Humana (NYSE: HUM) raises its 2026 profit floor despite a third-quarter adjusted loss

What happened

Humana Inc. (NYSE: HUM) raised its 2026 earnings guidance on Nov. 6 after reporting a third-quarter adjusted loss of $0.70 per share.

The adjusted EPS floor for the year moves to at least $9.50 from at least $9.00 in the July 29 guidance. The GAAP floor jumps to at least $15.09 from at least $6.52. Revenue guidance stays at least $160 billion.

GAAP EPS for the quarter ended Sept. 30 was $1.33, down from $1.62 a year earlier. Adjusted results, which exclude items Humana says do not reflect core operations, fell from earnings of $3.24 in the third quarter of 2025. The largest excluded item was a non-cash put call valuation adjustment on minority investments tied to the primary care partnership, worth $2.94 per share.

President and CEO Jim Rechtin said Humana is "increasingly driving financial and operating performance toward being 'ahead' of our plan."

Key numbers

Metric	Latest	Change	Source
3Q26 revenues	$41.16 billion	from $32.65 billion, +26.1%	Calculated from SEC 8-K
3Q26 adjusted (loss) earnings per share	-$0.70	from $3.24, -$3.94	Calculated from SEC 8-K
3Q26 GAAP EPS	$1.33	from $1.62, -$0.29	Calculated from SEC 8-K
FY 2026 adjusted EPS guidance (floor)	at least $9.50	+$0.50 vs July 29 guidance	Calculated from SEC 8-K
3Q26 Insurance segment benefit ratio	93.7%	from 91.1%, +2.6 percentage points	Calculated from SEC 8-K
YTD operating cash flows	$5.38 billion	from $2.57 billion, +109.2%	Calculated from SEC 8-K

Read more: Humana (HUM) company research

Revenue grew while the benefit ratio rose

Third-quarter revenues were $41.16 billion, up $8.51 billion, or 26.1%, from $32.65 billion in the third quarter of 2025. Humana credits Medicare membership growth and higher premiums per member. Those came from higher Medicare Advantage benchmark funding from CMS and a larger Part D direct subsidy. The previously disclosed Star Ratings headwind partly offset the gains.

Costs rose faster. The consolidated benefit ratio climbed to 93.9% from 91.1%. Humana cites the Star Ratings revenue headwind, new individual Medicare Advantage members who run at a higher benefit ratio, and lower favorable prior period reserve development. That development was $67 million favorable in the quarter against $275 million a year earlier.

The Insurance segment benefit ratio was 93.7%, better than management's guidance of 'slightly above 94 percent'. The segment posted a loss from operations of $303 million, against income of $251 million a year earlier. Operating costs were the bright spot. The consolidated operating cost ratio fell to 11.3% from 12.6%, which Humana attributes to operating leverage and cost cutting.

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CenterWell and membership

CenterWell revenue rose to $7.16 billion from $5.88 billion, but income from operations fell to $243 million from $305 million. Its operating cost ratio rose to 95.9% from 93.9%.

Humana points to the final year of the v28 risk model phase-in and higher primary care costs concentrated in a group of specific patients in one geography. It also cites more volume in CenterWell Specialty Pharmacy, which has a higher operating cost ratio.

Year to date, CenterWell Senior Primary Care added 146,800 patients, or 30%. Medicaid membership grew by 103,600, or 7%, largely from the start of integrated Duals programs in Michigan, Illinois and South Carolina.

Cash flow and the balance sheet

Operating cash flows for the first nine months were $5.38 billion, up $2.81 billion, or 109.2%, from $2.57 billion a year earlier. Humana attributes the increase to favorable working capital, mainly a higher balance of claims incurred but not reported and collection of receivables, plus a modest rise in GAAP earnings.

Debt-to-total capitalization fell 180 basis points to 40.9% from 42.7% on June 30. Humana cites repayment of commercial paper and third-quarter GAAP net earnings. The recently announced joint venture with BlackRock replaced the earlier ventures with Welsh, Carson, Anderson Stowe. Humana says it makes the balance sheet more efficient and lowers the cost of capital.

Why it matters

OptimistFi has argued that Humana's Medicare Advantage scale pays off only if underwriting and cash flow recover from recent cost pressure. This quarter supports that in part. Cash flow and operating costs improved, but the benefit ratio and adjusted earnings moved the wrong way.

The guidance raise has a ceiling. Humana says full-year adjusted EPS is still expected to decline from last year because of the Star Ratings headwind, net of mitigation. Last year's adjusted figure was $17.14, and nine-month adjusted EPS was $17.17, so the guidance floor sits well below what Humana has already reported.

Insurance guidance points the same way. Full-year Insurance segment income from operations is guided to approximately breakeven, against $1.95 billion through nine months. The full-year Insurance benefit ratio is guided to 92.75% plus or minus 25 basis points, against 91.4% through nine months. Both guided figures are weaker than the nine-month results.

The GAAP jump is not an operating gain. Humana removes $11.42 per share of put call valuation adjustments from full-year adjusted guidance. A footnote cites the non-cash reversal of a net put liability of about $1.2 billion tied to the earlier Welsh, Carson, Anderson Stowe ventures. Humana has also appealed the court decision rejecting its Star Ratings challenge and says it may not prevail.

What's next

Humana's fourth-quarter 2026 report is the next test. Humana expects a non-cash $2.14 per share impact that quarter from the initial option liability tied to the HPS Investment Partners joint venture. It excludes the item from adjusted EPS.

An Insurance benefit ratio inside the guided 92.75% plus or minus 25 basis points would support the case. A ratio above that range, or further primary care cost pressure at CenterWell, would weaken it.

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