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Humana Inc (HUM)
NYSE:HUM

Humana (HUM) AI Stock Analysis

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HU

Humana

(NYSE:HUM)

Rating:72Outperform
Price Target:
$259.00
▲(10.09%Upside)
Humana's strong financial performance and recent corporate events underpin a favorable outlook. While valuation remains fair and the company shows operational strength, technical analysis suggests caution due to lack of upward momentum. External uncertainties from regulatory challenges and litigation also temper the overall score.
Positive Factors
Earnings
Humana reported solid earnings with adjusted EPS significantly above consensus, driven partly by timing of certain expenses.
Financial Guidance
The company reaffirmed its full-year adjusted EPS guidance, indicating confidence in its financial outlook.
Operational Performance
EBITDA was 27.2% above the estimate, indicating strong operational performance.
Negative Factors
Cost Trends
There are risks such as the potential for MA cost trends to reaccelerate, which could limit margin expansion.
Legal Challenges
HUM faces a material headwind from star ratings changes assuming its legal challenge is unsuccessful.
Membership Decline
Total medical membership decreased 7.2% year over year.

Humana (HUM) vs. SPDR S&P 500 ETF (SPY)

Humana Business Overview & Revenue Model

Company DescriptionHumana Inc. (HUM) is a leading health and well-being company that operates primarily in the insurance sector, offering a wide range of health insurance products and services. The company specializes in providing Medicare Advantage plans, standalone prescription drug plans, and commercial health insurance. Humana also offers wellness solutions, including behavioral health services, pharmacy services, and home health care, aimed at improving the overall health outcomes of its members.
How the Company Makes MoneyHumana makes money primarily through its health insurance offerings, with a significant portion of its revenue generated from Medicare Advantage plans. These plans are funded by the U.S. government and provide coverage for medical services to individuals over the age of 65. Humana receives a fixed payment per member from the government, which it supplements with premiums paid by members. Additionally, Humana earns revenue from its commercial insurance products, including employer-sponsored health plans. Another key revenue stream comes from its pharmacy solutions, which include prescription drug plans and mail-order pharmacy services. Strategic partnerships with healthcare providers and innovations in healthcare delivery also contribute to its earnings by enhancing service efficiency and member satisfaction.

Humana Key Performance Indicators (KPIs)

Any
Any
Revenue by Segment
Revenue by Segment
Breaks down sales figures for each business unit, indicating which areas are contributing most to growth and where there might be potential for expansion or risk.
Chart InsightsHumana's shift from Retail to Insurance as a primary revenue driver marks a strategic pivot, with Insurance revenue surging since 2023. The earnings call highlights robust membership growth and operational efficiency, particularly in Medicaid and CenterWell. However, regulatory uncertainties, especially around CMS' star ratings, pose potential risks. The company's focus on closing care gaps and leveraging AI for cost management reflects a proactive approach to maintaining margins and growth, despite external challenges. This strategic realignment could enhance long-term stability and profitability.
Data provided by:Main Street Data

Humana Earnings Call Summary

Earnings Call Date:Apr 30, 2025
(Q1-2025)
|
% Change Since: -9.29%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
Humana's earnings call reflected a strong start to 2025 with reaffirmed guidance and operational progress in key areas such as clinical excellence and member growth. However, the sentiment was tempered by uncertainties related to Stars ratings litigation and regulatory challenges. The company is focused on controlling internal factors and strategic growth, but external uncertainties pose ongoing challenges.
Q1-2025 Updates
Positive Updates
Strong Start to 2025
Humana reaffirmed its full-year guidance and reported Q1 performance ahead of plan, mainly driven by timing-related outperformance.
Medicare Product and Experience
No changes to membership guidance for 2025, with strong performance in the Open Enrollment Period (OEP) and a positive trend outlook for the year.
Operational Progress in Clinical Excellence
Efforts are leading to a projected 25% year-over-year closure of care gaps and a 30-50% reduction in members with weight refills.
Efficient Back Office Operations
G&A costs were slightly better than expectations with progress in cost management efforts, including AI use in contact centers.
Growth in CenterWell and Medicaid
Robust patient and membership growth in primary care and Medicaid with 30 new centers added through acquisition and partnership.
EPS and Revenue Guidance
Reaffirmed full-year adjusted EPS guidance of approximately $16.25 and expected insurance segment benefit ratio of 90.1% to 90.5%.
Medicaid Business Success
Successful growth with a 100,000 member increase year-to-date and expansion into 13 states.
Negative Updates
Stars Ratings Litigation Uncertainty
No new updates on litigation related to CMS' 2026 star ratings, with timing and outcomes still uncertain.
Continued Regulatory Headwinds
Ongoing challenges related to external regulatory environments affecting business operations.
Impact of V28 on Health Plan
A significant 160 basis point impact due to V28, with efforts in place for mitigation.
Medicare Advantage Margin Target
Path to 3% MA margin target remains tied to uncertain outcomes on Stars ratings.
Membership Decline
Exiting certain plans led to membership decline, although it was strategically aimed at improving margins.
Company Guidance
During Humana's First Quarter 2025 Earnings Call, the company reaffirmed its full-year guidance, highlighting several key metrics and operational strategies. For the full year, Humana expects an adjusted EPS of approximately $16.25 and an insurance segment benefit ratio between 90.1% and 90.5%. The company's performance in the first quarter exceeded expectations, partly due to timing-related outperformance, with a significant portion of the EPS outperformance attributed to a shift in the timing of certain expenses. Humana reported strong membership growth in its primary care and Medicaid segments, with the addition of 30 new centers over the past year. Operationally, Humana aims to close care gaps by 25% year-over-year through in-person home visits paired with virtual health and has observed a 30% to 50% reduction in members with weight refills due to medication adherence campaigns. Despite challenges, Humana is focused on achieving a 3% margin target for its Medicare Advantage (MA) business by 2027, contingent on external factors such as the outcome of CMS' 2026 star ratings litigation. The company also highlighted its efficient back-office operations, noting that Q1 G&A costs were slightly better than expected, driven by cost management efforts, including increased AI use in contact centers. Humana plans to provide further insights into its earnings potential and operational progress at an upcoming investor conference.

Humana Financial Statement Overview

Summary
Humana shows strong financial performance with consistent revenue growth and robust profitability metrics. The balance sheet demonstrates financial stability with controlled leverage, though ROE has slightly declined. Cash flow analysis indicates healthy operational cash generation, despite mixed free cash flow growth.
Income Statement
85
Very Positive
Humana's income statement reflects strong profitability with a consistent increase in total revenue from 2020 to TTM 2025. The Gross Profit Margin remains robust at 100% due to the accounting classification. The Net Profit Margin for TTM stands at 1.42% and shows improvement over prior years despite some fluctuations. Revenue growth has been steady, with a notable 28.6% increase from 2022 to 2023. EBIT and EBITDA margins show resilience, though slightly varied, indicating operational efficiency. Overall, the income statement reflects a positive trajectory in revenue growth and profitability.
Balance Sheet
75
Positive
The balance sheet shows a solid equity base with Stockholders' Equity consistently growing. The Debt-to-Equity Ratio for TTM stands at 0.75, indicating a manageable level of leverage. The Equity Ratio is at 34.84%, reflecting a stable equity position relative to total assets. Return on Equity (ROE) for TTM is 9.63%, which is reasonable, though it has decreased compared to previous years. Overall, the balance sheet reflects financial stability with controlled leverage and a solid equity base, though ROE has seen a slight decline.
Cash Flow
80
Positive
Cash flow analysis indicates strong operational cash flow with an Operating Cash Flow to Net Income Ratio of 1.68 for TTM, suggesting efficient cash generation from operations. Free Cash Flow remains stable, showing slight growth with the Free Cash Flow to Net Income Ratio at 1.39. However, Free Cash Flow growth has been inconsistent, as seen in modest changes from 2022 to TTM. Overall, cash flow statements reflect healthy operational cash generation and sufficient free cash flow, though growth has been mixed.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
120.26B117.76B106.37B92.87B83.06B77.16B
Gross Profit
120.26B117.76B106.37B92.87B83.06B77.16B
EBIT
3.34B2.56B4.01B3.80B3.15B4.99B
EBITDA
4.12B3.53B4.93B4.64B3.86B5.60B
Net Income Common Stockholders
1.71B1.21B2.49B2.81B2.93B3.37B
Balance SheetCash, Cash Equivalents and Short-Term Investments
22.14B20.43B21.32B5.06B3.39B4.67B
Total Assets
50.93B46.48B47.06B43.05B44.36B34.97B
Total Debt
13.31B11.72B11.66B11.42B12.82B6.98B
Net Debt
9.06B9.50B6.96B6.36B9.43B2.31B
Total Liabilities
33.11B30.03B30.75B9.03B10.54B6.06B
Stockholders Equity
17.75B16.38B16.26B15.31B16.08B13.73B
Cash FlowFree Cash Flow
2.38B2.39B2.98B3.47B946.00M4.67B
Operating Cash Flow
2.87B2.97B3.98B4.59B2.26B5.64B
Investing Cash Flow
-2.22B-2.95B-3.49B-1.01B-6.56B-3.06B
Financing Cash Flow
-2.31B-2.49B-856.00M-1.91B3.02B-1.96B

Humana Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price235.26
Price Trends
50DMA
250.58
Negative
100DMA
259.70
Negative
200DMA
270.98
Negative
Market Momentum
MACD
-4.36
Negative
RSI
47.27
Neutral
STOCH
67.98
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HUM, the sentiment is Neutral. The current price of 235.26 is above the 20-day moving average (MA) of 233.83, below the 50-day MA of 250.58, and below the 200-day MA of 270.98, indicating a neutral trend. The MACD of -4.36 indicates Negative momentum. The RSI at 47.27 is Neutral, neither overbought nor oversold. The STOCH value of 67.98 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HUM.

Humana Risk Analysis

Humana disclosed 16 risk factors in its most recent earnings report. Humana reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Humana Peers Comparison

Overall Rating
UnderperformOutperform
Sector (54)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
CNCNC
77
Outperform
$27.48B8.2212.59%8.85%33.30%
MOMOH
76
Outperform
$16.16B14.4026.72%16.71%12.23%
HLHLN
73
Outperform
$48.26B26.938.90%2.15%2.16%43.24%
HUHUM
72
Outperform
$28.39B16.6310.09%1.50%10.09%-12.18%
64
Neutral
$40.16B-414.62%17.21%21.16%
54
Neutral
$5.37B3.26-45.10%3.30%16.81%0.02%
53
Neutral
$10.47B-21.25%5.38%-6.88%-6809.78%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
HUM
Humana
235.26
-115.76
-32.98%
ALNY
Alnylam Pharma
307.99
150.69
95.80%
CNC
Centene
55.22
-12.98
-19.03%
MOH
Molina Healthcare
298.14
-9.94
-3.23%
VTRS
Viatris
8.92
-0.73
-7.56%
HLN
Haleon PLC Sponsored ADR
10.87
2.64
32.08%

Humana Corporate Events

Business Operations and StrategyFinancial Disclosures
Humana Reaffirms 2025 Earnings Guidance in June Meetings
Neutral
Jun 2, 2025

Humana Inc. announced that its senior management will meet with investors and analysts throughout June 2025 to reaffirm its earnings guidance for the year ending December 31, 2025. The company projects diluted earnings per share of approximately $14.68 and adjusted earnings per share of approximately $16.25, consistent with its previous guidance. Humana will also host an Investor Conference on June 16, 2025, to discuss its strategic direction and financial performance. The use of Adjusted EPS, which differs from GAAP EPS, is intended to provide a more comprehensive view of the company’s core operating performance.

The most recent analyst rating on (HUM) stock is a Hold with a $253.00 price target. To see the full list of analyst forecasts on Humana stock, see the HUM Stock Forecast page.

Private Placements and FinancingBusiness Operations and Strategy
Humana Secures $5 Billion Credit Agreement
Positive
May 30, 2025

On May 30, 2025, Humana Inc. entered into a $5.0 billion unsecured revolving credit agreement with several banks, increasing its previous credit commitment from $2.642 billion. This new agreement replaces an expired $2.1 billion credit agreement and includes provisions for interest rates, facility fees, and covenants, allowing for up to $1.0 billion in incremental commitments. As of the agreement date, Humana had no outstanding borrowings and maintained approximately $4.98 billion in borrowing capacity, which could significantly impact its financial flexibility and operational strategy.

The most recent analyst rating on (HUM) stock is a Hold with a $253.00 price target. To see the full list of analyst forecasts on Humana stock, see the HUM Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
Humana Reports Strong Q1 2025 Financial Results
Positive
Apr 30, 2025

Humana Inc. reported its financial results for the first quarter of 2025, noting a GAAP earnings per share (EPS) of $10.30 and an adjusted EPS of $11.58. The company affirmed its full-year 2025 adjusted EPS guidance of approximately $16.25, while revising its GAAP EPS guidance to approximately $14.68. Despite an anticipated decline in individual Medicare Advantage membership, Humana remains confident in its pricing strategy and long-term value creation. The company also highlighted progress in its CenterWell and Medicaid businesses, including a new contract in Illinois for a dual eligible special needs plan program.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.