What Happened?
Shares of health insurance company Humana (NYSE: HUM) fell 8.4% in the morning session after the company's third-quarter earnings report revealed a significant miss on profit estimates, fueling concerns about declining profitability. While the company reported revenue of $32.65 billion, beating analysts' expectations, its GAAP earnings per share (EPS) of $1.62 came in 43.4% below the consensus estimate of $2.86. The pressure on profitability was evident as Humana's operating margin fell to 1.2%, down from 2.5% in the same quarter last year. Adding to investor worries, the company's customer base also fell slightly short of Wall Street’s forecasts. Overall, despite Humana reaffirming its full-year revenue guidance, the sharp earnings miss and shrinking margins led to a negative market reaction.
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What Is The Market Telling Us
Humana’s shares are quite volatile and have had 15 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 16 days ago when the stock gained 2.3% on the news that the company announced a new initiative with Providence, a Washington-based health system, to streamline and secure data exchange in support of value-based care. The collaboration aimed to create a scalable system for seamless data sharing, enabling clinicians to deliver more effective care while reducing administrative tasks for members. Humana's President of Insurance, George Renaudin, stated that the effort would help members spend less time on paperwork and more time on their health. This positive development seemed to outweigh other concerns, including news of a law office investigating claims that the company had downplayed pressures from increased medical costs.
Humana is up 4.5% since the beginning of the year, but at $263.97 per share, it is still trading 15.4% below its 52-week high of $312 from September 2025. Investors who bought $1,000 worth of Humana’s shares 5 years ago would now be looking at an investment worth $598.86.
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