Humana Q3 2026 Earnings: Revenue Rises as Adjusted EPS Turns Negative

Humana (NYSE: HUM) reported Q3 2026 revenue of $41.16 billion, up about 26% from $32.65 billion a year earlier, while GAAP diluted EPS fell to $1.33 from $1.62. Adjusted EPS swung to a $0.70 loss from earnings of $3.24 per share, and the Insurance segment posted an adjusted operating loss despite a lower operating cost ratio. Humana nevertheless raised its full-year adjusted EPS floor to $9.50.

Core Financial Results

Top-line growth did not translate into stronger underlying quarterly profit. GAAP pretax income increased, but adjusted pretax results moved from a profit to a loss after excluding a favorable noncash valuation adjustment.

Operating cost ratios improved at both the consolidated and Insurance segment levels. However, that expense improvement was not enough to prevent a sharp deterioration in adjusted earnings.

Adjusted figures exclude items including minority-investment valuation changes, transformation costs, intangible amortization and impairment charges.

Business and Segment Performance

The Insurance segment’s GAAP benefit ratio was 93.7%, better than management’s previous expectation of slightly above 94%. Even with the segment operating cost ratio declining to 7.7% from 9.1%, Insurance moved into an operating loss, showing that lower administrative costs did not fully offset pressure elsewhere in the segment’s economics.

Humana’s growth disclosures for CenterWell and Medicaid were presented on a year-to-date basis rather than as quarterly figures. CenterWell Senior Primary Care added 146,800 patients, representing 30% growth, while Medicaid membership increased by 103,600, or 7%. The Medicaid increase was largely attributed to the launch of integrated Duals programs in Michigan, Illinois and South Carolina.

Humana also replaced its previous CenterWell Senior Primary Care joint ventures with Welsh, Carson, Anderson & Stowe with a new venture involving HPS Investment Partners, a BlackRock subsidiary. Management said the new structure improves balance-sheet efficiency, lowers the cost of capital and provides funding for future growth.

Noncash Valuation Gains Widened the Gap Between GAAP and Adjusted Earnings

A $358 million favorable put/call valuation adjustment related to non-consolidated minority investments materially supported Q3 GAAP results. Because Humana excludes this noncash item from adjusted performance, it reduced the reconciliation from GAAP to adjusted EPS by $2.94 per share.

The comparison moved in the opposite direction in Q3 2025, when the corresponding pretax reconciliation adjustment was $97 million. Value-creation initiative costs also declined to $25 million from $267 million. These accounting and transformation items help explain why GAAP pretax income increased while adjusted pretax earnings deteriorated by $631 million and turned negative.

The lower consolidated operating cost ratio—11.3% on a GAAP basis and 11.2% on an adjusted basis—shows progress on expenses. The adjusted loss indicates that cost control alone was insufficient to preserve quarterly profitability.

Earnings Guidance

Humana raised both of its full-year EPS floors, although the increase in adjusted guidance was much smaller than the GAAP revision. Management continues to expect adjusted EPS to decline from the $17.14 reported for 2025 because of the 2026 Star Ratings headwind, net of mitigation measures.

The large GAAP revision is heavily influenced by joint-venture accounting rather than an equivalent improvement in core earnings. Humana’s reconciliation includes an $11.42-per-share favorable put/call valuation adjustment associated with the noncash reversal of an approximately $1.2 billion liability tied to the previous CenterWell ventures. It also includes a $2.14-per-share initial option liability expected to be recorded in Q4 for the new BlackRock-related venture; that expected noncash charge is excluded from adjusted guidance.

Risks Investors Need to Watch

• Insurance profitability: The Insurance segment reported a loss even though its benefit ratio was better than management’s guidance and its operating cost ratio declined. Further changes in medical utilization, claims trends or pricing could materially affect margins.
• Star Ratings pressure: Humana explicitly expects the 2026 ratings headwind to drive a year-over-year decline in adjusted EPS. Lower quality bonus payments can affect revenue, operating earnings and cash flow.
• Medicare regulatory exposure: Humana’s concentration in Medicare products leaves results sensitive to CMS payment rates, risk-adjustment rules and the outcome of its Star Ratings dispute.
• GAAP earnings volatility: Minority-investment valuations and joint-venture option liabilities are producing large noncash swings in reported EPS, making the relationship between GAAP results and underlying operating performance less straightforward.
• Expansion execution: CenterWell and Medicaid membership are growing, but Humana must successfully execute its integrated-care strategy and new joint-venture structure for that growth to support future profitability.

Summary

Humana generated substantial Q3 revenue growth and lowered operating cost ratios, but adjusted earnings turned negative as the Insurance segment moved into a loss. The higher full-year adjusted EPS floor signals some improvement relative to management’s previous plan, while Star Ratings pressure and medical-cost performance remain central operating concerns. Large noncash joint-venture valuation effects will also continue to make GAAP EPS less directly comparable with Humana’s adjusted results.