Humana (HUM) Q3 2026 Earnings Report

The call was strongly positive. Humana raised its 2026 EPS outlook, reported better-than-expected cost performance, delivered exceptional Stars results, expanded Medicaid and CenterWell membership, improved balance sheet efficiency, and expressed confidence in 2027 margin progress and its 2028 commitments. The main challenges were the continuing Stars headwind, higher expected 2027 cost trends, localized Primary Care Organization pressure, and uncertainty around AEP retention and the eventual size of the 2028 tailwind.

Humana raised its full year 2026 adjusted EPS outlook from at least $9 to at least $9.50 and expects to double its individual MA pretax margin this year, excluding the Stars headwind; for 2027, it anticipates membership will be up, expects fewer new members, and expects to make a material improvement on both a Stars adjusted and Stars unadjusted basis, reaching well into the profitability range, while 2027 trend is expected to be 8% to 9% versus 7% to 8% for 2026, with Part D expected to increase 14% to 15%. The company expects margin progression in '27 to put it on track for a 3% plus margin in 2028, expects a onetime tailwind in 2028, and said 95% of members in 4+ Star plans this year would be upside to its target; it expects to maintain top quartile results for BY '29, with key HEDIS metrics running roughly 5% ahead of last year's quality improvement rate on a per member basis, and said group MA improved 500 basis points excluding the Stars headwind. It also expects approximately 130 basis points of fourth-quarter GAAP debt-to-cap reduction and no substantial change in reinsurance use into 2027.