Health insurance company Humana (NYSE: HUM) announced better-than-expected revenue in Q3 2026, with revenue up 26.1% year on year to $41.16 billion. On the other hand, the company’s full-year revenue guidance of $160 billion at the midpoint came in 1.7% below analysts’ consensus estimates. Its non-GAAP loss of $0.70 per share was 30.3% above analysts’ consensus estimates.

For more on Humana, read our free full research report.

Revenue growth

A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones sustain growth for years. Over the last five years, Humana grew its revenue at a solid 13.7% compounded annual growth rate. Its growth surpassed the average healthcare company and shows its offerings resonate with customers.

Long-term growth matters the most, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Humana’s annualized revenue growth of 16.5% over the last two years is above its five-year trend, suggesting demand was strong and recently accelerated.

We can better understand the company’s revenue dynamics by analyzing its number of customers, which reached 18.04 million in the latest quarter. Over the last two years, Humana’s customer base averaged 8.8% year-on-year growth. Revenue growth outpaced customer growth, indicating that the average customer spent more each year on the company’s products and services.

This quarter, Humana reported strong year-on-year revenue growth of 26.1%, and its $41.16 billion of revenue topped Wall Street’s consensus estimates by 0.7%.

Looking ahead, sell-side analysts expect revenue to grow 7.8% over the next 12 months, according to S&P, a deceleration versus the last two years. Its growth trajectory remains satisfactory given its scale and suggests the market expects its products and services to succeed.

Adjusted operating margin

Adjusted operating margin is one of the best measures of profitability because it shows how much a company earns after subtracting all core expenses, like marketing and research and development. It also removes various one-time costs to give a clearer picture of normalized profits.

Humana was profitable over the last five years but held back by its large cost base. Its average adjusted operating margin of 3.3% was weak for a healthcare business.

Looking at the trend in its profitability, Humana’s adjusted operating margin decreased by 3 percentage points over the last five years. The company’s two-year trajectory also shows it failed to get its profitability back to the peak as its margin fell by 1.2 percentage points. Humana still has strengths, but there is room to improve its profitability.

This quarter, Humana’s breakeven margin was 0.3%, down 1.8 percentage points year on year. The reduction was modest, indicating that the company’s overall cost structure has been relatively stable.

Earnings per share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth. For example, a company could inflate its revenue through excessive spending on advertising and promotions.

Humana’s EPS declined by 4.9% annually over the last five years while its revenue grew by 13.7%. This indicates the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

A closer look at Humana’s earnings helps explain its performance. As noted earlier, Humana’s adjusted operating margin declined by 3 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q3, Humana reported adjusted EPS of negative $0.70, down from $3.24 in the same quarter last year. Despite falling year on year, this result beat analysts’ consensus estimates by a wide margin. Over the next 12 months, Wall Street expects Humana’s full-year EPS to grow 11.5% from $13.26 to $14.79, according to S&P.

Key takeaways from Humana’s Q3 results

Humana’s quarter had some key positives: EPS beat analysts’ consensus estimates, and full-year EPS guidance topped Wall Street’s consensus. But the outlook was mixed, with full-year revenue guidance missing expectations. Shares remained flat at $413.03 immediately after the report.

Humana had a solid quarter, but is the stock a buy? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation when deciding whether to invest. For more on Humana, read the full research report here (it’s free).