Humana Pulls 2025 Earnings Guidance on Slowing Government Medicare Funding

Humana ( HUM ) shares fell more than 5% in intraday trading Wednesday after it pulled its 2025 adjusted earnings guidance due to slower government healthcare spending.

The cancelled profit guidance offset better-than-expected results for the first quarter and a bullish outlook on costs and membership. Humana shares are down by about a third this year, as healthcare insurers grapple with rising costs and payments from the Centers for Medicare & Medicaid Services (CMS) for Medicare Advantage plans that are below what the industry had hoped for .

Humana said Wednesday that looking to 2025, it expects benefit levels, plan stability and choice for seniors to be negatively impacted as a result of the final Medicare Advantage rate notice from Washington, which it said “is not sufficient to address the current medical cost trend environment.”

Because of that, the company explained that it no longer believes that “$6 to $10 of Adjusted EPS growth is the appropriate target range for 2025,” and is “evaluating plan level pricing decisions.”

The warning came as the healthcare insurer reported higher-than-expected first-quarter adjusted earnings per share (EPS ) of $7.23, with revenue increasing 10.7% to $29.61 billion.

Investors also overlooked some good news on expenses. Humana said it benefited from lower-than-planned administrative expenses, with the adjusted operating cost ratio falling to 10.2% from 10.9% a year earlier.

The insurer also said it expects a pickup in membership this year. Humana said it now anticipates 2024 Medicare Advantage membership will climb by 150,000, up from its previous estimate of 100,000. It also reiterated its full-year adjusted EPS of approximately $16.00, while lowering its GAAP outlook to approximately $13.93 from about $14.87.

Humana shares fell 5.2% to $310.62 as of 1 p.m. ET Wednesday.