Humana (HUM) Up 30.6% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Humana (HUM). Shares have added about 30.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Humana due for a pullback? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for Humana Inc. before we dive into how investors and analysts have reacted as of late.

Humana Beats Q1 Earnings Estimates on Increasing Premiums

Humana reported first-quarter 2026 adjusted earnings of $10.31 per share, which beat the Zacks Consensus Estimate by 3.5%. However, the bottom line fell 11% year over year.

Revenues improved 23.5% year over year to $39.6 billion. The top line surpassed the consensus mark by 0.5%.

The quarterly results benefited on the back of premium gains and a robust performance from the CenterWell segment, which saw a revenue jump supported by its primary care business. A rise in overall medical membership also contributed to the upside. However, the upside was partly offset by escalating operating expenses and a deteriorating benefit ratio.

HUM’s Q1 Operational Update

Humana’s premiums totaled $37.7 billion, which advanced 23.6% year over year, and surpassed the Zacks Consensus Estimate of $37.3 billion and our estimate of $36.6 billion. Services revenues rose 25.7% year over year to $1.7 billion, beating the consensus mark of $1.6 billion. Investment income of $262 million fell 0.8% year over year in the quarter under review. However, the metric beat the consensus mark of $230 million and our estimate of $235.7 million.

The benefit ratio came in at 89.4%, which deteriorated 240 basis points (bps) year over year. Total operating expenses increased 25.9% year over year to $37.9 billion, higher than our estimate of $36.6 billion. The year-over-year increase was due to higher benefits and operating costs. The adjusted operating cost ratio of 10% improved 50 bps year over year.

HUM’s net income declined 4.7% year over year to $1.2 billion but beat our estimate of $1.1 billion.

Q1 Segmental Update of HUM

Insurance

The segment’s revenues rose 23% year over year to $38.1 billion in the first quarter on the back of improved per-member premiums derived from HUM’s Medicare and stand-alone PDP businesses, supported by improved Medicare Advantage benchmark funding from the Centers for Medicare and Medicaid Services and a higher Part D direct subsidy tied to the IRA.

Adjusted operating income dropped 8.8% year over year to $1.4 billion. The benefit ratio deteriorated 200 bps year over year to 89.4%. The operating cost ratio of 7.3% improved 90 bps year over year.

Total medical membership of the segment was 17.7 million as of March 31, 2026, which rose 19.4% year over year. The metric beat the Zacks Consensus Estimate of 16.7 million and our estimate of 15.7 million.

CenterWell

The unit recorded revenues of $6.1 billion in the quarter under review, which improved 19.7% year over year and surpassed the Zacks Consensus Estimate of $5.8 billion. The metric benefited from higher revenues stemming from the company’s primary care business.

Adjusted operating income dropped 25.1% year over year to $338 million. The operating cost ratio of 94.5% deteriorated 340 bps year over year due to the ongoing implementation of the v28 risk model update within the company’s primary care business and higher volumes in CenterWell Specialty Pharmacy.

Humana’s Financial Update (As of March 31, 2026)

Humana exited the first quarter with cash and cash equivalents of $5 billion, which rose 17.9% from the 2025-end level. Total assets of $55.3 billion increased 13% from the figure at 2025-end.

Long-term debt amounted to $12.3 billion, down 0.8% from the figure as of Dec. 31, 2025. Debt to capitalization deteriorated 190 bps year over year to 43% at the first-quarter end.

Total stockholders’ equity of $18.6 billion advanced 5.2% from the 2025-end figure.

HUM generated net cash from operations of $1.3 billion in the first quarter of 2026, which increased nearly fourfold year over year.

HUM’s Capital Deployment Update

Humana bought back shares worth $107 million in the first quarter of 2026. It also paid dividends of $107 million during the same quarter.

2026 View by HUM

Revenues are still projected to be a minimum of $160 billion, which implies a 23.4% increase from the 2025 reported figure. The Insurance segment’s revenues are expected to continue to be forecasted at a minimum of $155 billion. Revenues of the CenterWell segment are still expected to be at a minimum of $25 billion.

Adjusted EPS is still projected to be at least $9.00, which indicates a 47.5% decline from the 2025 figure. GAAP EPS is now projected to be at least $8.36, down from the previously expected guidance of at least $8.89.

Management still anticipates Individual Medicare Advantage membership to witness growth of around 25% in 2026. Group Medicare Advantage membership is still expected to record an increase of roughly 150,000.

Membership from the Individual Medicare stand-alone PDP is still expected to increase around 1,000,000 this year. State-based contracts are still anticipated to witness membership growth within 25,000-100,000.

The GAAP benefit ratio for the Insurance segment is still likely to be 92.75%, with a variability margin of plus or minus 25 basis points. The GAAP consolidated adjusted operating cost ratio is still expected to be at 10%, with a variability margin of plus or minus 25 basis points.

GAAP cash flow from operations is still estimated within $2.5-$2.9 billion. Meanwhile, capital expenditures are still projected to be roughly $650 million. The adjusted effective tax rate is expected to be around 25.5%, while the weighted average share count is anticipated at around 121 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in fresh estimates.

The consensus estimate has shifted 38.73% due to these changes.

VGM Scores

Currently, Humana has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for value investors.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Humana has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Humana is part of the Zacks Medical - HMOs industry. Over the past month, UnitedHealth Group (UNH), a stock from the same industry, has gained 3.3%. The company reported its results for the quarter ended March 2026 more than a month ago.

UnitedHealth reported revenues of $111.72 billion in the last reported quarter, representing a year-over-year change of +2%. EPS of $7.23 for the same period compares with $7.20 a year ago.

UnitedHealth is expected to post earnings of $4.84 per share for the current quarter, representing a year-over-year change of +18.6%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.2%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for UnitedHealth. Also, the stock has a VGM Score of A.

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