Humana Incurs Q4 Loss, Revenues Up Y/Y on CenterWell Unit Strength

Humana Inc. HUM incurred a fourth-quarter 2025 adjusted loss of $3.96 per share, narrower than the Zacks Consensus Estimate of a loss of $4.01 per share but wider than the prior-year quarter’s loss of $2.16 per share.  

Adjusted revenues improved 11.8% year over year to $32.6 billion. The top line outpaced the consensus mark by 2.4%. 

The quarterly results benefited on the back of premium gains and a robust performance from the CenterWell segment, which saw a revenue jump supported by its pharmacy and primary care businesses. However, the upside was partly offset by escalating operating expenses, a sharp drop in investment income and a decline in overall medical membership.

Humana Inc. Price, Consensus and EPS Surprise

Humana Inc. price-consensus-eps-surprise-chart | Humana Inc. Quote

Q4 Operational Update

Humana’s premiums totaled $30.9 billion, which advanced 11.3% year over year, and came higher than the Zacks Consensus Estimate of $30.2 billion and our estimate of $29.8 billion. Services revenues rose 28.6% year over year to $1.5 billion, higher than the consensus mark of $1.4 billion. Investment income of $132 million plunged 55.6% year over year in the quarter under review. The metric lagged the consensus mark of $273 million and our estimate of $295.7 million.

The benefit ratio came in at 93%, which deteriorated 150 basis points (bps) year over year. Total operating expenses increased 12% year over year to $33.3 billion, higher than our estimate of $31.8 billion. The year-over-year increase was due to higher benefits and operating costs. Adjusted operating cost ratio of 13% improved 20 bps year over year. 

Humana incurred a net loss of $776 million, wider than the prior-year quarter’s loss of $683 million.  

Q4 Segmental Update

Insurance

The segment’s adjusted revenues rose 11.3% year over year to $31.3 billion in the fourth quarter on the back of improved per-member premiums derived from HUM’s Medicare and state-based contract businesses. An expanding customer base in stand-alone prescription drug plans also drove the performance.      

The unit incurred an adjusted operating loss of $923 million, wider than the prior-year quarter’s loss of $575 million. The adjusted benefit ratio deteriorated 120 bps year over year to 93.1%. Adjusted operating cost ratio of 10.8% improved 20 bps year over year. 

Total medical membership of the segment was 15 million as of Dec. 31, 2025, which fell 8.2% year over year. The metric fell short of the Zacks Consensus Estimate of 15.1 million and our estimate of 15.2 million.

CenterWell

The unit recorded revenues of $6 billion in the quarter under review, which improved 16.2% year over year and surpassed the Zacks Consensus Estimate of $5.5 billion. The metric benefited from higher revenues stemming from the company’s pharmacy and primary care businesses.  

Adjusted operating income dropped 10.4% year over year to $345 million. The operating cost ratio of 94.2% deteriorated 170 bps year over year due to the ongoing implementation of the v28 risk model update within the company’s primary care business and higher volumes in CenterWell Specialty Pharmacy.

Humana’s Financial Update (As of Dec. 31, 2025)

Humana exited the fourth quarter with cash and cash equivalents of $4.2 billion, which soared 89.1% from the 2024-end level. Total assets of $48.9 billion increased 5.2% from the figure at 2024-end.  

Long-term debt amounted to $12.4 billion, up 11% from the figure as of Dec. 31, 2024. Debt to capitalization improved 80 bps year over year to 41.1% at the fourth-quarter end. 

Total stockholders’ equity of $17.7 billion advanced 7.8% from the 2024-end figure.   

HUM generated net cash from operations of $921 million in 2025, which plunged 68.9% from the 2024 figure.

HUM’s Capital Deployment Update

Humana bought back shares worth $151 million in 2025. It also paid dividends of $430 million during 2025.

Full-Year Update

Adjusted revenues of $129.8 billion grew 10.7% year over year in 2025. Adjusted earnings per share (EPS) rose 5.7% year over year to $17.14. 

Premiums of $122.8 billion improved 9.6% year over year. The benefit ratio came in at 90.2% for 2025, which deteriorated 40 bps year over year.

2026 View

Revenues are estimated to be a minimum of $160 billion, which implies an 23.4% increase from the 2025 reported figure. The Insurance segment’s revenues are forecasted at a minimum of $155 billion. Revenues of the CenterWell segment are expected to be at a minimum of $25 billion.

Adjusted EPS is projected to be at least $9.00, which indicates a 47.5% decline from the 2025 figure. GAAP EPS is projected to be at least $8.89.  

Management anticipates Individual Medicare Advantage membership to witness growth of around 25% in 2026. Group Medicare Advantage membership is expected to record an increase of roughly 150,000.  

Membership from the Individual Medicare stand-alone PDP is expected to increase around 1,000,000 this year. State-based contracts are expected to witness membership growth within 25,000-100,000. 

The GAAP benefit ratio for the Insurance segment is likely to be 92.75%, with a variability margin of plus or minus 25 basis points. The GAAP consolidated adjusted operating cost ratio is anticipated to be at 10%, with a variability margin of plus or minus 25 basis points. 

GAAP cash flow from operations is estimated within $2.5-$2.9 billion. Meanwhile, capital expenditures are projected to be roughly $650 million. The adjusted effective tax rate is expected to be around 25.5% while the weighted average share count is anticipated at around 121 million.

Humana’s Zacks Rank

Humana currently has a Zacks Rank #4 (Sell).  

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Medical Sector Releases

Of the Medical sector players that have reported fourth-quarter 2025 results so far, the bottom-line results of Encompass Health Corporation EHC, The Cigna Group CI and The Ensign Group, Inc. ENSG beat the respective Zacks Consensus Estimate.

Encompass Health reported fourth-quarter 2025 adjusted EPS of $1.46, which beat the Zacks Consensus Estimate by 13.2%. The bottom line increased 24.8% year over year. Net operating revenues of $1.5 billion improved 9.9% year over year. The top line marginally beat the consensus mark by 0.2%. EHC’s net patient revenue per discharge rose 4.1% year over year. 

Total discharges grew 5.3% year over year to 67,238. Net income climbed 23.7% year over year to $203.1 million in the fourth quarter. Adjusted EBITDA of $335.6 million grew 15.9% year over year. In the fourth quarter, Encompass Health added 37 beds to its existing hospitals and inaugurated three de novo hospitals.

Cigna’s fourth-quarter 2025 adjusted EPS of $8.08 beat the Zacks Consensus Estimate by 2.7%. The bottom line advanced 22% year over year. Adjusted revenues of $72.5 billion rose 10% year over year. The top line beat the consensus mark by 3.7%. Cigna’s medical customer base came in at 18.1 million as of Dec. 31, 2025, which declined 5.4% year over year.  The adjusted SG&A expense ratio of 4.7% improved 100 bps year over year.

Adjusted income from operations totaled $2.1 billion, which rose 16% year over year. The Evernorth Health Services unit recorded revenues of $63.1 billion in the fourth quarter, which advanced 17% year over year. Adjusted operating income, on a pre-tax basis, rose 2% year over year to $2.2 billion. The Cigna Healthcare segment’s revenues of $11.1 billion tumbled 16% year over year. MCR came in at 88% at the fourth-quarter end, which deteriorated 10 bps year over year.

Ensign Group reported a fourth-quarter 2025 adjusted EPS of $1.82, which beat the Zacks Consensus Estimate by 4%. The bottom line improved 19.5% year over year. Operating revenues advanced 20.2% year over year to $1.36 billion. The top line missed the consensus mark by 0.5%. Ensign Group’s adjusted net income of $107.8 million rose 23.2% year over year in the quarter under review. 

Same-facilities occupancy improved 240 bps to 83.8%, while transitioning-facilities occupancy increased 290 bps year over year to 84.9%. The Skilled Services segment’s revenues were $1.3 billion in the fourth quarter, which grew 20.2% year over year. Skilled nursing facilities and campus operations of the segment totaled 326 and 31, respectively, at the quarter-end. In the Standard Bearer unit, rental revenues climbed 37.2% year over year to $34.5 million. 

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