Humana Draws Retail Focus Ahead Of Q1 Earnings As Medicare Membership Set To Drop

Wall Street expects the insurer to post a 10% drop in Medicare Advantage membership for 2025 but higher premiums to support an earnings beat.

Humana Inc. shares drew attention from retail investors on Tuesday, ahead of its quarterly earnings report due Wednesday, as the insurer faces pressure from a projected 10% decline in individual Medicare Advantage membership for 2025.

The company previously warned that it expects membership to fall by around 550,000 next year, driven by exits from unprofitable plans and select counties. 

This reduction is attributed to planned exits from certain unprofitable plans and geographic markets. ​

Humana's decision to withdraw from 13 Medicare Advantage markets aims to improve profitability amid elevated medical costs and reimbursement challenges. 

The company's Medicare Advantage business has faced pressure due to rising medical expenses and changes in federal reimbursement rates. 

Notably, Humana's Medicare Advantage plans rated 4-star or higher are expected to decline significantly in 2025, potentially impacting future revenues and quality bonus payments. 

Despite that drop, Zacks Equity Research said higher premium revenues may help Humana deliver an earnings beat.

Investors are also watching UnitedHealth Group Inc. (UNH) — the sector's largest player — for read-throughs. 

Users on Stocktwits compared the two, citing UnitedHealth's exposure to Medicare Advantage and its recent challenges following a cyberattack. 

"I think it'll make a run tomorrow with $HUM earnings the next morning," one user posted.

Another speculated a miss by Humana could send UNH shares below $400.

Analysts expect Humana's first-quarter revenue to rise to $32.22 billion from $29.21 billion a year earlier, according to Koyfin. 

EBITDA is estimated at $1.92 billion, a sharp rise from $245 million last quarter, while earnings per share (EPS) are expected to be $10.07 compared with a loss of $2.16.

On Stocktwits, 24-hour message volume for Humana jumped by 1650% amid bearish sentiment.