Humana Inc. HUM is well-poised to grow on increasing premiums, strategic acquisitions, an aging population in the United States and solid cash generation capacity. Headquartered in Louisville, KY, the company provides health insurance benefits through Health Maintenance Organization, Private Fee-For-Service and Preferred Provider Organization plans. It also provides specialty products such as dental, vision and other supplementary benefits.
Let’s delve deeper.
HUM’s Rising Premium Momentum
HUM continues to grow its membership base, especially in the Medicare Advantage and state-based programs, which remain key growth engines. In the second quarter of 2025, Group Medicare Advantage membership grew 4.6% year over year and state-based contracts and other memberships rose 13.7%. As of June 30, 2025, around 3,542,300 members, or 68% of the company's individual Medicare Advantage members, were engaged in value-based relationships through its integrated care delivery model. An increase in membership leads to a rise in premiums. The company’s premium grew 9.9% in 2022, 15.5% in 2023, 10.7% in 2024 and 8.6% in the first half of 2025. Membership in state-based contracts is anticipated to witness an increase of 175,000-250,000 in 2025.
HUM’s Segmental Performance & Growth Drivers
The company’s adjusted revenues in the insurance segment witnessed 8.4% year-over-year growth in the first half of the year. Improved per-member Medicare premiums, coupled with an expanding customer base in stand-alone prescription drug plans and state-based contract businesses, will further boost the figures. The segment’s revenues are forecasted at a minimum of $123 billion in 2025.
In the first half of 2025, the CenterWell segment’s revenues rose 8.9% year over year. Humana’s CenterWell Pharmacy drives growth through pharma partnerships, direct-to-consumer models and GLP-1 collaborations, surpassing expectations and fueling expansion. The company expects the CenterWell segment’s revenues to be at least $21.5 billion in 2025.
The strategic expansion of Medicaid is moving forward with the launch of the Virginia contract. This brings its active presence to 10 states and has three more states that have been awarded and are currently pending.
HUM's strategic acquisitions have carved a path to expansion for the company in a competitive market space. It also takes a disciplined approach to portfolio optimization by divesting non-core operations to enhance profitability.
HUM’s Solid Financial Position
Humana boasts sufficient cash reserves and adequate cash generation abilities. It held cash, cash equivalents and investment securities totaling $21.7 billion as of June 30, 2025, comfortably exceeding its long-term debt of $12.6 billion. Sound operating cash flows have enabled the company to adopt a disciplined capital deployment strategy through share repurchases and dividend payments. It bought back shares worth $109 million in the first half of 2025.
HUM’s Impressive Earnings Surprise History
Humana boasts a robust earnings surprise record. It has topped estimates in three of the trailing four quarters and missed once, the average surprise being 9.6%.
Key Concerns
Despite its strengths, there are challenges to monitor. Humana has been witnessing increasing operating expenses for the past few years. In 2022, 2023, 2024 and the first half of 2025, the metric jumped 11.5%, 14.9%, 12.5% and 7.8% year over year, respectively. Higher benefits and operating costs are expected to remain a negative for its profitability in the coming days. The benefit ratio deteriorated 70 basis points year over year to 89.7% in the second quarter of 2025. It expects the benefit ratio for the insurance segment to be between 90.1% and 90.5% for 2025, the high end indicating an increase from the 2024 level of 90.4%. Humana is grappling with a debt-laden balance sheet, which induces an increase in interest expenses. This might put pressure on the company’s margins.
How Are HUM’s Peers Performing?
Several competitors like Elevance Health, Inc. ELV and The Cigna Group CI are also making moves.
Elevance Health continues to deliver solid performance, supported by diversified healthcare services, product expansion and strong membership growth, positioning the company for sustainable long-term expansion and shareholder value creation. In the first half of 2025, Elevance Health’s total operating revenues rose 14.8% year over year.
Cigna demonstrates resilient performance with steady revenue growth, expanding healthcare services and strategic acquisitions, positioning the company for continued profitability and competitive market strength. Cigna’s adjusted revenues rose 13% year over year in the first half of 2025.
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Humana Inc. (HUM): Free Stock Analysis Report Cigna Group (CI): Free Stock Analysis Report Elevance Health, Inc. (ELV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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