UPDATED: Feb. 11 at 2:30 p.m.
Humana executives told investors Tuesday morning that the company is putting a focus on operational excellence as it seeks to navigate choppy financial waters.
CEO Jim Rechtin said on the company's earnings call that Humana is not yet providing an outlook going into 2026, and there are plenty of unknowns that need to come together before it fully outlines plans for next year. For one, the Centers for Medicare & Medicaid Services (CMS) has released its proposal for the annual Advance Notice governing private Medicare plans, but reimbursement rates have not been finalized.
In addition, the Medicare Advantage program's Star Ratings remain a major point of concern. Humana is one of many insurers involved in litigation against CMS over the most recent crop of ratings, which had far lower scores across the board for payers.
The Humana team is focusing on what it can control, however, Rechtin said, with efforts to drive clinical excellence and an "efficient back office" making for two cornerstones in its strategy moving forward. That work creates a foundation to better address challenges like regulatory changes, he said.
"When we do that, that leads us to a place where we can get to a sustainable, compelling, competitive place in the market," Rechtin said.
Chief Financial Officer Celeste Mellet, who took the role on Jan. 11, said the company is working to improve its approach to multi-year planning so it can get better at "looking around corners" to anticipate incoming headwinds. That also allows the team to be more reactive when they need to make tradeoffs, she said.
"We need to be ruthless about stopping things that are not driving better outcomes for our members and better returns for our shareholders," Mellet said.
Humana posted a $693 million loss in the fourth quarter of 2024, a notable increase from its $541 million loss in the prior-year quarter, according to its earnings report released Tuesday morning.
The company also halved its profits for full-year 2024 compared to 2023, posting $1.2 billion. Humana earned $2.5 billion in profit for 2023.
Revenues did increase both in the fourth quarter and for the full-year, according to the report. Fourth-quarter revenues were $29.2 billion, ticking up from $26.5 billion in the fourth quarter of 2023. Humana earned $117.8 billion in revenue for full-year 2024 compared to $106.4 billion in 2023.
The results surpassed Wall Street's expectations on both earnings and revenue, according to Zacks Investment Research.
“We were pleased with Humana’s solid finish to the year, while also reaffirming our outlook for 2025,” said Humana CEO Jim Rechtin. “We are confident in our long-term strategy and 2025 will be a critical step in returning to compelling, normalized margins.”
Humana reaffirmed projections that its 2025 performance will be in line with 2024, according to the report. The insurer said it expects to earn $16.25 per share for the year and also estimates that it will lose about 550,000 Medicare Advantage (MA) members as it exits certain low-performing markets.
The company said its medical loss ratio in the quarter was 91.9%, which aligned with its expectations. Humana said continued trends around elevated utilization drove up MLR, though it did offset some of those impacts through its benefit designs.
It added that growth in MA and Medicaid enrollment tends to drive up utilization and cost, according to the report.
The insurer had 16.5 million total medical members as of the fourth quarter, including 8.5 million across all of its Medicare products.