Earnings Notes: Humana Q3 2025

It appears from Humana’s Q3 earnings call that it is set for a strong growth year in 2026, as it indicated early Medicare Advantage AEP results are coming in very hot.

Inevitably, that will invite comparisons to issues that plans have had the last few years with profitability as they’ve grown — namely, UHC and CVS have had massive profitability challenges in the previous few years driven by this dynamic. This is amplified by the narrative that Humana outlined at its investor day earlier this year, which highlighted how 2026 and 2027 were already going to be down years from a profitability perspective given the Stars headwind, before 2028 normalizes for the business. Growing quickly into a challenging profitability year while holding benefits stable seems like a recipe for potential disaster.

Nonetheless, Humana seems undeterred and appears confident that it can profitably manage the influx of membership it is expecting. It noted that its stable plan benefits are helping retain existing members, win back members that had previously churned to other plans, and attract “good” new members. Humana brought up the concept of lifetime value on several occasions during the call, so much so that at one point the CFO felt the need to chime in, reminding analysts that they haven’t forgotten about short-term profitability, either.

It all sets the stage for Humana as a litmus test for the industry in 2026 — now that we’ve entered this period of austerity in Medicare Advantage, can Humana profitability manage its book of business while growing in 2026, or will it face the same set of profitability challenges other plans have faced the past few years?

Humana’s stock traded down 8% on an otherwise uneventful earnings report from Humana, which I think is indicative of the general skepticism the market has here.

Links:

Here are a few key takeaways from the earnings discussion: