Humana Inc.
HUMBusiness Overview
ticker: HUM step: 01 generated: 2026-05-12 source: quick-research
Humana Inc. (HUM) — Business Overview
Business Description
Humana is the second-largest Medicare Advantage (MA) insurer in the United States and one of the most senior-focused health-services companies in the S&P 500. The company operates two reporting segments — Insurance (predominantly Medicare Advantage + state Medicaid + military) and CenterWell (a vertically integrated senior-focused care services platform combining primary care, pharmacy, and home health). 83% of Humana's premiums and services revenue come from contracts with the federal government, the highest government concentration of any major US insurer.
Revenue Model
- Insurance segment (~92% of revenue): Premiums collected from CMS (Centers for Medicare & Medicaid Services) for Medicare Advantage and Medicare Part D enrollment, state Medicaid contracts, and TRICARE (military). MA accounts for ~14% of revenue from individual MA contracts directly.
- CenterWell segment (~8% of external revenue, ~28% including intersegment): Three sub-businesses: (1) CenterWell Pharmacy (mail-order PBM for Humana members and external), (2) CenterWell Primary Care (employed senior-focused primary care clinics — 100,600+ patients added in 2025, +25%; serves Medicaid in 13 states), (3) CenterWell Home Solutions (home health services and hospice).
The vertically integrated model is the key strategic distinction: CenterWell captures the medical-loss-ratio (MLR) dollar that would otherwise go to third-party providers, lowering effective cost of care for senior members while creating an alternative growth engine independent of Insurance margin volatility.
Products & Services
Insurance:
- Individual Medicare Advantage HMO, PPO, Special Needs Plans (SNPs)
- Group Medicare Advantage (employer / retiree)
- Medicare Part D standalone prescription drug plans
- Medicaid managed care (state contracts in 22+ states)
- TRICARE (military) — east region administrator
- Stand-alone dental, vision, life products
- Group commercial health insurance (sub-scale, has been deemphasized)
CenterWell Healthcare Services:
- CenterWell Primary Care (employed senior-focused PCP clinics)
- CenterWell Pharmacy (mail-order + specialty pharmacy)
- CenterWell Home Health (acquired Kindred at Home)
- CenterWell Hospice
- CenterWell Senior Primary Care (Medicaid expansion)
Customer Base & Go-to-Market
- Medicare Advantage members (~5.7M): Senior citizens 65+ (plus dual-eligibles and SNPs); Humana is the #2 MA carrier behind UnitedHealthcare
- Medicare Part D members: Stand-alone prescription drug plan participants
- Medicaid members: State-contracted managed care across 22+ states
- TRICARE: Military families in the East region (federal contract)
- CenterWell patients: ~500K+ across primary care, home health, pharmacy
- Federal customer: CMS is effectively Humana's largest "customer" — 83% of premiums and services revenue derives from federal contracts
Sales channels: AEP (Annual Enrollment Period) marketing, broker / agent networks, direct-to-consumer, plus group contract sales for employer-retiree plans.
Competitive Position
Humana is the second-largest Medicare Advantage insurer with ~5.7M individual MA members (vs. UnitedHealth's ~10M+). The company's competitive moat is narrower and more senior-focused than UnitedHealth's broader UnitedHealthcare + Optum vertical integration. Key competitive advantages: (1) MA scale + senior-focused brand — strongest brand recognition among Medicare-age consumers, (2) CenterWell vertically integrated care — owns the primary care, pharmacy, and home health channels that drive MA medical-cost-trend management, (3) AEP marketing engine — historically the most effective marketing organization for Medicare enrollment, (4) National county footprint — operates in 85% of US counties (down from 89%) with material scale advantages. Key challenges: 2025 STAR ratings collapse (only 25% of members in 4-star+ plans, down from 94% in 2024) — a structural revenue headwind hitting 2026 P&L; modest 2026 STAR recovery (14% in 4.5-star+); higher-than-expected MA medical cost trend (utilization persistent in 2024–2025); $1.5–2B+ annual STAR-related revenue impact; UNH vertical integration advantages widening the competitive gap. The MA recovery thesis is the principal driver of HUM's investment narrative.
Key Facts
- Founded: 1961
- Headquarters: Louisville, KY
- Employees: ~67,000
- Exchange: NYSE
- Sector / Industry: Health Care / Health Care Plans
- Market Cap: ~$30B (May 2026)
- 2025 individual MA membership: ~5.7M
- 2026 individual MA membership growth target: ~25% YoY
- Operates in 85% of US counties (2026)
- 83% of premiums and services revenue from federal government contracts
Financial Snapshot
ticker: HUM step: 04 generated: 2026-05-12 source: quick-research
Humana Inc. (HUM) — Financial Snapshot
Income Statement Summary
| Metric | FY2022 | FY2023 | FY2024 | FY2025 | YoY (25v24) |
|---|---|---|---|---|---|
| Revenue | $92.9B | $106.4B | $117.8B | $129.7B | +10.1% |
| GAAP EPS (diluted) | ~$22.40 | $20.00 | $9.98 | $9.84 | -1.4% |
| Adj. EPS (non-GAAP) | $25.20 | $26.09 | $16.21 | ~$17.14 (normalized) | — |
| Net Income | $2.81B | $2.49B | $1.21B | $1.20B | ~flat |
| Medical Loss Ratio (MA) | ~86% | ~87% | ~90%+ | ~91–92% | — |
GAAP EPS collapsed in 2024 driven by higher-than-expected MA medical cost trend and a $541M Q4 2024 loss. 2025 stabilized at low base; the 2026 hit comes from the STAR rating bonus payment cliff.
Cash Flow & Balance Sheet (FY2025)
| Metric | Value |
|---|---|
| Operating Cash Flow | ~$3B (compressed by MA margin pressure) |
| Capex | ~$1.0B |
| Free Cash Flow | ~$2B |
| Cash & Investments | ~$22B (regulated insurance reserves dominate) |
| Total Debt | ~$13B |
| Net Cash position varies by year-end working capital |
Key Ratios (approximate, May 2026)
- P/E (TTM, GAAP): ~25x — distorted by depressed earnings | EV/EBITDA: ~12x | FCF Yield: ~5–7%
- Revenue Growth (TTM): ~10% | MLR: ~92%+ | Operating Margin: ~1–2% (compressed)
- Trading at deep discount to historical "quality compounder" multiple
Membership / Segment Stats (FY2025 / FY2026)
- 2025 individual MA membership: ~5.7M
- 2026 individual MA membership growth target: ~25% YoY
- Operating county footprint: 85% of US counties (down from 89%)
- CenterWell Primary Care patients: +100,600 in 2025 (+25%)
- 2025 STAR ratings: 25% of MA members in 4+ star plans (down from 94% in 2024)
- 2026 STAR ratings: 14% of MA members in 4.5+ star plans (modest improvement from 3% in 2025)
Growth Profile
Humana is in the middle of a multi-year cyclical earnings reset:
- 2024 medical cost trend shock — MA utilization persisted at elevated levels, compressing MLR
- 2025 STAR ratings collapse — Largest drop of any major MA insurer; analyst estimate $1–3B 2026 revenue impact from lost quality bonus payments
- 2026 EPS guidance ~$9 — vs. peak normalized EPS of ~$26 in 2023; reflects deepest cyclical compression in years
- 2027–2028 recovery path — Consensus models EPS recovery to ~$15 in 2027, ~$26 in 2028 IF: (a) medical cost trend normalizes, (b) STAR ratings recover for 2027 bonus year, (c) 5% effective CMS rate increase materializes, (d) county footprint pruning + benefit design discipline holds margins
Litigation status: Humana sued HHS over STAR ratings; lost initial challenge, refiled, lost again, currently appealing to 5th Circuit. Any litigation win would create binary upside catalyst.
Forward Estimates
2026 guidance: "At least $8.89" GAAP EPS / "at least $9.00" adjusted EPS — decline from 2025 due to STAR Ratings headwind net of mitigation. MLR ~92.75% expected. Bull-side scenarios pencil in cyclical recovery + STAR re-rating + CMS rate normalization driving EPS to ~$15 in 2027 and ~$26 in 2028. Bear-side scenarios extend the STAR / medical cost pressure into 2027 with EPS staying below $12 and continued multiple compression.
Deeper Financial Analysis
The fundamental tier adds 9 additional research dimensions for $HUM.