HUM · Humana Inc.

Humana Inc. delivered a strong start to 2026 with Q1 Adjusted EPS of $10.31, hitting the high end of its guidance range representing 110-115% of full-year expectations, driven by robust membership growth in Medicare Advantage and favorable medical cost trends slightly better than anticipated across new and existing members. The Insurance segment reported a GAAP benefit ratio of 89.4%, better than the guided 'just under 90%', reflecting effective 2026 pricing, clinical excellence efforts offsetting claims trends, and benefits from group MA recontracting, despite headwinds from BY2026 Star Ratings and higher benefit ratios for new members. Revenues surged 23% year-over-year to $39.6 billion, fueled by Medicare membership expansion, higher MA benchmarks, and Part D subsidies from the Inflation Reduction Act, partially offset by Star Ratings impacts. Operating cost ratio improved to 10.0% adjusted, benefiting from revenue leverage and ongoing transformation initiatives including value creation costs of $98 million. CenterWell saw 22% sequential patient growth to 601,600, boosted by the MaxHealth acquisition adding 59,000 patients and 54 centers. Management affirmed FY2026 guidance for Adjusted EPS at least $9.00, Insurance benefit ratio at 92.75% ±25bps, and ~25% individual MA growth, but lowered GAAP EPS to at least $8.36 due to non-operating adjustments. Leadership transition in Insurance maintains continuity with Aaron Martin stepping up and John Barger leading MA operations. Balance sheet remains solid with operating cash flows up sharply to $1.25 billion, though DCP rose to 33.9 days on higher IBNR from membership growth, and debt-to-capitalization at 43% post $1B notes offering. CEO Jim Rechtin highlighted solid execution positioning for long-term MA margin stability by 2028.