Humana Inc.

2026 performance & near-term outlook (costs, margin, execution): Management said year-to-date performance is “in line with expectations” and remains on track to double individual Medicare Advantage (MA) pretax margin in 2026 (excluding Stars headwind). They guided full-year 2026 medical+pharmacy cost trend to ~7%–8%, noting slight favorability in inpatient. Operationally, the 2Q consolidated operating cost ratio fell 120 bps YoY, with an expectation of ~150 bps full-year improvement—attributed to their transformation/operating model initiatives.

2027 MA bid posture & path to 2028 margin target: Their #1 priority in 2027 bids is margin progression to support a commitment of returning to a sustainable MA pretax margin of at least ~3% in 2028. They expect meaningful progress in 2027, but did not provide bid-specific numeric margin bridge guidance, emphasizing that ultimate results depend on final 2027 membership size/composition. They highlighted that drug trend remains high and is expected to tick modestly higher in 2027, and that they build contingency because bids are set ~6 months ahead and markets can move.

Plan exits (estimated impact) and membership/benefits tradeoffs: For 2027, they expect plan exits impacting ~600,000 members, similar in concept to prior years’ approach, and said they will prioritize higher-performing plans (including those with more value-based care penetration) to reduce disruption and recapture a significant portion of exited members (citing they did so in 2025). They framed this less as a Stars tactic and more as portfolio underwriting margin + capital return optimization.