Humana delivered solid 2025 results but guided to a sharply lower 2026 EPS due to a massive STARS headwind and slightly negative individual MA margins, even as it executes on a member growth strategy. Management remains confident in doubling MA margins when normalizing for STARS and in its path to 2028 earnings potential, while flagging higher-than-usual conservatism in guidance. 2025 adjusted EPS of $17.14, in line with expectations and above initial guidance, with insurance MLR at 90.4% slightly better than guide.
Humana delivered solid 2025 results but guided to a sharply lower 2026 EPS due to a massive STARS headwind and slightly negative individual MA margins, even as it executes on a member growth strategy. Management remains confident in doubling MA margins when normalizing for STARS and in its path to 2028 earnings potential, while flagging higher-than-usual conservatism in guidance. 2025 adjusted EPS of $17.14, in line with expectations and above initial guidance, with insurance MLR at 90.4% slightly better than guide.
Humana delivered solid 2025 results but guided to a sharply lower 2026 EPS due to a massive STARS headwind and slightly negative individual MA margins, even as it executes on a member growth strategy. Management remains confident in doubling MA margins when normalizing for…
2025 adjusted EPS of $17.14, in line with expectations and above initial guidance, with insurance MLR at 90.4% slightly better than guide.
2026 EPS guided to at least $9, down significantly, driven by the $3.5B net STARS headwind; individual MA margins are expected to be slightly below break-even.
Strong AEP growth of ~20% (1M members) with improved retention and a mix shift toward switchers; 2026 membership expected to grow ~25% and be enterprise-accretive.
Guidance points to a significant decline in EPS for 2026, driven by the large STARS headwind and slightly negative individual MA margins, though management emphasizes a doubling of margins when normalizing for STARS and sees growth as accretive to the enterprise.
Management discussed capital efficiency efforts to fund membership growth, including optimizing legal entity structures, reinsurance, selling non-core assets, and managing capital deployment. They expect statutory capital requirements to increase by less than 20% despite 40% premium growth, offsetting over $3 billion in capital needs.
Management expressed confidence in membership growth, operational capacity, and progress toward STARS and margin targets, while acknowledging and adapting to funding environment pressures.
“We did not have a high percentage of members impacted by competitor plan exits. we absorbed approximately 12% of these members. That is notably less than our market share.”
“the level of conservatism in our initial guide is higher than typical to account for the dynamic environment.”
“When calculating the headwind for 26, it is important to keep the membership and revenue growth in mind, which is why the number is larger than what we have previously discussed with you.”
| 지표 | 기간 | 범위 | 중간값 | 상태 |
|---|---|---|---|---|
| EPS | FY2026 | $9.00 | $9.00 | GUIDED |
Humana gained ~1 million net new MA members (20% AEP growth) with a 500 bps retention improvement; 70% of new sales were switchers from competitors, but Humana only absorbed 12% of competitor plan-exit members — less than its market share, implying rivals retained more of their exiting members or other competitors captured a larger share. — This suggests competitor plan exits (e.g., from UNH or CVS) may have driven less churn benefit to Humana than its market share would imply, potentially indicating those competitors found ways to retain more of their exiting members or other rivals captured more.
… of our growth and why we like the growth. We grew by approximately 1 million members, or 20% in AEP. Our retention rate improved over 500 basis points year over year. And I keep emphasizing that that is good growth. Over 70% of our new sales were switchers from competitor plans. On average, switchers have better economics. Now, I recognize that there are concerns about switchers from plan exits that our competitors have done. We did not have a high percentage of members impacted by competitor plan exits. we absorbed approximately 12% of these members. That is notably less than our market share. Seventy percent of new sales were in contracts with four stars or better, and nearly 30% of our new sales were Bounce Back members. So, these are members that we have seen before in previous years. We recognize them, and we are pleased with the mix. Over 75% of our new sales were from higher lifetime value channels, so they're from better sales channels. This is nearly a 10 percentage point improvement year over year. And again, we view this as a very positive development. When we look at full year 2026, we do anticipate individual MA membership growth of approximately 25%. And I will …