Humana is raising its full-year guidance after surpassing revenue expectations in the second quarter, the insurer announced Wednesday.
The company posted an adjusted earnings per share (EPS) of $6.27 and updated its full-year revenue expectations to at least $128 billion, instead of a floor of $126 billion. Full-year adjusted EPS guidance rose from $16.25 to $17.00.
Quarterly performance was strong due to the insurer’s Medicare Advantage membership figures, progress in the CenterWell—a senior-focused primary care division—segment, and as-expected medical cost utilization.
Fewer Medicare Advantage members are predicted to drop from Humana’s network, partly because some members that left for a competitor’s offerings returned, executives said. The company says it projects a decline of up to half a million members this year, instead of previous guidance showing 550,000 members exiting.
“We feel good about our solid performance in the first half of the year,” said President and CEO Jim Rechtin. “It reinforces our strategy to continue investing in improved outcomes, operational excellence and a better experience for our customers and investors.”
The company offered an early retirement buyout option to eligible employees this week. A similar offer was given to employees in 2017, before Humana ultimately laid off 1,300 workers, reported the Courier Journal.
“In the next few months, we will also be expanding our efforts to contract out additional aspects of our shared services functions,” said Rechtin during an earnings call with investors, noting the changes will be long-term in focus and should help pivot the company to work more nimbly with technology. “We are doing this in an effort to streamline and optimize outsourcing capabilities.”
Humana’s stock is up more than 5% since markets closed yesterday.
Net income decreased compared to the second quarter of 2024. Humana’s current net income is $545 million, or $4.51 per share, versus $679 million, or $5.62 per share, this time last year.
Year-over-year revenue increased by nearly $3 billion due to higher per member Medicare and state-based contract premiums and Inflation Reduction Act direct subsidies.
Humana’s quarterly insurance benefit ratio was 89.9%, aligned with expectations. The insurer still expects to see a full-year benefit ratio of 90.1% to 90.5%.
Patient growth at CenterWell, a senior-focused primary care division, is expected to grow by 50,000 to 70,000 members by year’s end. The company previously anticipated growing its business by 50,000 members to be the ceiling.
However, the division’s operating cost ratio increased partially due to phase-in of regulatory risk adjustment model changes.
Insurers are experiencing a rocky quarter, with many prominent companies downgrading guidance and slashing revenue estimates.
The company also highlighted recent announcements on star ratings, prior authorization restrictions and integration with MyChart accounts.
Rechtin downplayed impacts to the business from Trump’s recently passed budget bill because the company’s footprint is skewed toward long-term support services and not focused on the Medicaid expansion population.
“So while this bill will certainly have some impact, we expect it to be more muted for us versus Medicaid broadly,” he told investors during the call.
This story was updated on July 30 at 9:08 a.m.