Why did Humana revise its GAAP EPS guidance while affirming Adjusted EPS guidance?

The filing states that GAAP EPS guidance was revised to approximately $14.68 from approximately $15.88, while Adjusted EPS guidance of approximately $16.25 was affirmed. The reconciliation shows the Adjusted measure excludes items such as amortization of intangibles, put/call valuation adjustments on non-consolidating minority interest investments, value creation initiatives, and the related cumulative net tax impact. The put/call valuation adjustments are projected at $1.35 per share for FY 2025 in the guidance reconciliation.

How did the Insurance segment benefit ratio compare with expectations?

The 1Q25 Insurance segment benefit ratio was 87.4 percent, which the company described as in line with its previously disclosed expectation of approximately 87.5 percent. The full-year 2025 guidance range of 90.1 to 90.5 percent was affirmed, and management expects the second-quarter benefit ratio to be approximately 90 percent.

What is management's outlook for capital deployment?

Management stated that its current 2025 outlook does not contemplate share repurchase activity, given a prudent near-term approach until Stars mitigation plans and 2026 Medicare Advantage pricing are finalized. The company raised $1.5 billion in the debt markets in the first quarter, which covers maturities through the end of 2026, and continues to target debt-to-capitalization of approximately 40 percent over the long term.

What drove the year-over-year change in consolidated revenues?

The filing attributes the increase from $29,611 million to $32,112 million primarily to higher per-member Medicare and state-based contract premiums, driven largely by an increased direct subsidy due to the Inflation Reduction Act, and to membership growth in stand-alone PDP and state-based contracts. These were partially offset by the decline in individual Medicare Advantage membership, including plan and county exits.

HUM 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed April 30, 2025. Cited figures are marked; the original filing is the authoritative source.

Humana Inc. reported first-quarter 2025 results on April 30, 2025, with GAAP earnings per share of $10.30^a and Adjusted EPS of $11.58, compared with GAAP EPS of $6.11 and Adjusted EPS of $7.23 in the first quarter of 2024.

Consolidated revenues were $32,112 million^b versus $29,611 million a year earlier. The Insurance segment benefit ratio was 87.4 percent, in line with the company's previously disclosed expectation of approximately 87.5 percent. Income before income taxes and equity in net losses was $1,691 million on a GAAP basis, compared with $1,014 million in the prior-year quarter.

Humana revised its full-year 2025 GAAP EPS guidance to approximately $14.68^c from approximately $15.88, while affirming Adjusted EPS guidance of approximately $16.25. The company also affirmed its FY 2025 Insurance segment benefit ratio guidance range of 90.1 to 90.5 percent and its expected decline of approximately 550,000 individual Medicare Advantage members. Management said its 2025 outlook does not contemplate share repurchases, and it expects second-quarter Adjusted earnings to be approximately 35% of full-year Adjusted earnings.

Other developments in the filing include CenterWell Pharmacy being selected as the fulfillment pharmacy for NovoCare Pharmacy's weight loss medication for cash-pay customers, and Illinois announcing its intent to award Humana a Fully Integrated Dual Eligible Special Needs Plan contract expected to start in 2026. The filing also notes that the company raised $1.5 billion^d in senior notes during the quarter and that debt-to-total capitalization was 42.8 percent at March 31, 2025.

02—Key points

Key Highlights

GAAP EPS of $10.30 and Adjusted EPS of $11.58 for 1Q25, versus GAAP EPS of $6.11 and Adjusted EPS of $7.23 in 1Q24.
Full-year 2025 GAAP EPS guidance revised to approximately $14.68 from approximately $15.88; Adjusted EPS guidance affirmed at approximately $16.25.
Insurance segment benefit ratio of 87.4 percent in 1Q25, in line with the previously disclosed expectation of approximately 87.5 percent; FY 2025 guidance range of 90.1 to 90.5 percent affirmed.
Consolidated revenues of $32,112 million in 1Q25, up from $29,611 million in 1Q24.
Individual Medicare Advantage membership expected to decline by approximately 550,000 in 2025, reflecting exits from unprofitable plans and counties.
No share repurchases are contemplated in the 2025 outlook; the company raised $1.5 billion in debt during the quarter, and debt-to-total capitalization was 42.8 percent.
CenterWell Pharmacy selected as fulfillment pharmacy for NovoCare Pharmacy's weight loss medication for cash-pay customers; Illinois intends to award a new FIDE SNP contract.

03—Questions

Frequently Asked Questions

Why did Humana revise its GAAP EPS guidance while affirming Adjusted EPS guidance?
The filing states that GAAP EPS guidance was revised to approximately $14.68 from approximately $15.88, while Adjusted EPS guidance of approximately $16.25 was affirmed. The reconciliation shows the Adjusted measure excludes items such as amortization of intangibles, put/call valuation adjustments on non-consolidating minority interest investments, value creation initiatives, and the related cumulative net tax impact. The put/call valuation adjustments are projected at $1.35 per share for FY 2025 in the guidance reconciliation.
How did the Insurance segment benefit ratio compare with expectations?
The 1Q25 Insurance segment benefit ratio was 87.4 percent, which the company described as in line with its previously disclosed expectation of approximately 87.5 percent. The full-year 2025 guidance range of 90.1 to 90.5 percent was affirmed, and management expects the second-quarter benefit ratio to be approximately 90 percent.
What is management's outlook for capital deployment?
Management stated that its current 2025 outlook does not contemplate share repurchase activity, given a prudent near-term approach until Stars mitigation plans and 2026 Medicare Advantage pricing are finalized. The company raised $1.5 billion in the debt markets in the first quarter, which covers maturities through the end of 2026, and continues to target debt-to-capitalization of approximately 40 percent over the long term.
What drove the year-over-year change in consolidated revenues?
The filing attributes the increase from $29,611 million to $32,112 million primarily to higher per-member Medicare and state-based contract premiums, driven largely by an increased direct subsidy due to the Inflation Reduction Act, and to membership growth in stand-alone PDP and state-based contracts. These were partially offset by the decline in individual Medicare Advantage membership, including plan and county exits.

04—Continue

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