What Happened?

Shares of health insurance company Humana (NYSE:HUM) fell 15.3% in the pre-market session after peer UnitedHealth reported underwhelming first-quarter 2025 results as its sales and profits fell below Wall Street expectations. Guidance was the biggest concern. UNH's new full-year earnings forecast came in well below what analysts had been expecting, mainly because the company saw its care (medical costs in its privately run Medicare plans) and funding issues lasting longer. The news cast a shadow over other health insurers with similar offerings, hinting at tighter margins and more uncertainty ahead.

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What The Market Is Telling Us

Humana’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. But moves this big are rare even for Humana and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 2 months ago when the stock dropped 8.2% on the news that the company reported mixed fourth-quarter 2024 results: Earnings and adjusted EBITDA missed Wall Street's expectations. Sales were also underwhelming, exceeding expectations by a narrow margin. Declining customer count didn't help the growth outlook, and the company expected individual Medicare Advantage annual membership to fall by roughly 550,000 in 2025 compared to the previous year. While full-year guidance was ahead of consensus forecasts, it also implied a significant growth deceleration. Overall, this was a challenging quarter.

Humana is up 5.6% since the beginning of the year, but at $266.46 per share, it is still trading 34.1% below its 52-week high of $404.52 from July 2024. Investors who bought $1,000 worth of Humana’s shares 5 years ago would now be looking at an investment worth $714.18.

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