Humana Reports Earnings Drop Amid Medicare Advantage Growth

Humana, the second-largest provider of Medicare Advantage plans in the United States, reported a decline in earnings due to rising medical costs and payment rates from the Advance Notice that fell below the medical cost trend. For the fourth quarter of 2025, Humana announced a loss of $1.01 billion, compared to an $862 million loss in the same quarter of 2024. Despite this, the company saw an increase in quarterly revenue, reaching $32.52 billion, up from $29.21 billion in 2024.

Industry Impact

Projections indicate a 25% increase in Medicare Advantage membership by 2026, presenting challenges in maintaining profitability. Although current margins are slightly below break-even, improvements are anticipated in the following year. Humana President and CEO Jim Rechtin emphasized the importance of adaptable strategies to sustain benefit structures amidst funding constraints, highlighting the company's proactive risk management approach.

Humana's growth in Medicare Advantage membership is fueled by new enrollments and enhanced retention strategies. Effective pricing and outcome-driven investments are crucial for maintaining membership levels. Recent metrics show a 20% increase in membership, equivalent to about one million new members, with a 500 basis-point improvement in retention rates. Approximately 70% of new members transitioned from other Medicare Advantage plans, underscoring Humana’s competitive edge in the payer market.

Regulatory and Compliance Developments

January onboarding saw improvements in net promoter scores, complaint rates, and health risk assessment completion, all contributing to potentially enhanced star ratings. Despite losing a lawsuit against the Centers for Medicare and Medicaid Services regarding star rating calculations, Humana continues to expand its services with significant growth in CenterWell, its senior care provider division, and Medicaid services.

CenterWell Senior Primary Care experienced a patient increase of over 25% in 2025, driven by acquiring The Villages Health in Florida. Humana’s Medicaid services now cover 13 states, with plans to enter Georgia and Texas by 2027, demonstrating a commitment to expanding regulatory compliance requirements across various regions.

Market Context and Company Outlook

As the second-largest Medicare Advantage insurer, Humana maintains a strong commitment to this market, even as other carriers face challenges, such as those experienced by UnitedHealth and Elevance. Jim Rechtin expressed satisfaction with Humana’s financial and operational achievements in 2025, stressing optimism about the future prospects for Medicare Advantage membership growth in 2026.

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