Humana braces to lose a 'few hundred thousand' members in 2025

Updated at 3 p.m. on July 31

Humana CFO Susan Diamond told investors on Wednesday that the insurer is likely to lose a "few hundred thousand members" as it adjusts to ongoing pressures in the Medicare Advantage space.

On its earnings call Thursday morning, CEO Jim Rechtin said that Humana identified as it built 2025 MA bids "a set of plans" that weren't turning a profit, and did not identify a path to make those plans profitable. So it intends to exit those plans, he said.

Additionally, another crop of plans has been identified as turning a slim profit or posting a slim loss, and the insurer does see opportunity to turn those products around, so is finding benefit cuts or price reductions that can make them more profitable, he said.

For people enrolled in a plan that Humana intends to exit, they in most cases have access to alternative coverage through Humana, Rechtin said. Diamond said those plan shifts may offset some of the anticipated membership losses.

"It's not a small number, within that there is an assumption that obviously we will retain some of those members because as Jim said, in...virtually all of the counties where we're having plan changes, there is another plan option available to our beneficiaries," Diamond said. "So there's an inherent assumption."

Diamond said as the bid process has not yet been finalized, the Humana team can't offer further details on the outlook for 2025 plans. However, once they're filed, they may be able to provide greater clarity later this quarter.


7:30 am on July 31

Humana affirmed its guidance for the year as it continues to face headwinds in the Medicare Advantage (MA) space.

The company reported $679 million in profit for the second quarter, according to its earnings report released Wednesday, down from $959 million in the prior-year quarter. This did surpass Wall Street analysts' estimates, according to Zacks Investment Research.

Humana also brought in $29.5 billion in revenue for the quarter, compared to $26.7 billion in the second quarter of 2023. The company also beat the Street on revenue, Zacks said.

For the first half of the year, Humana posted $59.2 billion in revenue, up from $53.5 billion in the first six months of 2023. Profit was down, however; the company brought in $1.4 billion in the first half of 2024, compared to $2.2 billion in the same period for 2023.

The company reported a medical loss ratio of 89.5% in the quarter, compared to 86.8% in the second quarter of 2023. It said that MLR remains elevated as higher utilization in MA continues to effect performance. 

Another significant headwind were the finalized rates from the Centers for Medicare & Medicaid Services, Humana said, which the company addressed by reducing benefits.

Humana confirmed its guidance for the year, which the company characterized as conservative in the first quarter as these MA challenges impacted performance. It expects at least $16 in earnings per share.

Its stock was down by nearly 9% premarket amid concern about the ongoing MA headwinds.

Newly instated CEO Jim Rechtin posted a letter (PDF) to the company's site accompanying the earnings release, where he outlined four key focus areas that Humana needs to achieve to improve its financial performance in a challenging market.

For one, he said it's crucial to build a product and member experience that meets consumer demand but is also priced with discipline. Then, Humana must operate that plan on a foundation of clinical excellence, "which is the foundation for industry leading margins," he said.

The company must also strive to be efficient in its capital deployments as well as in running its back office.

"These themes are not new. This has been Humana’s strategy, and it’s the right strategy," Rechtin wrote. "But we must bring a renewed operating rigor to it. We will do this with discipline and urgency."