Humana Inc. Q1 FY2026 earnings call

• Product and experience: Emphasizes member growth trajectory on track, membership performing as expected, and will adjust benefits for 2028 margin goal. - Clinical excellence: Talks about STARS outlook for BY28 and strong early start for BY29. - Highly efficient operations: Highlights progress on operating model changes. - Capital allocation: Mentions acquisition of Max Health and Medicaid membership growth. - Insurance leadership transition: George Renadin to retire effective June 29th, 2026, Aaron Martin to lead day-to-day management of insurance segment, John Barger to lead MA operations

Product and experience: Member growth trajectory is on track, membership both new and returning is performing as expected three months into the year, and will adjust benefits to remain on track to deliver the 2028 commitment of returning to a sustainable margin of at least 3%. Clinical excellence: Outlook on BY28 STARS has not changed, confident in returning to top quartile STARS results in BY28; for BY29 STARS, seeing a strong early start with improved member activation and outcomes. Highly efficient operations: Continuing to make progress on operating model changes including centralizing certain teams, expanding outsourcing, and increased automation of processes. Capital allocation: Recently completed the acquisition of Max Health, and Medicaid membership grew by approximately 50,000 lives

• Expect to double individual MA margin in 2026 adjusted for STARS. - Focus on returning to a sustainable margin of at least 3% in 2028 and making progress towards that in 2027. - Maintaining dividend levels and limiting share repurchases to offset dilution from employee stock compensation, intending to increase both when cash flows and funding capacity grow, and pursuing non-core asset divestitures

• Q: Dig into DCP and IBNR, A: Prudent approach to claims reserves given early year and membership growth, early indicators consistent with expectations. - Q: Welsh Carson put call options, A: Decision on options in mid-year, potential cash obligations in 2027 and 2028. - Q: 27 bidding strategy, A: Focus on 2028 margin goal, retention of members, market-by-market approach. - Q: Earning seasonality, A: Impact of PPD levels on MLR, seasonality less pronounced than last year. - Q: CenterWell operating cost ratio, A: Growth in CenterWell, one-time items not repeating. - Q: MA metrics and bids, A: Leading indicators, margin planning, claims work details. - Q: Focus on margins and benefits, A: Larger funding shortfall, cost management on track. - Q: MA product performance and PDP, A: Portfolio performing, PDP in line with expectations. - Q: Operating leverage and cost progress, A: Progress on operating costs, tactical and strategic cost measures. - Q: CenterWell trend and patient profiles, A: Growth in CenterWell, patient behavior in line. - Q: Management processes for initiatives, A: Transformation office set up, supporting business initiatives. - Q: 27 margin setup comparison, A: More mature transformation efforts, broader levers for margin