Humana Adjusts Strategy Amid Medicare Advantage Challenges

While the company refrains from offering a full outlook for 2026, it is focused on strengthening its operational foundation to weather uncertainties in reimbursement rates and regulatory changes.

Humana’s latest earnings call has highlighted the insurer’s plan to enhance operational efficiency and clinical excellence to navigate ongoing financial headwinds, particularly in the Medicare Advantage (MA) space.

Talking about the matter, Jim Rechtin, CEO , Humana shared that the company refrains from offering a full outlook for 2026, and it is focused on strengthening its operational foundation to weather uncertainties in reimbursement rates and regulatory changes.

“We need to focus on what we can control, and that includes driving clinical excellence and having an efficient back office. When we do that, we position ourselves for a sustainable, competitive future in the market,” Rechtin said.

Humana's performance in Q4 2024 has shown the effects of mounting challenges. The company reported a significant $693 million loss, up from a $541 million loss in the same quarter of 2023.

Despite this, revenues showed an upward trend, reaching $29.2 billion in Q4, a notable increase from $26.5 billion in Q4 2023. However, Humana’s full-year profits dropped by 50% compared to the previous year, marking a shift in its financial trajectory.

Market Pressures Impacting Medicare Advantage

Humana faces ongoing difficulties with the Centers for Medicare & Medicaid Services (CMS), particularly surrounding Medicare Advantage (MA) Star Ratings, which were released with lower-than-expected scores.

The company, along with other insurers, is involved in litigation with CMS over these ratings. Rechtin acknowledged these challenges but reassured investors that the company is focusing on operational improvements and clinical outcomes to strengthen its competitive position.

“As we continue to enhance our operations, we create a foundation to better manage regulatory challenges and drive better outcomes for our members,” he added.

Strategic Focus for 2025 & Beyond

Humana’s CFO Celeste Mellet, who joined the company in January 2025, said, "We need to be ruthless about stopping things that are not driving better outcomes for our members and better returns for our shareholders."

According to Mellet, the company is making adjustments to its multi-year strategy to improve its agility in responding to challenges.

For 2025, Humana is maintaining its guidance, forecasting earnings of $16.25 per share.

Further, the company expects to lose 550,000 Medicare Advantage members as it exits some low-performing markets. To return to healthier margins, the company’s strategy includes streamlining operations and focusing on higher-performing markets.

Humana’s medical loss ratio (MLR) in Q4 2024 stood at 91.9%, in line with expectations. Utilization trends continue to affect costs, and the company is adjusting its benefit designs to offset the impact of increased medical expenses. Humana continues to expand its reach, with 16.5 million total members across Medicare and Medicaid.