Humana is gearing up for another year of membership growth in Medicare Advantage, after seeing strong early results in the ongoing open enrollment season for 2027.
So far, sign-ups have been more robust than Humana predicted, CEO Jim Rechtin told investors on a Friday morning call to discuss the insurer’s third quarter. Humana’s recapture of members affected by plan exits is “particularly strong,” but the insurer is also bringing on more new members than planned, Rechtin said.
The CEO said it was too early to project the size of MA membership growth. But any growth at all is a departure from the previous expectation that Humana’s membership would stay flat or decrease in 2027, after the insurer slashed its plans on offer. About 600,000 seniors — 8% of its 7.2 million MA members — were affected.
MA is Humana’s bread and butter, accounting for 40% of the insurer’s membership but 80% of its premiums. As such, the Kentucky-based insurer has outsized exposure to pressures in the privatized Medicare program — and there have been a lot of them over the past few years, as seniors utilized more expensive care coming out of the coronavirus pandemic.
In response to shrinking margins, MA carriers culled plans and cut benefits coming into 2026, leading most to shed members this year.
Humana was the exception. The insurer trimmed plans but retained more generous benefits than its competitors for 2026, causing more than 1 million new seniors to flock to its coverage. That growth raised eyebrows for investors, who were concerned the new members would saddle Humana with spending well above what the insurer would be paid by the government for overseeing their care.
Though that cost tsunami never materialized, Humana’s results in the first half of the year have been humdrum compared to its peers. Other publicly traded insurers have posted a flurry of beat-and-raises in the first and second quarters, while Humana has performed largely in line with expectations and kept its guidance flat.
Another year of membership growth could further muddle the insurer’s margin recovery plans. But Humana still expects to increase its MA profits next year, executives said on the call.
Membership growth won’t be as intense as it was in 2026. And growth isn’t because the insurer’s plans for 2027 are overly generous, Rechtin said. Instead, the outperformance is due to brokers doing a better job of shunting seniors into Humana’s plans, after the insurer reshuffled its distribution channel partners.
Some turnover among smaller plans could also be creating an opportunity for larger players to snap up members this open enrollment period, CFO Celeste Mellet added.
A number of smaller MA carriers — including Providence Health Plan, Memorial Hermann Health Plan and Central Mass Health — are bowing out of the market for 2027, citing cost pressures and regulatory uncertainty.
And since Humana shuttered plans with lower capital returns, any new members should land in plans that generate higher profits, according to Mellet.
“We have significantly improved our product position and price per margin. That was our No. 1 priority in terms of our approach to bids this year,” the CFO said.
Rechtin and Mellet declined to provide specific margin guidance for 2027, given it’ll depend on where membership lands. But Humana is well on track for meaningful margin recovery next year, and to reach its goal of a 3% MA margin in 2028, they said.
“We’re happy with what we’re seeing,” Mellet said. “We would expect to be well into the profitability range.”
Looking forward, Humana is also buoyed by a dramatic boost to its MA quality ratings for 2027, which will generate valuable bonuses and other advantages for the insurer in 2028.
Humana suffered a major ratings collapse two years ago, which has dragged on the insurers earnings in 2025 and 2026. But the percentage of Humana members in plans rated 4 stars or above rocketed from 41% in 2026 to 93% in 2027, an achievement that could net Humana billions of dollars in extra payments in 2028.
The stars results are close to the best Humana has ever achieved, according to Rechtin. Humana plans to invest the windfall to improve clinical results and customer experience, but will also pass some through to shareholders.
“We have just one headline today and that is that we are in a good place,” Rechtin said.
Overall, Humana reported profit of $162 million on revenue of $41.2 million in the quarter. Profit was down 17% year over year despite 26% revenue growth — though, analysts said Humana performed better than expected, thanks to better controlled medical costs and strong investment income.
Humana raised its 2026 guidance for the first time this year on the results. The insurer now expects adjusted earnings per share of at least $9.50, up from its previous guidance of at least $9.
Humana’s expectations for non-adjusted earnings per share more than doubled, to at least $15.09 from at least $6.52.
