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HUMANA INC

HUM
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Business Summary

Humana Inc. operates in the health benefits industry, which is highly competitive and includes other managed care companies, national insurance companies, and other HMOs and PPOs . The company derived approximately 83% of its total premiums and services revenue from contracts with the federal government in 2025, including 14% related to its federal government contracts with the Centers for Medicare and Medicaid Services (CMS) to provide health insurance coverage for individual Medicare Advantage members in Florida .

Primary competitors vary by local market and include other managed care companies, national insurance companies, and other HMOs and PPOs, many of which have a larger membership base and/or greater financial resources . The company's ability to sell products and retain customers is influenced by factors such as service, quality and depth of provider networks, and price . Humana believes barriers to entry in its markets are not substantial, so the addition of new competitors can occur relatively easily, and customers enjoy significant flexibility in moving between competitors through the Medicare Annual Enrollment Period .

The company generates revenue primarily through premiums from insurance products and services revenue from its CenterWell segment. Premiums revenue is recognized as income in the period members are entitled to receive services, and is net of estimated uncollectible amounts, retroactive membership adjustments, and adjustments to recognize rebates under minimum benefit ratios . Services revenue includes revenue from pharmacy solutions, primary care, and home solutions, and is recognized in the period services are performed . The core business model is an integrated care delivery model that unites quality care, high member engagement, and sophisticated data analytics, designed to improve health outcomes and affordability .

The Insurance segment includes Medicare benefits (individual Medicare Advantage, Group Medicare Advantage, Medicare stand-alone PDP, and Medicare Supplement), state-based contracts (Medicaid), specialty benefits (dental, vision, life, disability), and military services (TRICARE) . For the year ended December 31, 2025, Insurance segment premiums revenue was $122.825 billion , with individual Medicare Advantage premiums of $90.403 billion , Group Medicare Advantage premiums of $9.014 billion , Medicare stand-alone PDP premiums of $6.844 billion , specialty benefits premiums of $989 million , Medicare Supplement premiums of $1.098 billion , and state-based contracts and other premiums of $14.477 billion . The Insurance segment also had services revenue of $1.017 billion .

The CenterWell segment includes pharmacy solutions, primary care, and home solutions operations . For the year ended December 31, 2025, CenterWell segment external services revenue was $4.816 billion , comprising home solutions external revenue of $1.401 billion , pharmacy solutions external revenue of $1.218 billion , and primary care external revenue of $2.197 billion . Intersegment revenues for CenterWell were $17.657 billion , including home solutions intersegment revenue of $2.127 billion , pharmacy solutions intersegment revenue of $11.741 billion , and primary care intersegment revenue of $3.789 billion .

During 2025, the company finalized its exit from the Employer Group Commercial Medical Products business . The company recorded charges of $449 million in 2025 related to value creation initiatives, including $329 million in severance and other employee related charges and $40 million in asset impairments . Additionally, impairment charges of $253 million were recorded in 2025, including $128 million for impairment of indefinite-lived intangible assets . In March 2025, the company issued $750 million of 5.550% unsecured senior notes due May 1, 2035, $500 million of 6.000% unsecured senior notes due May 1, 2055, and an additional $250 million of its existing 5.375% unsecured senior notes due April 15, 2031, with net proceeds of $1.481 billion . The company repurchased $200 million principal amount of senior notes for approximately $194 million cash in 2025 . Common shares were repurchased for $151 million in 2025 . Dividends paid to stockholders were $430 million in 2025 .

Total revenues for 2025 were $129.664 billion , compared to $117.761 billion in 2024 . Net income attributable to Humana was $1.188 billion , or $9.84 per diluted common share , compared to $1.207 billion , or $9.98 per diluted common share in 2024. The consolidated benefit ratio was 90.2% in 2025 , compared to 89.8% in 2024 . The operating cost ratio was 12.0% in 2025 , compared to 11.8% in 2024 . Cash and cash equivalents increased to $4.2 billion at December 31, 2025 from $2.221 billion at December 31, 2024 .

Business Outlook

For the full year 2026, the company anticipates net membership growth in its individual Medicare Advantage offerings of approximately 25% , net membership growth in its group Medicare Advantage offerings of approximately 150,000 members , net membership growth in its Medicare stand-alone PDP offerings of approximately 1,000,000 members , and net membership growth in its state-based contracts in a range of 25,000 to 100,000 members .

The company's strategy is centered on its integrated care delivery model, which unites quality care, high member engagement, and sophisticated data analytics . Key growth vectors include the expansion of Medicare programs, the state-based contracts strategy, and the growth of CenterWell businesses including pharmacy solutions, primary care, and home solutions . The company offers providers a continuum of opportunities to increase integration of care, including performance bonuses, shared savings, and shared risk relationships . At December 31, 2025, approximately 3,586,100 members, or 68%, of individual Medicare Advantage members were in value-based relationships under the integrated care delivery model .

The company initiated a substantial multi-year transformation program designed to re-align its cost structure, operating model, and technology footprint with evolving market conditions . As a result of these initiatives, charges of $449 million were recorded in 2025, and the company expects to incur additional charges over the course of the program . The value creation initiatives are intended to create capacity to fund growth in the company's businesses .

The company's business depends significantly on effective information systems and the integrity and timeliness of the data used to run its business . The company is committing significant resources to maintain, protect, and enhance existing systems and develop and integrate new systems, including those powered by or incorporating artificial intelligence and machine learning, to keep pace with changes in information processing technology, evolving industry and regulatory standards, and changing customer preferences .

Capital expenditures, excluding acquisitions, were $523 million in 2025 . The company repurchased common shares for $151 million in 2025 under share repurchase plans authorized by the Board of Directors and in connection with employee stock plans . Dividends paid to stockholders were $430 million in 2025 . The Board declared a cash dividend of $0.8850 per share payable on January 30, 2026 and a cash dividend of $0.8850 per share payable on April 24, 2026 .

The company faces structural headwinds from government policies and decisions regarding the Medicare Advantage and Prescription Drug Plans, military services, and Medicaid programs, which directly shape premiums or other revenues, eligibility and enrollment of members, services provided, and administrative and health care services costs . Legislative or regulatory actions, such as changes to these programs resulting in a reduction in premium payments, an increase in costs, or additional fees, taxes, or assessments, may have a material adverse effect . The company also faces intense competitive pressure to contain premium prices despite increasing medical and administrative costs .

Risk Factors

The company faces material risks from its significant concentration of revenues in government programs, which accounted for approximately 93% of total premiums and services revenue for the year ended December 31, 2025 . Changes in these programs, including reductions in premium payments or increases in member benefits without corresponding premium increases, could materially adversely affect results . The company also faces risks from the Medicare Advantage Star Ratings system; the number of plans rated 4-star or higher significantly declined in 2025, and the company has filed a lawsuit seeking to set aside the 2025 Star Ratings . If unsuccessful, the decline will negatively impact 2026 quality bonus payments from CMS and may significantly adversely affect revenues, operating results, and cash flows . Additionally, the company is subject to risks from the CMS risk-adjustment model and RADV audits, including the Final RADV Rule which eliminated the Fee-for-Service Adjuster, and the company has filed a lawsuit challenging this rule . The outcome of these legal proceedings cannot be predicted with certainty .

Management Priorities

Management's message emphasizes the company's commitment to its integrated care delivery model, which unites quality care, high member engagement, and sophisticated data analytics, and is designed to improve health outcomes and affordability . The strategic priorities emphasized for the period ahead include the expansion of Medicare programs, the state-based contracts strategy, and the growth of CenterWell businesses including pharmacy solutions, primary care, and home solutions . Management also highlights the substantial multi-year transformation program designed to re-align the cost structure, operating model, and technology footprint with evolving market conditions, with charges of $449 million recorded in 2025 and expectations of additional charges over the course of the program .

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Competition
  2. [2] Item 1, Business — General
  3. [3] Item 1, Business — Competition
  4. [4] Item 1, Business — Competition
  5. [5] Item 1A, Risk Factors
  6. [6] Item 7, MD&A — Critical Accounting Policies and Estimates; Note 2, Summary of Significant Accounting Policies
  7. [7] Note 2, Summary of Significant Accounting Policies
  8. [8] Item 1, Business — General
  9. [9] Item 1, Business — Business Segments
  10. [10] Item 7, MD&A — Insurance Segment
  11. [11] Item 7, MD&A — Insurance Segment
  12. [12] Item 7, MD&A — Insurance Segment
  13. [13] Item 7, MD&A — Insurance Segment
  14. [14] Item 7, MD&A — Insurance Segment
  15. [15] Item 7, MD&A — Insurance Segment
  16. [16] Item 7, MD&A — Insurance Segment
  17. [17] Item 7, MD&A — Insurance Segment
  18. [18] Item 1, Business — CenterWell Segment Products
  19. [19] Item 7, MD&A — CenterWell Segment
  20. [20] Item 7, MD&A — CenterWell Segment
  21. [21] Item 7, MD&A — CenterWell Segment
  22. [22] Item 7, MD&A — CenterWell Segment
  23. [23] Item 7, MD&A — CenterWell Segment
  24. [24] Item 7, MD&A — CenterWell Segment
  25. [25] Item 7, MD&A — CenterWell Segment
  26. [26] Item 7, MD&A — CenterWell Segment
  27. [27] Item 7, MD&A — Executive Overview
  28. [28] Item 7, MD&A — Executive Overview; Note 2, Summary of Significant Accounting Policies
  29. [29] Item 7, MD&A — Executive Overview; Note 2, Summary of Significant Accounting Policies
  30. [30] Item 7, MD&A — Liquidity
  31. [31] Item 7, MD&A — Liquidity
  32. [32] Item 7, MD&A — Liquidity
  33. [33] Item 7, MD&A — Liquidity
  34. [34] Item 7, MD&A — Consolidated Results
  35. [35] Item 7, MD&A — Consolidated Results
  36. [36] Item 7, MD&A — Consolidated Results
  37. [37] Item 7, MD&A — Consolidated Results
  38. [38] Item 7, MD&A — Consolidated Results
  39. [39] Item 7, MD&A — Consolidated Results
  40. [40] Item 7, MD&A — Consolidated Results
  41. [41] Item 7, MD&A — Consolidated Results
  42. [42] Item 7, MD&A — Consolidated Results
  43. [43] Item 7, MD&A — Consolidated Results
  44. [44] Item 7, MD&A — Liquidity
  45. [45] Item 7, MD&A — Insurance Segment
  46. [46] Item 7, MD&A — Insurance Segment
  47. [47] Item 7, MD&A — Insurance Segment
  48. [48] Item 7, MD&A — Insurance Segment
  49. [49] Item 7, MD&A — Executive Overview
  50. [50] Item 1A, Risk Factors
  51. [51] Item 7, MD&A — Executive Overview
  52. [52] Item 7, MD&A — Executive Overview
  53. [53] Item 7, MD&A — Executive Overview
  54. [54] Item 7, MD&A — Executive Overview
  55. [55] Item 7, MD&A — Executive Overview
  56. [56] Item 1A, Risk Factors
  57. [57] Item 1A, Risk Factors
  58. [58] Item 7, MD&A — Cash Flow from Investing Activities
  59. [59] Item 7, MD&A — Cash Flow from Financing Activities
  60. [60] Item 7, MD&A — Cash Flow from Financing Activities
  61. [61] Item 5, Market for Registrant's Common Equity
  62. [62] Item 5, Market for Registrant's Common Equity
  63. [63] Item 1A, Risk Factors
  64. [64] Item 1A, Risk Factors
  65. [65] Item 1A, Risk Factors
  66. [66] Item 1A, Risk Factors
  67. [67] Item 1A, Risk Factors
  68. [68] Item 1A, Risk Factors
  69. [69] Item 1A, Risk Factors
  70. [70] Item 1A, Risk Factors
  71. [71] Item 1A, Risk Factors
  72. [72] Item 7, MD&A — Executive Overview
  73. [73] Item 1A, Risk Factors
  74. [74] Item 7, MD&A — Executive Overview
  75. [75] Item 8, Consolidated Statements of Income
  76. [76] Item 8, Consolidated Statements of Income
  77. [77] Item 8, Consolidated Statements of Income
  78. [78] Item 8, Consolidated Statements of Income
  79. [79] Item 8, Consolidated Statements of Income
  80. [80] Item 8, Consolidated Statements of Income
  81. [81] Item 8, Consolidated Statements of Income
  82. [82] Item 8, Consolidated Statements of Income
  83. [83] Item 7, MD&A — Consolidated Results
  84. [84] Item 7, MD&A — Consolidated Results
  85. [85] Item 7, MD&A — Consolidated Results
  86. [86] Item 7, MD&A — Consolidated Results
  87. [87] Item 8, Consolidated Balance Sheets
  88. [88] Item 8, Consolidated Balance Sheets
  89. [89] Item 8, Consolidated Balance Sheets
  90. [90] Item 8, Consolidated Balance Sheets
  91. [91] Item 7, MD&A — Insurance Segment
  92. [92] Item 7, MD&A — CenterWell Segment
  93. [93] Item 7, MD&A — CenterWell Segment
  94. [94] Item 7, MD&A — Executive Overview
  95. [95] Item 7, MD&A — Executive Overview
  96. [96] Item 7, MD&A — Executive Overview
  97. [97] Item 7, MD&A — Executive Overview
  98. [98] Item 7, MD&A — Consolidated Results
  99. [99] Item 7, MD&A — Consolidated Results

Analysis on 6/8/2026