Humana (HUM) Q4 2024 earnings summary

Executive summary

• Adjusted EPS for 2024 met initial guidance at $16.21, with investments in Stars and growth in the latter part of the year; GAAP EPS was $9.98, reflecting higher medical cost trends and lower prior period reserve development.

• FY 2024 revenues grew to $117.8B, up from $106.4B in FY 2023, driven by higher Medicare premiums and membership growth in Medicare Advantage and state-based contracts.

• 2025 outlook reaffirmed, with a continued commitment to achieving at least a 3% margin in individual MA and adjusted EPS guidance of $16.25, in line with 2024.

• New executive team members, including CFO, CHRO, and CIO, introduced to drive transformation and operational improvements.

• Focus remains on four levers: product/experience, clinical excellence, operational efficiency, and capital allocation.

Financial highlights

• FY 2024 consolidated revenues were $117.8B, up 10.7% year-over-year; 4Q24 revenues were $29.2B.

• Nearly 5% membership growth in 2024, despite product repricing to reflect elevated medical cost trends.

• Operating expense ratio improved by 40 basis points in 2024 through care model optimization and streamlining; consolidated operating cost ratio was 11.3% (adjusted).

• Exited unprofitable plans, improving benefit ratios; additional D-SNP losses contributed to margin improvement.

• Medicaid membership expected to grow by 150,000–175,000 in 2025, with incremental margin improvement.

Outlook and guidance

• FY 2025 GAAP EPS guidance is approximately $15.88; adjusted EPS guidance is approximately $16.25, in line with 2024 results.

• FY 2025 consolidated revenues projected at $126B–$128B; Insurance segment $121B–$123B; CenterWell $20.5B–$21.5B.

• 2025 margin improvement driven by plan exits, benefit adjustments, and favorable calendar effects.

• Individual Medicare Advantage membership expected to decline by ~550,000 (about 10%); group MA flat; stand-alone PDP to grow by ~200,000.

• Cash flows from operations projected at $2.4B–$2.9B; capital expenditures at ~$650M.