Humana reported second-quarter earnings of $7.61 per share, surpassing the $7.22 expected by analysts, and revenue of $40.87 billion, exceeding the forecast of $40.61 billion. The company's net income rose to $694 million from $545 million a year earlier.
CFO Celeste Mellet noted that medical and pharmacy costs aligned with expectations, with a slight favorability in inpatient medical costs among value-based providers. However, Cantor Fitzgerald analysts expressed disappointment over the company's unchanged profit outlook of at least $9 per share for 2026, especially as other insurers have recently raised their guidance.
This sentiment contributed to a more than 4% drop in Humana's shares in premarket trading. The medical benefit ratio for the quarter was 91.2%, slightly higher than the previous year's 89.9%, indicating that while costs are stabilizing, they remain a concern. Mellet highlighted that while medical costs are expected to remain stable, pharmacy costs are projected to rise due to high drug prices.
Looking ahead, Humana aims to enhance profitability through adjustments to its Medicare Advantage plans and by expanding membership, with a goal of achieving a sustainable pretax margin of at least 3% by 2028