AI Takeaway
Humana reported strong Q1 FY2026 revenue growth of 23.5% to $39.6B, but operating income fell 12.9% to $1.75B as rising medical costs and SG&A expenses compressed margins significantly.
Revenue
$39.65B
++23.47% YoY
EPS (Basic)
$9.85
-4.46% YoY
Operating Income
$1.75B
-12.91% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Total revenue surged 23.5% year-over-year to $39.6B in Q1 FY2026, up from $32.1B in the prior-year period, reflecting significant growth in membership and premium revenue across Humana's health insurance segments.
Source: Source: 10-Q Income Statement
Operating margin contracted sharply from 6.27% to 4.42% year-over-year, with operating income declining 12.9% to $1.75B despite the large revenue increase, indicating that medical cost trends are outpacing premium growth.
Source: Source: 10-Q Income Statement, Key Ratios
Selling, General & Administrative expenses rose 19.1% year-over-year to $4.02B, adding further pressure to profitability and suggesting increased administrative and selling costs associated with membership growth and operational scaling.
Source: Source: 10-Q Income Statement
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Upgrade to unlockOperating income fell 12.9% despite a 23.5% revenue increase, strongly suggesting that medical costs are rising faster than premiums. Sustained elevation in medical cost ratios could further compress margins and erode profitability in subsequent quarters.
Source: Source: 10-Q Income Statement, Key Ratios
Unlock 4 more detailed risk analysis
Upgrade to unlockReported EPS of $10.31 versus the $10.29 analyst consensus — a +0.2% beat for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $39.65B | $32.11B | +23.47% |
Operating Income | $1.75B | $2.01B | -12.91% |
Net Income | $1.19B | $1.24B | -4.66% |
EPS (Basic) | $9.85 | $10.31 | -4.46% |
EPS (Diluted) | $9.83 | $10.30 | -4.56% |
SG&A Expense | $4.02B | $3.38B | +19.05% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $55.28B | $50.93B | +8.54% |
Current Assets | $38.08B | $34.42B | +10.63% |
Total Liabilities | $36.63B | $33.11B | +10.64% |
Current Liabilities | $21.51B | $18.04B | +19.20% |
Stockholders' Equity | $18.58B | $17.75B | +4.67% |
Cash & Equivalents | $4.95B | $4.25B | +16.49% |
Long-Term Debt | $12.27B | $12.73B | -3.57% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $1.25B | $331M | +278.85% |
Investing Cash Flow | $-2.55B | $314M | -913.06% |
Financing Cash Flow | $2.05B | $1.38B | +48.12% |
Dividends Paid | $107M | $108M | -0.93% |
Share Buybacks | $107M | $9M | +1088.89% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Margin | 4.4% | 6.3% | -1.85% |
Net Margin | 3.0% | — | — |
ROE | 6.4% | — | — |
ROA | 2.1% | — | — |
Current Ratio | $1.771 | — | — |
Debt to Equity | $1.972 | — | — |
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Humana reported Q1 FY2026 revenue of $39.6B, up 23.5% year-over-year, but net income declined 4.7% to $1.19B as rising medical costs and higher SG&A expenses weighed on profitability. Diluted EPS came in at $9.83, down from $10.30 in the prior-year period.
Despite a 23.5% revenue increase, Humana's operating income fell 12.9% to $1.75B because medical costs and SG&A expenses rose faster than premiums, compressing the operating margin from 6.27% to 4.42%. This pattern is consistent with elevated healthcare utilization trends affecting the managed care industry.
Humana maintains a current ratio of 1.77 and cash of $4.95B, indicating adequate short-term liquidity, but its debt-to-equity ratio of 1.97 reflects meaningful leverage with $12.27B in long-term debt. Operating cash flow improved dramatically to $1.25B, up 278.9% year-over-year, which is a positive sign for cash generation.
The primary risk evident from Q1 FY2026 financial data is medical cost ratio deterioration, as operating income fell 12.9% despite revenue growing 23.5%, suggesting healthcare utilization is outpacing premium rates. Additionally, SG&A expenses grew 19.1% to $4.02B, and current liabilities grew 19.2%, both trends that could pressure future profitability if not controlled.
Humana's operating cash flow improved significantly to $1.25B in Q1 FY2026 from $331M in the prior year, a 278.9% increase. However, investing cash outflows surged to -$2.55B from a positive $314M, indicating substantial capital was deployed into investments or acquisitions during the quarter.