Humana (HUM)

Health insurance company Humana (NYSE:HUM) reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 11.4% year on year to $32.52 billion. Its GAAP loss of $6.61 per share was 62.2% below analysts’ consensus estimates.

Company Overview

With over 80% of its revenue derived from federal government contracts, Humana (NYSE:HUM) provides health insurance plans and healthcare services to approximately 17 million members, with a strong focus on Medicare Advantage plans for seniors.

Upfront premiums collected by health insurers lead to reliable revenue, but profitability ultimately depends on accurate risk assessments and the ability to control medical costs. Health insurers are also highly sensitive to regulatory changes and economic conditions such as unemployment. Going forward, the industry faces tailwinds from an aging population, increasing demand for personalized healthcare services, and advancements in data analytics to improve cost management. However, continued regulatory scrutiny on pricing practices, the potential for government-led reforms such as expanded public healthcare options, and inflation in medical costs could add volatility to margins. One big debate among investors is the long-term impact of AI and whether it will help underwriting, fraud detection, and claims processing or whether it may wade into ethical grey areas like reinforcing biases and widening disparities in medical care.

Humana's main competitors include UnitedHealth Group (NYSE: UNH), CVS Health's Aetna (NYSE: CVS), Cigna Group (NYSE: CI), Elevance Health (formerly Anthem) (NYSE: ELV), and Centene Corporation (NYSE: CNC). In the Medicare Advantage space specifically, UnitedHealth's UnitedHealthcare and CVS Health's Aetna are Humana's strongest competitors.

Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.

With $129.7 billion in revenue over the past 12 months, Humana is one of the most scaled enterprises in healthcare. This is particularly important because health insurance providers companies are volume-driven businesses due to their low margins.

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Thankfully, Humana’s 11.2% annualized revenue growth over the last five years was decent. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Humana’s annualized revenue growth of 12.4% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

We can dig further into the company’s revenue dynamics by analyzing its number of customers, which reached 15 million in the latest quarter. Over the last two years, Humana’s customer base averaged 8.3% year-on-year declines. Because this number is lower than its revenue growth, we can see the average customer spent more money each year on the company’s products and services.

This quarter, Humana reported year-on-year revenue growth of 11.4%, and its $32.52 billion of revenue exceeded Wall Street’s estimates by 1.4%.

Looking ahead, sell-side analysts expect revenue to grow 12.6% over the next 12 months, similar to its two-year rate. This projection is particularly noteworthy for a company of its scale and implies the market is baking in success for its products and services.

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Humana’s operating margin has risen over the last 12 months and averaged 3.5% over the last five years. Although its profitability is still paltry, we can see its decent revenue growth is giving it operating leverage as it scales. This gives it a shot at higher long-term profits if it can keep expanding.

Analyzing the trend in its profitability, Humana’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Humana generated an operating margin profit margin of 4.1%, up 6 percentage points year on year. This increase was a welcome development and shows it was more efficient.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Humana, its EPS declined by 17.3% annually over the last five years while its revenue grew by 11.2%. We can see the difference stemmed from higher interest expenses or taxes as the company actually improved its operating margin and repurchased its shares during this time.

In Q4, Humana reported EPS of negative $6.61, down from negative $5.75 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Humana’s full-year EPS of $9.80 to grow 23.1%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Humana has shown mediocre cash profitability over the last five years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 2%, subpar for a healthcare business.

Humana burned through $1.85 billion of cash in Q4, equivalent to a negative 5.7% margin. The company’s cash burn increased from $675 million of lost cash in the same quarter last year. These numbers deviate from its longer-term margin, but we wouldn’t read too much into the short term because investment needs can be seasonal, leading to temporary swings.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Humana’s five-year average ROIC was 39.4%, placing it among the best healthcare companies. This illustrates its management team’s ability to invest in highly profitable ventures and produce tangible results for shareholders.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Humana’s ROIC averaged 1.9 percentage point decreases each year. Only time will tell if its new bets can bear fruit and potentially reverse the trend.

It was good to see Humana narrowly top analysts’ revenue expectations this quarter. On the other hand, its EPS missed. EPS guidance for the full year also came in well below Wall Street's estimate as ⁠lower quality ratings for its ⁠Medicare Advantage plans for older ​adults present a major headwind for the company. Overall, this was a weaker quarter. The stock traded down 8.1% to $166.67 immediately following the results.

Updated: February 11, 2026 at 6:50 AM EST

Are you wondering whether to buy Humana or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

For starters, its revenue growth was good over the last five years and is expected to accelerate over the next 12 months. And while its declining EPS over the last five years makes it a less attractive asset to the public markets, its scale gives it meaningful leverage when negotiating reimbursement rates. Additionally, Humana’s stellar ROIC suggests it has been a well-run company historically.

Humana’s P/E ratio based on the next 12 months is 14.5x. When scanning the healthcare space, Humana trades at a fair valuation. For those confident in the business and its management team, this is a good time to invest.

Wall Street analysts have a consensus one-year price target of $282.96 on the company (compared to the current share price of $166.67), implying they see 69.8% upside in buying Humana in the short term.