Humana (HUM) Is Down 12.1% After Cutting Full-Year Earnings Guidance Amid Q3 Results – Has The Bull Case Changed?

• Earlier this week, Humana Inc. reported its third quarter 2025 results, highlighting revenue of US$32.65 billion and net income of US$195 million, with a reduction in GAAP EPS guidance for the year to approximately US$12.26.
• Despite revenue growth both for the quarter and year-to-date, the lowering of full-year earnings guidance points to ongoing operational and profitability headwinds for Humana.
• We'll consider how the cut to full-year earnings guidance alters Humana's previously positive investment narrative and growth expectations.

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Humana Investment Narrative Recap

To be a shareholder in Humana, you need to believe in the company's ability to deliver consistent growth in Medicare Advantage and value-based care, while effectively managing regulatory and cost pressures. The recent reduction in full-year earnings guidance signals short-term profitability challenges, potentially impacting the most important catalyst, Humana's drive for operational efficiency through technology and clinical innovation. At the same time, it intensifies the main risk: medical cost trends and margin management, especially given ongoing industry-wide headwinds.

Among recent announcements, Humana’s affirmation of its quarterly cash dividend at US$0.885 per share stands out, underscoring management's intention to maintain shareholder returns. This is especially relevant as investors assess whether the current earnings setback is a temporary blip or part of a longer-term earnings pressure, and whether capital return policies can remain stable through ongoing margin uncertainties.

In contrast, the market may be underestimating the potential effect of regulatory changes on profitability that investors should be aware of...

Read the full narrative on Humana (it's free!)

Humana's narrative projects $150.9 billion revenue and $3.3 billion earnings by 2028. This requires 7.0% yearly revenue growth and a $1.7 billion increase in earnings from $1.6 billion today.

Uncover how Humana's forecasts yield a $295.38 fair value, a 18% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community contributors offered nine different fair value estimates for Humana, ranging from US$211.89 to US$662.11 per share. While opinions span a wide spectrum, keep in mind that medical cost trend risks remain at the forefront of the company’s outlook, shaping future performance and investor sentiment.

Explore 9 other fair value estimates on Humana - why the stock might be worth over 2x more than the current price!

Build Your Own Humana Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Humana research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Humana research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Humana's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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