Humana's Q2 2026 revenue rose 26.2% to $40.9B and diluted EPS rose 27.1% to $5.73 on 23% Medicare Advantage membership growth, but its benefit ratio rose to 91.1% from 89.7% on a Star Ratings revenue cut and costlier new members.
Revenue
$40.9B
+26.2% YoY
Net income
$694M
+27.3% YoY
Diluted EPS
$5.73
+27.1% YoY
Operating margin
3.3%
Overview
Humana's second quarter of 2026 (April–June) was a quarter of very fast growth with thinner profit per dollar of premium. Total revenue rose 26.2% to $40.9 billion, driven by a 23.4% jump in individual Medicare Advantage members (Medicare Advantage is the privately run version of Medicare for people 65 and over). Net income attributable to Humana rose 27.3% to $694 million, and diluted earnings per share (EPS) rose 27.1% to $5.73.
The catch is on the cost side. Humana's benefit ratio — the share of every premium dollar that goes straight back out as medical and drug claims (also called the medical loss ratio) — rose to 91.1% from 89.7%. Put simply, about 91 cents of every premium dollar was spent on members' care, leaving roughly 9 cents to run the company and make a profit. Earnings grew mainly because Humana collected far more premium and spent a smaller share of it on overhead, not because each member became more profitable.
Key metrics
Metric
Q2 2026
Q2 2025
YoY Change
Total revenue
$40,867M
$32,388M
+26.2%
Premiums revenue
$38,834M
$30,716M
+26.4%
Income from operations
$1,360M
$1,098M
+23.9%
Operating margin
3.3%
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Operating margin = income from operations ÷ total revenue. Operating cost ratio = administrative costs (excluding depreciation and amortization) as a share of revenue excluding investment income. Adjusted EPS is Humana's own non-GAAP figure from its earnings release.
Why the benefit ratio went up
Humana's 10-Q names three reasons the Insurance segment benefit ratio rose 130 basis points (1.3 percentage points) to 91.2%:
The Star Ratings hit to revenue. Medicare pays insurers bonus money based on their "Star Ratings" (a 1-to-5 quality score set by the government agency CMS). Humana's ratings for "Bonus Year 2026" came in lower, which cut the premium it receives per member. Lower revenue for the same care cost pushes the ratio up. The filing calls this the "BY 2026 Star Ratings headwind" and lists it first.
New members cost more at first. Humana added about 1.2 million individual Medicare Advantage members during the most recent enrollment periods. The filing says new members "on average, run at a higher benefit ratio as compared to retained members."
Less help from old claims. Insurers set aside estimates for care already delivered but not yet billed; when those estimates turn out too high, the excess reduces current-period costs. That cushion shrank: favorable prior-period reserve development was $53 million in Q2 2026 versus $161 million in Q2 2025 (and $442 million versus $638 million for the first half).
Working the other way, the filing says 2026 pricing — helped by a better Medicare Advantage funding rate from CMS, with "largely stable benefits year-over-year" — more than covered the assumed rise in medical costs, and group Medicare Advantage contracts were repriced for 2026.
Where the revenue came from
Insurance premiums
Q2 2026
Q2 2025
YoY Change
Individual Medicare Advantage
$28,875M
$22,764M
+26.8%
Group Medicare Advantage
$2,851M
$2,260M
+26.2%
Medicare stand-alone drug plans (PDP)
$2,995M
$1,721M
+74.0%
State-based contracts (Medicaid) and other
$3,501M
$3,460M
+1.2%
Total premiums
$38,834M
$30,716M
+26.4%
Membership growth was broad across Medicare. Individual Medicare Advantage grew by 1,224,400 members (+23.4%), including 959,900 members in D-SNP plans (plans for people eligible for both Medicare and Medicaid), up 22.1%. Group Medicare Advantage (plans sold through former employers) grew 27.6% to 727,200. Stand-alone prescription drug plan members jumped 62.6% to 3,946,400. Medicaid and other state contracts barely moved (+1.3% in members).
Premium per member also rose, which the filing attributes to higher Medicare Advantage funding from CMS and a larger federal "direct subsidy" for Part D drug plans under the Inflation Reduction Act — partly offset by the Star Ratings cut.
One figure moved the wrong way: the share of individual Medicare Advantage members in value-based arrangements (where doctors share in the savings or losses on their patients' care) fell to 64% from 68%, even though the number of such members rose to 4,118,700 from 3,542,300. New members are joining faster than they are being moved into these arrangements, which Humana relies on to control costs.
Overhead: where the profit growth actually came from
The consolidated operating cost ratio fell to 9.8% from 11.0%. Operating costs grew only 12.2% ($3,547M to $3,978M) while revenue grew 26.2%. Humana credits spreading fixed costs over far more members, plus its cost-cutting and "transformation" program. That 1.2-point drop in overhead roughly offset the 1.4-point rise in the benefit ratio, which is why operating margin was nearly flat at 3.3%.
The transformation program also costs money up front: $56 million of charges this quarter (severance, asset write-downs and consulting) versus $29 million a year earlier, and $154 million for the first half. Humana says it expects more charges as the multi-year program continues.
Segments
Segment
Q2 2026
Q2 2025
YoY Change
Insurance — income from operations
$820M
$766M
+7.0%
CenterWell — total revenue (incl. sales to Humana's own plans)
$6,790M
$5,537M
+22.6%
CenterWell — income from operations
$466M
$344M
+35.5%
CenterWell — operating cost ratio
92.4%
92.7%
-0.3 pts
Insurance grew operating income only 7.0% on 26% higher revenue — the benefit-ratio pressure above, in one number. For the first half, Insurance income from operations actually fell 3.6% to $2,255 million.
CenterWell — Humana's care-delivery arm (pharmacy, doctors' offices for seniors, and home health) — had a stronger quarter. Primary care revenue from outside customers rose 63.5% to $839 million, helped by acquisitions including MaxHealth, a Florida primary-care group bought in February 2026 for about $908 million. The earnings release says CenterWell Senior Primary Care patients grew by 130,900 (27%) year to date. Profitability improved slightly as earlier work to adapt to Medicare's revised risk-scoring model ("v28", whose final phase-in year is 2026) matured, partly offset by growth in lower-margin specialty pharmacy. For the first half, CenterWell's operating income was up only 2.6% to $755 million because of a weaker first quarter tied to a late-2025 primary-care acquisition and MaxHealth deal and integration costs.
GAAP vs. adjusted earnings
Humana's reported (GAAP) EPS includes several items the company strips out of its "adjusted" figure:
$211 million of non-cash valuation changes on put/call options tied to its minority investments in primary-care partnerships ($1.74 per share), booked in "other expense."
$56 million of transformation charges ($0.46 per share).
$21 million of impairments on minority investments ($0.17 per share).
$8 million of amortization of acquired intangibles ($0.07 per share).
After tax, these bring adjusted EPS to $7.61, up 21.4% from $6.27. Adjusted EPS grew more slowly than GAAP EPS (27.1%) because the adjustments added $1.88 per share this quarter versus $1.76 a year earlier, a smaller gap relative to the base.
Interest expense rose 25.5% to $197 million on higher debt and 2026 financing, and the effective tax rate rose to 25.6% from 24.7%, mainly from state taxes.
Cash and balance sheet
Operating cash flow for the first half was $3.2 billion versus $1.6 billion a year ago. Much of that is timing rather than earnings: the filing points to a larger reserve for claims not yet billed and a $1.05 billion Medicaid state-directed payment that settled just after June 30. Cash rose to about $6.9 billion from $4.2 billion at year-end. Share buybacks were small — $103 million in the first half — with $2.7 billion left on the authorization as of July 28, 2026.
Takeaway: Humana's 27% EPS growth came from volume and lower overhead, not better underwriting — the share of premiums paid out in claims rose 1.4 points to 91.1%. And by Humana's own guidance, the profitable part of the year is behind it: with $17.91 of adjusted EPS already earned in the first half against full-year guidance of "at least $9.00," the guidance allows for an adjusted second-half loss of up to about $8.91 per share, as Medicare's seasonal cost pattern pushes the benefit ratio higher later in the year.
Guidance and outlook
In its July 29 earnings release, Humana:
Affirmed full-year adjusted EPS of "at least $9.00" (versus $17.14 in 2025), which it says reflects the Bonus Year 2026 Star Ratings headwind, net of mitigation. It cut full-year GAAP EPS guidance to "at least $6.52" from "at least $8.36". In the release's reconciliation, the gap between the new GAAP and adjusted figures is mostly the year-to-date put/call valuation charges ($1.47 per share) and transformation costs ($1.27), before tax effects.
Affirmed a full-year Insurance segment benefit ratio of 92.75% (±0.25 points). With the first half at 90.3%, that implies noticeably higher ratios in the second half. The 10-Q explains why this is normal for Humana: members use up their deductibles and out-of-pocket limits as the year goes on, so Humana pays a larger share of claims later in the year.
Affirmed individual Medicare Advantage membership growth of about 25% for 2026.
Won a statewide Illinois Medicaid contract expected to start in January 2027.
A September 1, 2026 8-K reaffirmed the $6.52 GAAP / $9.00 adjusted EPS guidance and said Humana won't comment on its 2027 Star Ratings (which set Bonus Year 2028 payments) until CMS releases them in October.
Our read: The quarter delivered what management promised — the Insurance benefit ratio came in at 91.2% against guidance of "slightly above 91 percent." The bigger questions are ahead. First, whether the roughly 1.2 million new Medicare Advantage members settle toward the lower cost levels of long-standing members; the falling share in value-based care arrangements (64% versus 68%) is a caution sign there. Second, whether the reserve cushion keeps shrinking. Third, and most important for 2027–2028 earnings, October's Star Ratings release: 2026 shows how much a ratings cut can hurt, and Humana is still appealing its challenge to its 2025 Star Ratings in court. The government is also appealing a court ruling in Humana's favor on the Medicare audit rule (known as "RADV") that governs how overpayments are clawed back — the 10-Q says that rule could have a material adverse effect if it stands.