Humana outperforms on MA, raises guidance

Humana did better than expected on revenue during the second quarter of 2025, leading the insurer to raise its full-year guidance.

Revenue increased almost $3 billion year-over-year (YOY), though net income decreased over that time, falling to $545 million, versus $679 million during Q2 2024.

Adjusted earnings per share in the quarter stood at $6.27, and the company updated full-year revenue expectations to at least $128 billion, a $2 billion increase over its prior projection. 

WHAT’S THE IMPACT

During an earnings call Wednesday morning, Humana President, CEO and Director James Rechtin said the stronger-than-expected performance was driven primarily by the CenterWell Pharmacy – which saw higher direct-to-consumer volume and a favorable specialty drug mix – as well as Medicare Advantage membership that was higher than anticipated.

That membership did decline, but Rechtin said that MA membership declined less than the organization had originally projected, with more “bounce-back” members returning after choosing other plans. 

He said Humana is engaging in aggressive steps to improve member experience, including new actions to simplify prior authorization, and a partnership with Epic to integrate health plan information into MyChart accounts.

The company’s Medicaid expansion is continuing with a new Virginia contract, which increases the active footprint to 10 states (with three pending).

“Our second quarter results reflect solid execution across the enterprise as we focus on returning the business to its full earnings power,” said Humana Chief Financial Officer Celeste Marie Mellet, adding that the full-year adjusted EPS outlook is now about $17, which includes about $100 million in incremental investments toward “member outcomes and operational excellence.”

THE LARGER TREND

Only a few days after a federal judge struck down Humana’s lawsuit challenging the Medicare Advantage star ratings system, the insurer is once more suing the Centers for Medicare and Medicaid Services – again over star ratings, though this lawsuit differs somewhat from the first.

In its original lawsuit, Humana said it believes a significant driver of its lower star results was one contract decreasing to a 3.5-star rating from a 4.5-star rating in 2024. The MA contract contains approximately 45% of Humana's MA membership, including greater than 90% of its employer group waiver plan membership, Humana said. The court struck down the suit earlier this month.

Humana’s new lawsuit is simpler and doesn’t fixate on cut points, instead focusing on CMS’ handling of three customer service phone calls. An Accuracy & Accessibility Study, in which CMS call "surveyors" place test calls to evaluate centers' compliance with regulatory requirements, lowered the star ratings for at least a dozen of Humana's largest plans on the basis of just three phone calls that were handled by CMS in a manner inconsistent with the agency's own regulations, Humana said.