.

On the back of the better-than-expected results, the company raised its full-year 2025 adjusted earnings guidance to about $17 a share, up from a prior estimate of $16.25. It expects 2025 revenue of at least $128 billion, up from its prior guidance of $126 billion to $128 billion.

The new guidance is slightly above the FactSet consensus estimate for 2025 earnings, which had been $16.36 a share.

The company said its strong earnings were attributable to high volumes of prescriptions at CenterWell, the company's health services and pharmacy division, and more members than expected in its Medicare Advantage plans.

It said it was raising its guidance in part because it expects to lose only 500,000 Medicare Advantage members on individual plans this year, down from its prior estimate of 550,000. So far, it's lost 432,500 Medicare Advantage members this year.

Humana's profits have dropped precipitously since 2023, when the company reported earnings of $26.09 a share. Analysts expect Humana's earnings to fall to $13.82 a share in 2026, according to FactSet.

Still, on Wednesday morning, Wall Street appeared to see signs of improvement from the company. The results "offer a more comforting story, " Jefferies analyst David Windley wrote early Wednesday. "HUM is making progress."

Humana's worsening fortunes have been a bellwether for the industry. A more-or-less pure play on Medicare Advantage, Humana has struggled with rising medical costs and regulatory issues that have served as warnings for larger players such as UnitedHealth Group, which fell on softer-than-expected guidance on Tuesday.

Humana shares had been down 43% over the past 12 months, and 9.2% this year. In addition to the medical-cost troubles that have hit the entire industry, Humana suffered a major blow late last year after the Centers for Medicare and Medicaid Services cut the quality rating of its largest Medicare Advantage plan, which will weigh on the bonuses the company will receive from the federal government next year.

Humana lost a legal challenge to the rating cut in July, but it has since sued again.

At an investor day in the spring, the company said that its sights are fixed on 2028, by which time it expects "significant earnings growth."

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

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July 30, 2025 09:23 ET (13:23 GMT)

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