Humana raises 2026 profit floor despite adjusted quarterly loss

By Grace Kim

Humana reported a third-quarter adjusted loss of $0.70 per share on Nov. 6, 2026, while revenue rose 26.1% to $41.16 billion and the company raised its 2026 adjusted earnings floor.

Adjusted EPS swung $3.94 from $3.24 of profit a year earlier; GAAP EPS for the quarter ended Sept. 30 fell to $1.33 from $1.62. 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.

What changed in the 2026 guidance?

• Adjusted earnings per share (EPS), which excludes items Humana says do not reflect core operations, now has a floor of at least $9.50, up $0.50 from July 29 guidance of at least $9.00.
• GAAP EPS, which follows standard U.S. accounting rules, has a floor of at least $15.09, up from at least $6.52.
• Revenue guidance remains at least $160 billion.

The GAAP increase is largely non-operating: Humana deducts $11.42 per share of put-call valuation adjustments from adjusted guidance. A footnote links a non-cash reversal of about $1.2 billion in net put liability to the earlier Welsh, Carson, Anderson Stowe ventures.

President and CEO Jim Rechtin said Humana is “increasingly driving financial and operating performance toward being ‘ahead’ of our plan.” Revenue and operating costs support the claim, but higher medical costs still pressure earnings.

Takeaway: Humana raised its minimum earnings target, but medical costs still determine whether the year ends on track.

Why did medical costs outpace revenue?

Revenue increased $8.51 billion to $41.16 billion from $32.65 billion, helped by Medicare membership growth and higher premiums per member. Humana cited higher Medicare Advantage benchmark funding from CMS (Centers for Medicare & Medicaid Services) and a larger Part D direct subsidy; the previously disclosed Star Ratings headwind partly offset those gains.

Costs rose faster. The consolidated benefit ratio, a measure of medical costs relative to premium revenue, climbed to 93.9% from 91.1%. Humana attributed the increase to the Star Ratings revenue headwind, new individual Medicare Advantage members running at a higher benefit ratio, and less favorable prior-period reserve development.

Favorable prior-period reserve development contributed $67 million, versus $275 million a year earlier. The Insurance segment benefit ratio was 93.7%, up 2.6 points from 91.1% and better than guidance of “slightly above 94 percent.”

Segment operations shifted to a $303 million loss from $251 million of income. The consolidated operating cost ratio fell to 11.3% from 12.6% on operating leverage and cost cutting.

Takeaway: Revenue growth did not translate into better underwriting, even as the operating cost ratio improved.

How did CenterWell perform?

CenterWell revenue rose to $7.16 billion from $5.88 billion, but operating income fell to $243 million from $305 million. Its operating cost ratio increased to 95.9% from 93.9%, so earnings did not keep pace with revenue.

Humana cited the final year of the v28 risk-model phase-in, higher primary-care costs concentrated among a specific group of patients in one geography, and more volume in CenterWell Specialty Pharmacy, which carries 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 after integrated Duals programs began in Michigan, Illinois and South Carolina.

Takeaway: CenterWell’s patient growth arrived with higher care costs and weaker operating income.

What does the cash-flow improvement mean?

Operating cash flow—the cash generated from operations—reached $5.38 billion for the first nine months, up $2.81 billion or 109.2% from $2.57 billion. Humana cited favorable working capital, mainly a higher balance of claims incurred but not reported and collections of receivables, plus a modest rise in GAAP earnings.

Debt-to-total capitalization fell 180 basis points, or 1.8 percentage points, to 40.9% from 42.7% on June 30. The company linked the decline to commercial-paper repayment and third-quarter GAAP net earnings.

A recently announced joint venture with BlackRock replaced earlier ventures with Welsh, Carson, Anderson Stowe. Humana says the replacement makes the balance sheet more efficient and lowers its cost of capital.

Takeaway: Cash generation strengthened materially, giving Humana more room to absorb medical-cost pressure.

What must Humana prove in the fourth quarter?\n

OptimistFi argues that Humana’s Medicare Advantage scale pays off only if underwriting and cash flow recover. This quarter supports that case partly: cash flow and operating costs improved, while the benefit ratio and adjusted earnings worsened.

Full-year adjusted EPS is still expected to decline from last year because of the Star Ratings headwind, net of mitigation. Last year’s figure was $17.14, and nine-month adjusted EPS was $17.17, leaving the $9.50 floor well below reported results.

Full-year Insurance segment operating income is set at approximately breakeven, versus $1.95 billion through nine months. Its full-year benefit ratio is 92.75% plus or minus 25 basis points, versus 91.4% through nine months; both guided figures are weaker than year-to-date results.

Humana has appealed the court decision rejecting its Star Ratings challenge and says it may not prevail. In the fourth quarter, it expects a non-cash $2.14 per-share impact from the initial option liability tied to the HPS Investment Partners joint venture; the item is excluded from adjusted EPS.

An Insurance benefit ratio inside 92.75% plus or minus 25 basis points would support management’s cost case. A ratio above that range, or more primary-care pressure at CenterWell, would weaken it.

Takeaway: The fourth quarter must show that stronger cash generation can outrun rising medical costs.