Humana Inc. (HUM)

In October, Humana said that CMS's 2027 Star Ratings put 95 percent of its Medicare Advantage members in plans rated 4 stars or higher 6. The company said the result exceeded its goal of top quartile results, defined as Stars revenue per member per month 10 percent above the peer group median 3. The 2025 ratings had fallen sharply, and the company said that decline would lower its 2026 quality bonus payments from CMS 1.

On 13 October Humana announced a joint venture with funds managed by HPS Investment Partners, part of BlackRock, to run nearly 150 CenterWell Senior Primary Care clinics 5. The venture replaces the clinics' partnership with Welsh, Carson, Anderson & Stowe and has no put option, and Humana expects a significant reduction in its balance sheet liabilities 5. The company expects the deal to close in the fourth quarter of 2026 5.

Humana affirmed on 13 October that it expects adjusted earnings per share of at least $9.00 for 2026 4. It reports third-quarter results on 6 November 9, and for that quarter management expects adjusted earnings per share of about negative $1.00 8. A virtual investor update on 10 December is meant to mark progress against the plan set at the 2025 Investor Day 8.

Humana began in 1961 in Louisville as a nursing home company, founded by the lawyers David A Jones Sr and Wendell Cherry 11. By 1972 it had sold the nursing homes to focus on hospitals, and in 1984 it began offering health insurance after one of its Arizona hospitals was dropped from an insurance plan 11. In 1993 it split the hospitals off into a separate company, Galen Health Care 11.

Government programs became the core of the business 1. Its 10-K says Humana has taken part in the Medicare program for private health plans for over 30 years, and it has served the military's TRICARE program since 1996 1.

In July 2015 Humana agreed to merge with Aetna 12. A federal court sided with the Justice Department and granted a permanent injunction in January 2017, and the two companies ended the deal in February 2017 12. Humana received a breakup fee of $1 billion 12.

In August 2021 Humana bought the remaining 60 percent of Kindred at Home, the largest home health and hospice provider, from two private equity funds at an enterprise value of $8.2 billion 13. A year later it sold a 60 percent interest in the hospice arm, now called Gentiva, and kept a minority stake of about 35 percent 1.

Growth came in 2023 14. Premiums revenue rose 15.5 percent to $101.3 billion, mostly because individual Medicare Advantage membership grew 18.5 percent to 5,408,900 14.

Medical costs then rose faster than premiums 15. The benefit ratio, which is benefits expense as a share of premiums, climbed from 87.3 percent in 2023 to 89.8 percent in 2024 as costs in Medicare Advantage and state contracts ran higher 15. Net income attributable to Humana fell from $2.5 billion, or $20.00 per diluted share, in 2023 to $1.2 billion, or $9.98 per share, in 2024 15.

In October 2024 CMS released 2025 Star Ratings that left far fewer Humana members in plans rated 4 stars or higher 1. Humana sued over the ratings, a court rejected its challenge on 14 October 2025, and Humana appealed 2.

In 2025 the company dropped unprofitable plans and counties, so individual Medicare Advantage membership fell 7.3 percent to 5,249,300 1. Total revenues still rose 10.1 percent to $129,664 million 1. Net income was $1,203 million, or $9.84 per diluted share, with changes in the fair value of put and call options, restructuring charges and impairments weighing on the result 1.

Leadership changed along the way 1. Jim Rechtin joined in January 2024 as president and chief operating officer and has been chief executive since 1 July 2024, and Celeste Mellet became chief financial officer in January 2025 1. A multi-year cost program booked charges of $449 million in 2025, of which $329 million was severance and other employee costs 1.

What Humana is

Humana is a Louisville health insurer that also runs doctors' offices, pharmacies and home health care through its CenterWell arm 1. At the end of 2025 it had about 15 million members in medical plans and 4.7 million in specialty products 1. Contracts with the federal government supplied 83 percent of 2025 premiums and services revenue 1.

Individual Medicare Advantage

Medicare Advantage lets people on Medicare choose a private plan instead of the government's own program, and CMS pays the plan a fixed amount per member each month 1. Individual plans brought in $90,403 million in 2025, which is 70.3 percent of premiums and services revenue 1.

At 30 June 2026 Humana covered 6,453,700 individual members, up 23.4 percent in a year, including 959,900 in plans for people who qualify for both Medicare and Medicaid 2. Florida is the largest market, with about 1.0 million members and $17.8 billion of premiums in 2025, 14 percent of consolidated premiums and services revenue 1.

Group Medicare Advantage and drug plans

Group Medicare Advantage sells employers a plan to replace retiree health coverage, and brought in $9,014 million in 2025 1. Stand-alone prescription drug plans, which include one co-branded with Walmart, brought in $6,844 million 1.

Stand-alone drug plan membership reached 3,946,400 at 30 June 2026, up 62.6 percent, which Humana ties to group recontracting and the 2026 selling season 2.

Medicaid and other state contracts

State-based contracts, mostly Medicaid for low-income and disabled residents, brought in $14,477 million in 2025, 11.2 percent of the total 1. Humana said a statewide Illinois contract is expected to begin in January 2027 and its Florida contract was extended through 31 January 2035 8.

Military and specialty plans

The TRICARE T-5 East Region contract began on 1 January 2025 and covers 24 states and about 4.6 million beneficiaries 1. Humana arranges care for military families while the federal government keeps the cost risk 1. Medicare Supplement plans brought in $1,098 million and dental, vision and similar specialty benefits $989 million 1.

CenterWell primary care

CenterWell Senior Primary Care and Conviva run clinics for older patients and are paid mostly by risk-sharing contracts with Medicare Advantage plans 1. At 30 June 2026 Humana operated 398 centers serving about 622,000 patients 8. Second-quarter external revenue was $839 million, up 63.5 percent 2.

Growth came partly from purchases 2. Humana bought MaxHealth, a Florida primary care platform, on 13 February 2026 for about $908 million net of cash acquired 2.

CenterWell pharmacy and home health

CenterWell Pharmacy is Humana's mail-order pharmacy, and CenterWell Specialty Pharmacy handles costly drugs 1. Pharmacy external revenue was $382 million in the second quarter, up 19.0 percent 2. CenterWell Home Health works in 37 states and had $360 million of external revenue, flat on a year earlier 12.

How the company is doing now

In the second quarter of 2026 total revenues rose 26.2 percent to $40,867 million, and diluted earnings per share were $5.73 2. The benefit ratio was 91.1 percent, up from 89.7 percent, which the filing ties to the Star Ratings headwind, newer members costing more and less favorable reserve development 2.

Plants and people

The headquarters is the Humana Building in Louisville, and key administrative work is in Louisville, Arlington, Virginia, and Green Bay, Wisconsin 1. The medical centers are mostly in Florida and Texas, and about 372 are leased to contracted providers 1. Humana had about 67,060 associates at the end of 2025 1.

Jim Rechtin is president and chief executive and Celeste Mellet is chief financial officer 1. Dr Sanjay Shetty is president of CenterWell 5. On 28 July 2026 the board grew from eleven to thirteen directors with the election of Frederick J Crawford and Paul J Smith 20.

Rivals

The industry is highly competitive, and many rivals have larger memberships or more money in some markets 1. For its Stars comparison Humana names Centene, CVS, Elevance, HCSC and United as its peer group 3.

Current problems

The Justice Department has sent information requests about how Humana's Medicare plans report patient diagnoses to CMS 2. It also joined, in May 2025, a False Claims Act suit over payments to three call center broker partners 2. A court vacated the CMS audit rule on 25 September 2025, and the government appealed to the Fifth Circuit 2.

A shareholder class action covers statements made between July 2022 and October 2024, and a separate class action alleges violations of the Telephone Consumer Protection Act 2. Humana says it will defend against these allegations 2.

The umbrella, in words

Humana's main brands are Humana for insurance and CenterWell for care, with Conviva and CenterWell Senior Primary Care for clinics, CenterWell Pharmacy and CarePlus Health Plans 19. Humana's Exhibit 21 also names Humana Insurance Company and Humana Health Plans of Puerto Rico 19.

The company owns about 35 percent of Gentiva Hospice, counted by the equity method, and has agreed to sell all or substantially all of it for about $900 million 18.

It invested in a primary care partnership with Welsh, Carson, Anderson & Stowe that operated 146 clinics at the end of 2025 and is being replaced by the BlackRock venture 15.

Large holders report passive stakes: Dodge & Cox reported 9.5 percent of the common stock and Vanguard Capital Management 7.55 percent in their latest filings 1718.

The company expects to report third-quarter results on 6 November 9. It expects a third-quarter benefit ratio in the Insurance segment slightly above 94 percent and adjusted earnings per share of about negative $1.00 for the quarter 8.

For 2026 the company affirmed adjusted earnings per share of at least $9.00 and GAAP earnings per share of at least $6.52, and said GAAP guidance may change with the BlackRock deal 74. It also affirmed growth of approximately 25 percent in individual Medicare Advantage membership over 2025 7.

Medicare's annual enrollment period runs from 15 October to 7 December 2026, with coverage starting on 1 January 2027 6. For 2027 CMS finalized an average 2.48 percent increase in Medicare Advantage payments, or over $13 billion more than in 2026 16.

Management expects its approach to 2027 individual Medicare Advantage bids to drive meaningful progress toward a sustainable pre-tax margin of at least 3% in 2028 8. It holds a virtual investor update on 10 December 2026 to compare progress with the 2025 Investor Day framework 8.

Humana anticipates that some of its 2028 Stars outperformance will be one time and says it expects to use the benefit for one-time investments and return to shareholders 3. It plans to say more when it gives detailed 2028 guidance on the fourth quarter 2027 earnings call 3.

In the BlackRock venture, CenterWell can begin buying clinics at its election in 2028, and if it has not bought them all by the end of 2033 BlackRock can start a sale process 5. The venture is expected to deploy additional capital over the next two years 5.

The company said in June that it expected the sale of its Gentiva stake to close in the third quarter of 2026 10. A new statewide Illinois Medicaid contract is expected to begin in January 2027 8.

Management says it aims to hold debt to capitalization near its long-term target of approximately 40 percent, from 42.7 percent at 30 June 2026 8. The Fifth Circuit appeals over the audit rule and the 2025 Star Ratings are still pending 2.

Past

Humana's revenue grew from $54 billion in fiscal 2016 to $130 billion in fiscal 2025, up 10.1% a year, rising in 8 of 9 years with the deepest fall of 1% from fiscal 2016 to fiscal 2017, and the company was profitable in all 10 of those years. Net income peaked at $3.37 billion in fiscal 2020 but declined sharply to $1.19 billion by fiscal 2025. Over the three fiscal years to 2025, the diluted share count shrank about 1.7% a year, and dividends and buybacks returned about 49% of operating cash flow. Officers and directors filed 0 sales and 1 purchase of their own stock on the open market in the year to 2026-10-02, buying about $150 thousand. 12

Humana's filings since 2017 show 1 warning event: a debt default or acceleration notice on 2017-11-29. 1

Present

In its latest annual figures on file, for the fiscal year ended 2025-12-31, Humana reported revenue of $130 billion and a profit of $1.2 billion. A quarterly report for the period ended 2026-06-30 was filed on 2026-07-29. 34

Return on equity in fiscal 2025 was 7%, meaning the company earned about 7 cents of profit for every dollar of shareholders' money; leverage was 64%, meaning it owed about 64 cents per dollar of assets; and the share count was unchanged over the year. Revenue of $130 billion ranks in the top 45% by size among its industry family, but a net margin of 0.9% ranks in the bottom 45%, and revenue growth of 11.8% a year over the last three filed years ranks in the bottom 35%. 1

The chief executive is James A. Rechtin, filing under that title since 2024-12-17, 1.8 years; the 24 officers and directors filing in the last fifteen months have been on the record a median of 3.6 years; 6 officer or director changes were reported on Form 8-K since 2023-10-21. 1

Future

The quarterly report (Form 10-Q) for the quarter ending 2026-09-30 is due by 2026-11-09 under the SEC's rules. The annual report (Form 10-K) for the fiscal year ending 2026-12-31 is due by 2027-03-01 under the SEC's rules. 4

Cash of $4.2 billion against debt of $12 billion leaves negative 16.7% of assets as net cash, in the bottom 15% of its industry family, and cash from operations less capital spending is 0.3% of revenue, in the bottom 25%. Revenue growth over the last three filed years was 11.8% a year against 10.1% over all 10 years, speeding up in the top 15% of its family, but the newest year grew 10.1% in the bottom 5% and capital spending fell 21.7% a year. Revenue of $130 billion in fiscal 2025 came in 2.2% below the $133 billion its prior three years' pace pointed to, net income of $1.2 billion fell against a prior three-year average of $2.2 billion, and a net margin of 0.9% fell against 2.1% before, all in the bottom 35% of its family. 1

How the company operates

Humana reported 2 lines of business in fiscal 2025: Insurance at $125 billion and Center Well at $22 billion, with 2 of 2 growing in the latest filed year and the largest line making up 85% of revenue. The company is classed by the SEC under Hospital & Medical Service Plans. 13

New moves

On 2026-10-13, Humana filed a Form 8-K disclosing investor information under Regulation FD. On 2026-10-09, Humana filed a Form 8-K disclosing investor information under Regulation FD. 4

On 2026-05-19, Humana filed a Form 8-K reporting a major agreement signed and new debt or an obligation taken on for the period ended 2026-05-15. On 2026-03-09, Humana filed a Form 8-K reporting a major agreement signed and new debt or an obligation taken on for the period ended 2026-03-05. 4