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Fortune 500

The 300 companies on this year’s list brought in over $12.5 trillion in revenue for the latest 12 months, with the median revenue figure at $24 billion.

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Employees say:"I sincerely appreciate how our company has embraced remote work and has continued to allow it to be an option for associates. Not only does working from home greatly improve my work-life balance and mental health, it gives me the opportunity to work with colleagues around the country, which makes collaboration more enriching and interesting."

Best Large Workplaces in Health Care

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Employees say:"The remote-first policy is the absolute best thing about Humana. Our team does an excellent job at fostering community and connection in a remote workspace and I absolutely love the flexibility associated with remote work. It has truly made work-life balance more manageable and makes me a more productive and satisfied worker."

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GPTW Health Care Large 2023-Humana

Employees say: 
 
"Commitment to equality, not only in their associates but their members-specific needs also. This creates a secure, safe place to work that eliminates a lot of stress in personal and career life."

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F500-2023-042-Humana

The health insurance company that serves tens of millions of customers in the U.S. reported fiscal year 2022 revenue of $92.9 billion, up 10% from the previous year, thanks in part to growth in membership and premiums from its Medicare Advantage plans. 
<ul> 
 	<li>Humana announced plans in February 2022 to reinvest $1 billion into its core business, specifically its Medicare Advantage plan.</li> 
 	<li>In May 2022, Humana’s CenterWell Senior Primary Care and the investment firm Welsh, Carson, Anderson &amp; Stowe announced a joint venture to develop and operate primary care clinics for Medicare patients, the second such JV between the two partners.</li> 
 	<li>In 2023, Humana anticipates strong growth from its privately run Medicare Advantage program due to high retention and a projected expansion in new members.</li> 
 	<li>Humana has climbed 10 spots on the Fortune 500 list in the last four years.</li> 
</ul>

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F500 2022-Humana

Founded in 1961, Humana is the fifth-largest health insurance company by membership in the U.S., offering coverage for over 20 million Americans. The company’s revenue grew to $83.1 billion in 2021, a 7.7% increase in revenue from 2020. Much of that growth was driven by Humana’s Medicare Advantage programs, which enroll roughly 5 million people; the company projects that membership in those programs will grow by another 8% in 2022. In April 2022, Humana announced the sale of a 60% stake in KAH Hospice, the nation’s largest home health and hospice provider, for $2.8 billion to private investment firm Clayton, Dubilier &amp; Rice.

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G500 110 Humana

Health insurers have been looking like pretty good bets in the short term. A lot of that has to do with a suspension of health insurance industry fees, designed to reduce the industry’s tax burden, which was implemented in 2019. But Humana owes much of its own recent success to its focus on lucrative for-profit markets like Medicare Advantage, where the company expects membership to swell by more than 10% over the coming year. In May 2021, Humana plotted its next big evolutionary move by obtaining full ownership of home health care services firm Kindred at Home—a leader in a space that’s likely to see continued growth, given the steady aging of the overall population and the normalization of nonhospital care during the pandemic.

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F500-2021-41-Humana

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G500-2020-166-Humana

In 2019, the health insurer's consolidated revenues grew to nearly $56.5 billion, a more than $8 billion spike from the previous year. Like other insurers, Humana was able to take advantage of the suspension of a health insurance industry fee, which lowered its tax burden. The company also boosted its earnings-per-share numbers with the help of stock buybacks. Humana’s dedication to the lucrative Medicare Advantage market, where it has captured some 18% of enrollment, continues to serve it well.

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Humana

Humana is yet another health insurer which climbed the ranks in the latest Fortune 500 list. In 2019, the company’s consolidated revenues grew to nearly $56.5 billion, a more than $8 billion spike from the previous year. Like other insurers, Humana was able to take advantage of the suspension of a health insurance industry fee, which lowered its tax burden. The company also boosted its earnings-per-share numbers with the help of stock buybacks. Humana’s dedication to the ever-lucrative Medicare market, as a for-profit insurer, continues to serve it well.

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Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Best Workplaces In Health Care

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A health insurance company, Humana is one of the largest administrators of Medicare Advantage, a U.S. government program that provides health care to older Americans via private insurers. Humana plans are available in nearly 3,000 U.S. counties, the most of any Medicare Advantage provider. Humana also runs state-based Medicaid plans for lower-income Americans; CenterWell primary care centers for seniors; as well as home health and hospice businesses.

Q2 2026

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Humana (HUM): Company Profile, Stock Price, News, Rankings

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Good day, and thank you for standing by. Welcome to the Humana Second Quarter Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to Lisa Stoner, Vice President of Investor Relations. Please go ahead.

Thank you, and good morning. I hope everyone had a chance to review our press release and prepared remarks, which are both available on our website. We will begin this morning with brief remarks from Jim Rechten, Humana's President and Chief Executive Officer and Chief Financial Officer, Celeste Mele. Following these remarks, we will host a question and answer session where Jim and Celeste will be joined by George Rennaden, President of Humana's Insurance segment. Before we begin our discussion, I need to advise call participants of our cautionary statement.

Certain of the matters discussed in this conference call are forward looking and involve a number of risks and uncertainties. Actual results could differ materially. Investors are advised to read the detailed risk factors discussed in our latest Form 10 ks, our other filings with the Securities and Exchange Commission and our second quarter twenty twenty five earnings press release as they relate to forward looking statements along with other risks discussed in our SEC filings. We undertake no obligation to publicly address or update any forward looking statements in future filings or communications regarding our business or results. Today's press release, our historical financial news releases and our filings with the SEC are also available on our Investor Relations site.

Call participants should note that today's discussion includes financial measures that are not in accordance with Generally Accepted Accounting Principles or GAAP. Management's explanation for the use of these non GAAP measures and reconciliations of GAAP to non GAAP financial measures are included in today's press release. Any references to earnings per share or EPS made during this conference call refer to diluted earnings per common share. Finally, the call is being recorded for replay purposes. That replay will be available on the Investor Relations page of Humana's website, humana.com, later today.

With that, I will turn the call over to Jim Rechten.

Thank you, Lisa. Good morning, everyone, and thank you for joining us. As you've already seen, we delivered a good second quarter and first half relative to our expectations. The outperformance was driven primarily by CenterWell Pharmacy as well as better than expected individual MA membership. Our second quarter medical cost trends were in line with expectations.

And given these results and our solid first quarter, we are raising our full year 2025 EPS outlook from approximately $16.25 to approximately $17 While we still have challenges to navigate, the external environment this year continues to evolve largely in line with our expectations, and we are executing against our plan. There's actually a lot happening, and I have a great deal to cover today. So let me just remind everybody that I'll frame my comments as I typically do around the four basic drivers of our business. The first driver is MA product and experience, which drive customer growth and retention. Second is clinical excellence, which delivers clinical outcomes and medical margin.

Third is delivering a highly efficient back office and fourth is capital allocation and growth in both Cinerwell and Medicaid. Let me start with our Medicare product and experience. Individual MA membership, as I mentioned before, has declined less than we expected. Part of this improvement is that we've seen more bounce back members. And so these are members who chose another plan last autumn during AEP, but have come back to us during OEP and Roy.

These members typically have better year one economics because we know them and we can provide better clinical care. As you may remember from Investor Day, our retention strategy is an important lever for us on our path to a more sustainable and reliable margins. And so we're excited to see these members returning to Humana. We are also taking aggressive steps to continue to improve the experience for our members in an effort to build upon this performance. There's a couple of examples.

The first is, last week, Humana announced new actions to simplify and streamline the prior authorization process. This builds on the recent commitments made by multiple health plans, including Humana, that announced by AHIP in June. Humana's actions, go even further than our initial commitment through AHIP, will help ensure our members get the right care in a timely manner, while also reducing administrative burdens for physicians as well as improving the experience for our members. I think it's important that we remind everyone that we believe that prior authorization is an important check and balance to ensure appropriate care. It's just that it should be invisible to our members.

In another example of our focus on experience, we have entered into a new partnership with the healthcare software company Epic. This partnership makes Humana the first health insurer to integrate health plan information directly into MyChart's accounts. Why is this important? This brings health plan coverage information into the same place where members frequently go to manage their care decisions. In essence, it provides increased transparency to the cost of care.

We know that visibility into the cost of care when care decisions are being made is a big deal for our members, and we want to do everything we can to provide that visibility and transparency. Now let me turn to clinical excellence. We are going to focus today almost exclusively on STARS. We'll hit BY '27 28 along with the STARS litigation. I'll start with the STARZ litigation.

The court dismissed our case a couple of weeks ago on administrative grounds. They did this because we had not exhausted the optional appeals process with CMS when we originally filed our lawsuit. The appeals process with CMS is now over, and so we have refiled our STARS case in the same court. As we wait for a new ruling, our path forward remains the same. We are continuing to press ahead with urgency on BY-twenty seven and BY-twenty8.

Operationally, we are continuing to make strong progress. We are closing gaps in care and driving both quality and experience for our customers. And so there's no change in our message or our tone here today. As a reminder for BY27 results, we will be entering a quiet period when we receive planned preview data. So after today's call, we will not be discussing BY27 STARS until the final results are released by CMS in October.

Shifting to the area of a highly efficient back office, we have a lot of activity happening in this area right now. During Investor Day, we shared that we were focused on transforming the organization, transforming the organization to enable scalable growth and drive operating leverage. This is a multiyear transformation, and it will include both near term tactical cost programs, but also longer term efforts to change how we operate through increased automation and use of technology. This week, we notified eligible employees of an early retirement program to help accelerate efforts with our operating model and to streamline costs. In the next few months, we will also be expanding our efforts to contract out additional aspects of our shared services functions.

We are doing this in an effort to streamline and optimize outsourcing capabilities. We will also be evolving some of our employee benefits to bring them in line with industry standards. I really want to emphasize that while these changes will reduce cost, the intent is to enable our broader strategy. This will be a multiyear transformation that will be taken at a measured pace, and the objective is to create a more nimble technology enabled organization that can respond more quickly to consumer needs and expectations. Now let me turn to capital allocation and the growth of our Medicaid and Cinderwell businesses.

We're seeing exciting progress in both businesses right now. Strategic expansion of Medicaid continues with the launch of the Virginia contract. This brings our active footprint to 10 states with three more states awarded and pending. I know there's been a lot of curiosity about the impact of the Big Beautiful Bill. Our footprint in Medicaid is largely and it tends to be skewed towards the LTSS or long term support services population.

These geographies and this population are less impacted by the bill. So while the bill will certainly have some impact, we expect it to be more muted for us versus Medicaid broadly. We remain committed to our Medicaid strategy and the assumptions we made at Investor Day about margin progression. Finally, we are encouraged by our Cinerwell Pharmacy outperformance year to date. This has been driven by two things.

We've seen higher direct to consumer volume and we have seen favorability in specialty pharmacy, which is seeing higher volumes and more favorable drug mix than expected. So to conclude, all in, we are pleased with our solid performance year to date and our improved full year 2025 outlook. As we look ahead, we remain focused on delivering a more stable and compelling MA margin. We continue to have conviction that the strong core fundamentals and growth outlook for MA will allow us to deliver compelling shareholder value over the long term. And with that, I will turn it to Celeste for a few remarks before we go to Q and A.

Thank you, Jim. Our second quarter results reflect solid execution across the enterprise as we focus on returning the business to its full earnings power. And while we remain appropriately prudent in our assumptions heading into the back half of the year, to date the underlying fundamentals of the business including membership and patient growth, revenue and medical cost trends are developing in line to better than expected. We are pleased that our performance and outlook support our improved full year adjusted EPS outlook of approximately $17 And it is important to note that this outlook contemplates an additional approximately $100,000,000 in incremental investments to improve member and patient outcomes and support operational excellence. The additional investments are focused in areas where we have seen strong returns to date, such as pairing in home visits with virtual health to better engage members who don't have a primary care provider and closing gaps in care.

Turning to the balance sheet and capital deployment. We continue execute on our efforts to increase the efficiency of our balance sheet and fortify our foundation and are making the progress on the sale of non core assets and optimizing our capital requirements. We will share more on these efforts as plans finalize in the coming months. With respect to capital deployment, we will remain prudent in our near term approach, taking a balanced view to evaluating capital investments and returns. As I shared with you at our recent Investor Day, we intend to focus on maximizing shareholder value by executing on share buybacks to offset dilution from stock based compensation, growing individuals growing dividends in line with earnings as they recover, and over the long term executing on accretive M and A for which we have a proven track record.

Accordingly, we completed approximately $100,000,000 of share repurchases in the second quarter to offset dilution from employee issuance and do not have additional repurchases contemplated for 2025. During the quarter, we also opportunistically bought back approximately $200,000,000 of debt due in 2027 using the proceeds from our bond issuance earlier this year. Looking ahead, we will continue to manage the levers within our control, focused on delivering best in class clinical excellence, transforming the company to enable scalable growth and driving enhanced operating leverage. We believe that these efforts will allow us to expand margin and realize the earnings potential of the business while driving better outcomes for our members, patients, associates. With that, I will turn the call back to Lisa to start the Q and A.

Great. Thank you, Celeste and Jim. Before starting the Q and A, just a quick reminder for fairness to those waiting in the queue, which we do have a long list in the queue, we ask that you please limit yourself to one question. So operator, with that, if you'll please introduce the first caller.

Our first question comes from Ann Hynes with Mizuho.

Hi, good morning. In your prepared remarks, you highlighted that cost trends were in line or better than your expectations. Can you talk about what cost trend is actually better than your expectations? And within that, can you just talk about how Medicaid is doing since some of your peers are having some trend problems in that book of business? Thanks.

Yeah. Thanks, Anne. We called out that our the results we are seeing generally are in line to better than our expectations. So on the revenue side, we are seeing better than expected performance on you know, in CenterWell, we saw higher than expected patient growth earlier in the year. And as Jim called out, we have seen better than expected revenue growth in turn on the pharmacy side of things.

On the insurance side, membership growth also as Jim called out, well, it's going to be better than expected. Our guidance now assumes membership decline of around 500,000 up to $500,000 versus $550,000 before that is driving higher revenue with an in line MLR. In terms of our overall medical and operating costs, with the exception of the investments we called out earlier, the those are trending in line within the range of our expectations, in some cases on the on the better end of our expectations. And then to your last question on Medicaid, Tim talked a bit, and I'll turn it over to George about the states we're in and the programs that we're in, which is really allowing our business to deliver on what we expected for the year. I'll turn it over to George to talk more about that.

Yeah. Thanks, Celeste. So as you think about our Medicaid business, as Jim said, he talked about the footprint, but there are really a few reasons why you can't extrapolate across the whole industry that the Medicaid performance. And really, that's a result of three significant differences that you have to think about with Medicaid. One is the products that we're in.

And so as Jim said, we're much more oriented towards the LTSS population than the traditional Medicaid population. So that's one factor that you have to think about. The second is the state footprints. And as you think about the state footprints and where we are, we are in states that, we have worked very well with the states on the rate development, and things are moving well there. Now one of the things you may say is, well, you're large in Florida.

I I think that one of our competitors did acknowledge that their Florida problem was really specific to a population that we don't have exposure to. So, again, you have to think about product first. You have to think about the state footprints. And then a third part that is really important to think about with Medicaid is the network structure. And we believe that our network structure with our heavy emphasis on value based care creates a differentiator versus where we are elsewhere.

So with regard to Medicaid, we're really proud of the development we've had and the expansion we've had into now 10 full states and three more coming online. One thing, that we should also mention is, for example, we now have a new Illinois contract that will be coming on. That's a big opportunity for us that emphasizes our prioritization of Medicaid where we're focusing very hard in states that are linked where the Medicaid and DSNPs are linked and where Humana has an outsized dual membership to protect. So we feel good about developing. We've seen Medicaid to date.

Yeah. I think just to sum it up for you, Anne, Medicaid is running in line with our expectations. We're continuing to make progress on, new states, and and we feel like it's good about where we are. Thanks.

Our next question comes from Kevin Fischbeck with Bank of America.

Great. I was wondering if you could talk a little bit more about the Part D performance and then any comments you have on the CMS regulations that were just released a couple of days ago and how you're thinking about that for 2026? Thanks.

Hey, I will talk about performance to date and then I'll turn it over to George to talk about the recent CMS announcement. So first, not a lot to say about Part D, the member mix and Rx trends are tracking in line with our expectations today. If you recall, we did have we were expecting low double digit trend and on the Rx side of things and it's, you know, in line with our expectations. We haven't seen any unexpected behavioral changes to date and members are hitting their move so far in line with the expectations. So the ramp over the course of the year as members work through that.

And I'll turn it over to George on additional comments.

Yes, Les. There's not a lot more to say other than, you know, we did consider the IRA changes in our bid strategy and then how we set our guidance, especially drug trend is high. I mean, let's just, say that it is because it is. And, but that's as expected. And that's the good news is developing as we expected.

We're confident pricing strategy that we've seen. Our copay versus coinsurance structure is working out the way we intended. So this year, we're seeing PDP develop as we expected, whereas as Celeste said, members are moving through the quarters as we expected, so that's good. On the pharmacy for next year and on some of the things that you're seeing in the, for example, CMS released the recent rules and the national average bid, etcetera. Given the uncertainty of the IRA for '26, we did bid back in survey given the changes in the risk orders.

It's come in the way the risk orders are working. The way that the national average bid has worked is a little bit better than we expected, which is positive. From what we are seeing in the direct subsidy, the industry part d appears to be more consistent next year and within the range of our expectations to slightly better.

Our next question comes from Andrew Mock with Barclays.

Hi. Good morning. One of your peers noted a pretty meaningful pullback in the individual PPO market next year. Just curious how you're thinking about the implications of that to your own membership growth and margins for next year? Thanks.

Yes. Hey, let me make a couple of quick comments, and then I'm going hand off to George to walk you through some of the specifics. First of all, it's a big question I know for the entire industry right now, given all the discussions that are out there. And that there's really, I think, two questions underneath the question. One is, we recognize that there's a lot of talk about, hey, is there a unattractive population from a risk standpoint that tends to bounce around from plan to plan? And then second, why do we seem to feel good about where we're at as we both this year and as we head into next year. And the, you know, the the high level response to that is and we try to convey this at the Investor Day is we don't see bad membership.

We see bad benefit packages and product. And so if your product and your benefit structure is in the right place, all members can be good, profitable, attractive membership. And we feel like we have taken good steps in the last two years to put our product in a good place. And again, we feel good about that. We're seeing that this year.

We feel good about the trajectory into next year. And to the extent that others in the industry did not take similar steps in the past or taking it now, we think that's good for everybody. We think that's good for the sector. We think that's good for the industry. We think that is a positive thing.

And that at the highest level is kind of how we're thinking about it. But let me let George walk through some of the detail behind that. George?

Yes. Thanks, Jim. As Jim said, I understand why everyone is thinking about this question. But let me start by reminding you of the market dynamics that we've played out over the last few years. We were transparent almost two years ago now in discussing utilization trends we are seeing and the impact of v '28, and we made adjustments each year since then.

We're the only plans to reduce benefits in any way in '24, and we reduced more benefits and more significant than just about all of our competitors in '25. In addition to that, we executed on a combination of plan of benefit county exits impacting 550,000 members. Given these two rounds of significant benefit cuts, we have a significant gap to peers benefit value while some peers held their benefits stable or even invested more in their benefits. Now it's important to look at the granular MACFAT data. I know a lot of you have pulled that middleman MACFAT information, but you have to isolate the growth plans.

Because if you simply look at the averages without taking out the legacy plans that no one's really selling anymore, you'll get an inaccurate view of how the plans compare. However, if you evaluate the growth plans, those plans you actually have seen growth on over the last couple of years, you will see the significant gap to our peers that has resulted from the two years of benefit reductions we've implemented. And, additionally, we also did plan county exits for 2025 and impacted 560,000 members. We've recaptured 40% of those members in other MA offerings. Our goal, if you'll recall, was 50%, and we were been happy with even more recaptured because those plans, we feel confident, are being priced correctly.

So keep in mind this 40% recapture rate of these exited members as you hear the 2025 trends that we're, saying today are tracking in line with expectations. To reiterate, when members rejoined us in plans that were priced appropriately considering the funding and medical cost trends, were tracking in line with expectations that we set out in our guidance. We have also specifically evaluated how those recaptured members and plans are performing, and we feel good about our benefit structure and the members we recaptured where we price them for the long term value. And for 2026, our benefits are largely stable. In some places, we may have invested a little bit, and in others, we may have pulled back some.

But even with the significant cut by peers, if they do that for '26, we still anticipate having a gap to the next richest benefit in the market based upon an in-depth analysis of our competitors' opportunities under the various bid rules, including the TDC rules. So the point is we continue to feel good about the current run rate of our plans and are confident that our plans are priced appropriately given the funding environment cost trends that we're all experiencing even should we have greater growth.

Our next question comes from Steven Baxter with Wells Fargo.

Yeah. Hi. Thank you. I was hoping you could speak to what you saw in terms of inpatient utilization trends in Medicare Advantage during the second quarter? For context, one of your competitors spoke to an accelerating trend in the second quarter, so it'd good to get your perspective on your data that you have to date. Thank you.

Yeah. Thanks for the question. So on the inpatient side of things, you know, it's things are trending in line to on the better end of our expectations when you take into account both admissions and the cost per unit. So we're not seeing an acceleration of anything, if anything, you know, the beginning of the year because of the timing of the flu season was a little bit higher, but in line with our expectations. So we're we're, you know, things are trending as we said at lunch.

Our next question comes from Justin Lake with Wolfe Research.

Thanks. Good morning. I thought I'd take a shot at getting the latest on stars. I understand you're gonna go quiet, and I know you don't have the cut points yet, so there's no way to know what your stars are specifically gonna do. But I do believe that plan preview one has gone out.

And so you have a decent idea or at least a starting point in terms of how your own performance looks. And I'm you might have might expect there's a lot of a lot of focus on this. So, you know, would love to know if you could share with us here how your own performance has been in STARS? Do you feel like you've taken when we see the final data, regardless of how the cut points end up and therefore how your STARS end up, will investors be able to see a pretty strong step forward in terms of underlying performance in your star metrics? Thanks.

Yes. Hey, Justin, Planned Preview one data is not out. And honestly, if it was, we would not be talking about BLY27 at all. So it is not out at this point. And so we do not have any or if it is, we're not aware.

But I don't think it's out. And so we don't have any additional visibility. Look, what I'd say, and this is going to be consistent with what I've said in the past, we were behind where we needed to be back in September, late September, early October last year. We have made really good operational progress. We genuinely feel good about it.

And you will see the underlying metric performance you will see improvement in the underlying metric performance, meaning if you go metric by metric, our performance has gotten better. It really is a question of how much has the industry improved along with us and therefore, are the cut points. And at this point, with the lack of PP1 data, we just don't have visibility into that, which again is why we will enter a quiet period here over the next couple of months as that data does become available.

Our next question comes from Erin Wright with Morgan Stanley.

Great. I was wondering if you could talk a little bit more about the specialty pharmacy strength and what was kind of driving that and some of the Part D dynamics that kind of flow through there from an IRA perspective? How is that kind of playing out relative to your expectations at this point?

Hey, Erin. So on the specialty pharma, and I was just saying that CenterWell pharmacy business in general, part of what's driving our outperformance this year is strategic changes to how we're organizing and marketing that business. So we've we've invested a lot in building strong partnership with farmer companies, and that's done a couple of things for us. One, it's creating this new opportunities through this direct to consumer model. That's the Novo partnership we have that we've also partnered with Row and Weight Watchers to sell some GLP-1s.

We expect to see more of this type of business over time. We're excited about the progress this year. It's coming ahead of our expectations. The second piece that's driving outperformance, I should say that the second piece is generally there's broader outperformance from what we understand in specialty in the industry this year, but our specific performance is further boosted by winning additional access to multiple limited distribution drugs that we previously wouldn't have been able to access. So this is really driven by the partnerships I called out.

In the past, other pharmacies have gotten them and we have been excluded from that and now we are included. So really excited about some of the progress and the momentum in that business. In terms of PDP trends in general, as I called out earlier, the member mix and the Rx trends are tracking in line with our expectations, and there haven't been any unexpected behavioral changes.

Our next question comes from Joshua Raskin with Nephron Research.

Last quarter, you spoke about, I think, a couple of 100,000,000 investments that were mitigating upside to the guidance. And I believe, Celeste, I heard you say there was another $100,000,000 I want to confirm that's incremental spend that is in addition to the couple of 100 from 1Q? And then I'm curious, why not invest more instead of letting it flow through the guidance this quarter?

I do think you might ask that question. So but we that is right. We are confirming your question. It is an incremental 100,000,000. We see a lot of opportunity to invest across the business really focusing on our transformation where we have incremental investments in some of our member retention work, AI, general operational efficiencies, a little bit on stars where we're seeing high performance.

The there you know, we we are looking at where it makes sense to spend money. We don't wanna just spend money to spend it. We're not gonna spend it where there aren't good returns. Will we continue to look for additional opportunities? Absolutely.

And but we are spending that $100,000,000 where we think we can really drive a return and accelerate some of our transformation work and potential upside in starts.

Yeah. Hey, the one thing I would just add to that is, we've pulled some investment forward. So things we thought we were going to do next year got pulled into this year. But ultimately, you run into just a limit on how much of that you can do, how much can you operationally absorb in any given period of time. We'd love to be pulling more forward.

But right now, we're digesting the investments that we're making. That's a big part of it as well.

Our next question comes from AJ Rice with UBS.

Hi, everybody. Just wanted to ask about two quick things related to CenterWell. You continue to grow that membership on the value based primary care side and seem to be hitting your metrics there. I wonder, you know, one thing you emphasized is that you're member agnostic where maybe some of your other peers in that space are more focused on the medically complex. Is that part of why you're seemingly doing better?

And then I just would also consider, well, ask, are you have any update on home health rule? I know you're moving that to more value based as well, but I think you're still one of the biggest fee for service providers in the proposed rules challenging. It's just sort of hard to know how much that's likely to impact the overall enterprise given it's still, even though you're big in that space, relatively small in terms of the entire enterprise.

Yes. So let me on your first question on patient growth, it's really we've opened more clinics. Those clinics are ramping. They're doing well. It's a combination of word-of-mouth and marketing.

There isn't a particular kind of patient that's driving higher than expected growth. You know, we're pleased with what we're seeing and even with the higher patient growth, you know, trends and our expectations for that business are consistent with what we would have thought. In terms of home health, yeah, we're disappointed by the proposed six plus percent net rate reduction. We really don't think it's reflective of the wage and other inflation, that the industry is experiencing. Labor makes up almost 75% of that rate, and the rate's supposed to be tied to that.

We also had anticipated that CMS would eventually implement a behavioral adjustment. We did not anticipate it anticipate that it would be as high as proposed. It also say the data is supposed to be collected through the '26 and then analyzed then. So data is still being collected. So we believe it's early to make this adjustment.

We're continuing to advocate and educate the administration on the need for a reasonable home health reimbursement. And we're evaluating the impact in our home health businesses as proposed, but we do have a natural hedge in our insurance business. It wouldn't fully offset any if if this is implemented as proposed, it wouldn't fully offset it, but we believe we have other levers at the enterprise level that can absorb the headwind that isn't naturally offset by insurance.

Our next question comes from Ben Hendrix with RBC Capital Markets.

Hey, thank you very much. Just want to go back to the commentary you made on MA benefit actions in 'twenty four and 'twenty five and the more conservative approach you have taken versus some peers. To what extent could that put you at a disadvantage from a member experience perspective ahead of STARS? And can maybe you can remind us what types of investments you're making right now that could mitigate some of that and lend some confidence in reaching that your targets for the '28 bonus year?

We are monitoring this closely is where I would start. Certainly, any time that you take benefit actions, it does create some abrasion with members. We have been extremely active and diligent in essentially taking offsetting operating actions. So making sure that we're being very clear in how we communicate and explain the changes to our members, making sure that we're responsive to their concerns, etcetera. And all in all, we feel pretty good about where we are at on that specific item, meaning member experience related to cuts and benefits last year.

Humana (HUM) Q2 2025 Earnings Call Transcript

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