Earnings call transcript: Humana Q3 2025 sees profit surge and AI focus

Humana Inc., a prominent player in the Healthcare Providers & Services industry with a market capitalization of $35 billion, reported an all-time high profit for Q3 2025, with a notable increase in earnings per share, up 32% year-over-year. The company also highlighted significant strides in digitalization and AI implementation, aiming to enhance efficiency in its personal assistance segment. Despite weak demand in certain sectors, Humana’s stock closed at $291.30, marking a 1.24% increase from the previous session. According to InvestingPro analysis, the stock appears slightly undervalued based on its Fair Value calculation.

Key Takeaways

• Humana achieved its highest profit margin in years, reaching 8.3%.
• Earnings per share increased by 32% compared to the same quarter last year.
• The company is investing heavily in digitalization, with SEK 20 million allocated.
• Efficiency initiatives are projected to save SEK 100 million annually by 2026.
• Humana is focusing on organic growth by filling unused capacity.

Company Performance

Humana’s Q3 2025 performance demonstrated robust growth, driven by improved margins across its operations in Sweden, Norway, and Finland. The company reported an 8% margin in Sweden, 9% in Norway, and 10.3% in Finland. Humana’s strategic focus on digital transformation and AI has begun to yield efficiency gains, particularly in the personal assistance segment.

Financial Highlights

• Revenue: Not disclosed in the earnings call summary.
• Earnings per share: Up 32% year-over-year.
• Profit Margin: Achieved 8.3%, the highest in several years.

Outlook & Guidance

Humana is optimistic about its future, with plans to continue enhancing efficiencies through digitalization and AI. The company anticipates maintaining similar profitability levels in its personal assistance segment for 2026 and expects margin improvements in Norway and Finland, targeting over 6% and 6.5%, respectively.

Executive Commentary

Nathalie Nilsson, CEO, expressed confidence in Humana’s growth strategy, stating, "We have tripled our pipeline in targeted areas, which gives us confidence in our growth strategy moving forward." She also emphasized Humana’s pioneering role in setting net zero targets: "We are the first to set both short and long-term net zero targets, something we are very proud of."

Risks and Challenges

• Weak demand in child and youth segments could impact future growth.
• The personal assistance segment faces challenges with a 1.5% allowance fee increase.
• Macroeconomic pressures and currency fluctuations may affect profitability in international markets.

Humana’s Q3 2025 earnings call highlights a company on the path of transformation, leveraging digital and AI innovations to drive growth and efficiency. With a strong focus on sustainability and strategic market positioning, Humana is setting the stage for continued success in the coming years.

Full transcript - Humana Inc (HUM) Q3 2025:

Conference Moderator: Good morning and welcome to Humana’s Q3 2025 presentation. Today, our CEO, Nathalie Nilsson, and our CFO, Christopher Hunter, will present the developments in the quarter. Please go ahead, Nathalie.

Nathalie Nilsson, CEO, Humana: Thank you. We will give you a short introduction followed by financials and operational performance. We will then wrap it up with concluding remarks and open up for questions. Humana is a Nordic care provider with a high degree of specialized care. We are market leaders within children and young and personal assistance. We drive our development through digitalization, AI, sustainability, and by measuring the outcome of our services. We had an all-time high profit and the best margin in several years of 8.3%. The turnaround in Finland is completed. We have a significant profit improvement in personal assistance, and we have continued improved profitability in Norway, now up to 9%. This, together with reduced financing costs, the earnings per share is up with 32% year over year. We have tripled our pipeline in targeted areas, which gives us confidence in our growth strategy moving forward.

We will get back more on this topic in coming presentations. Humana has also taken the lead within the sustainability area, and all in all, we are in a strong position for continued positive development. During the quarter, Humana received validation by SBTi on our climate targets. We were the first amongst our peers to achieve this. We are also the first to set both short and long-term net zero targets, something we are very proud of.

Christopher Hunter, CFO, Humana: In our past quarterly reports, we have communicated about different efficiency initiatives. We are glad to be able to update you on these initiatives, where a vast majority of the actions are completed. The effects of this will be savings of approximately SEK 100 million in annual run rate by the end of 2026 and going forward. These savings are gradually included in our figures, and at the same time, we have recognized costs of some SEK 20 million in the P&L relating to digitalization investments to future-proof Humana. Back to you, Nathalie, for a closer look at our segments.

Nathalie Nilsson, CEO, Humana: Thank you. We have improved our margin in Sweden to 8%, and we see that our efficiency program delivers according to plan, as Christopher Hunter mentioned previously. Within individual and family, we continue to see very high occupancy and good profitability within the elderly care segment. We are now toe-to-toe with the best on the market in this area. The somewhat weak demand within child and youth, and to some extent also within adult, is partly counteracted by clients with more complex needs and higher compensation. Within personal assistance, the quarter is positively impacted by the timing of annual salary increases that occur later this year compared to last year. We also see an underlying profitability improvement. We continue to see that the loss of customers is declining, and out of the past seven months, we have seen three months with approximately net zero customer flow.

Compared to Q3 last year, we have halved our net outflow, so this is a good indicator for us moving forward. We can also see that our AI tools are starting to take off within the segment and thereby boosting our efficiency. In Norway, we have improved operating profit and increased margin to 9%. We see efficiency improvements in all of the divisions during Q3. In spite of what the diagram shows, we do actually have a positive growth in Norway if we look at the development in local currency. The negative percentage is a currency impact. In Finland, we have now completed the transition and are back up to a good profitability level of 10.3% after a negative Q2. This is after the decline in demand in Finland due to the savings program in the softer regions and the divestment of the elderly care segment.

This is a solid performance by our Finnish team, and we can see that three out of the four segments increase profitability year over year. The saving programs in the softer regions will continue, but we are in a good position to meet the continued call for improved efficiency. We have a positive view on Finland and have over the last six months tripled our pipeline in our targeted areas. We have also set up for a more growth-oriented organization moving forward.

Christopher Hunter, CFO, Humana: Going over to our financial targets, as previously mentioned in the presentation, we put a lot of focus on the organic growth, not yet visible in the figures. With regards to our profitability target, we are on a good track. Last quarter, a bit downward due to the weak result in Finland and the divestment of elderly care. Now the transition is completed, and the current quarter with the highest ever recorded operating profit gives us confidence in our work going forward to reach our profitability targets. When it comes to our capital structure, we are at the same level as the previous quarter, which means that we are within our targeted level.

Nathalie Nilsson, CEO, Humana: Summing up our achievements in Q3, the turnaround in Finland is completed. The efficiency and consolidation program delivers according to plan. We have tripled our growth pipeline in our targeted areas, and we have taken the lead within the sustainability area. Moving forward, we will focus on securing organic growth, both by signing more of the projects in our pipeline and by ensuring that we fill our unused capacity. We will also continue to drive efficiencies by the implementation of digitalization and AI. With that, we open up for questions.

Conference Moderator: Yes, if you wish to ask a question, please dial the pound key and five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial the pound key and six on your telephone keypad.

Question comes from Jakob Lemke from SEB. Please go ahead.

Yes, hi and good morning. I did not really catch you on the progress you have made on the cost savings initiatives, but could you maybe repeat what you said and also if you have started to see benefits from this already in this quarter or when you expect to see benefits from this?

Nathalie Nilsson, CEO, Humana: Yes, we have started to see a little bit of the effects already this quarter. When we look at it, we can see that underlying we are spot on, which means that we can see that we have executed already the SEK 40 million approximately. Since we are at the same time investing heavily in digitalization and AI, on the bottom line, some of that you cannot see.

What is the sort of net benefit here in Q3, and what should we expect in the coming quarters?

Christopher Hunter, CFO, Humana: The total net benefit, and that is also a bit divided between EBIT and the actual bottom line, so to speak, in our P&L. The effect for this quarter is around SEK 10 million on that net.

Okay, that will increase somewhat, maybe sometime next year, I assume.

Yes, exactly. What Nathalie said now with the costs that we take now to digitalize the company and to invest going forward, that is one-time costs that we do now. These savings will be annual savings going forward, so to speak.

Okay. I have a question on individual and family, and particularly the individual and family segments and not elderly care. Just wondering a bit on the demand and the development you see here short term and what expectations we should have for the coming quarters.

Nathalie Nilsson, CEO, Humana: It is like we’ve said in the past few quarters, there is a little bit of a weak development in the HVB segment, both for children and adults. It’s a much larger part of the child segment than the adult segment, of course, so it makes a bigger impact there. We do have more complex placements, which means higher compensation. Financially, it’s a small impact, but we do see that we have still quite a bit of free capacity that we can use and fill up. For us, we’re very much working on making sure because we do get a lot of requests from the municipalities, and you need to match the requests with the permit that you have. It takes 10 to 12 months if you need to change a permit since EVO is not that speedy in that process.

Okay, I guess the underlying earnings development here is quite weak right now, and is it fair to assume that it will take some time before that sort of turns around?

The underlying earnings is not actually that bad since we do get more compensation for more complex clients. What it really means for us is that we still have a bit of capacity left that we can fill up and get a good development moving forward.

Okay. My final question is just on these new units you’re adding to the pipeline. What sort of risk do you see to the demand profile on those? Is it the risk?

They are very low risk, I would say. They are exactly in our targeted areas where we want to be. We see within the LSS segment in Sweden and within the disability in Finland, exactly where we want to be, where we have high profitability and strong demand. We feel very confident about the growth pipeline and moving forward.

Okay, that’s all for me. Thank you very much.

The next question comes from Christopher Lilleberg from Carnegie. Please go ahead.

Yeah, thank you. Good morning. Four questions. The first one on the cost savings, is that all of it on the overhead cost line, or do you also see this spreading out in the business areas? My second question relates to personal assistance in Sweden. As you said, earnings were a bit inflated maybe this quarter, but how do you think about Q4 and then going into 2026 given the allowance fee was only increased by 1.5%, which I guess is not going to fully compensate for wage increases? My third question on the Norwegian margin, if you could explain a bit more in detail what has been driving this impressive improvement, and what do you think a sustainable Norwegian margin on an annual level going forward? Also, the same for Finland, what do you think the run rate margin in Finland is now?

Of course, you have the seasonality in the third quarter, so it’s always a bit difficult to extrapolate that and the improvements you have done there. Thank you.

Maybe I can start with the personal assistance question. I would say for Q4, the expectations are always Q4 in personal assistance is traditionally always a negative quarter. There will be challenges in Q4 financially. That’s the way it’s always been, unless there’s a one-time impact of some sort. That will be weak. Looking into next year, we do, of course, the 1.5% price increase is a big disappointment for us all. We are slightly helped, though, by the reduced social fees next year and also the year after that. There’s a positive impact on that. We were counting on improving our profit quite a bit during next year within personal assistance. We have a lot of positive signs that we mentioned before. The market has begun to grow slowly, but still on a steady pace.

We are more or less flattening out now in the bottom of the net customer flow. We have a lot of positive signs there. I would say that we will not reach the increased profitability next year. It will be postponed with one year. The index clause is still in investigation, so we hope that it will go in for 2027 instead. That’s our best guess, which means that we will probably be around the same profitability level as we will end up with this year for next year. That’s the assumptions we’re making right now. A little bit on the Norwegian margin, I would say that run rate is a bit more than 6%, and we continue to see this improvement. We have improved over the past two quarters. We feel pretty confident. It’s efficiency measures in all of the divisions.

Moving forward, we will continue to expect an improvement in Norway. In Finland, we have a run rate of around 6.5%, and we do believe that it will continue to increase. We feel also there the remainder and the divisions that we have left after the divestment of the elderly care, three out of four have improved year over year in spite of us doing this large transition program. We do have a continued conversion from too demanding intensive within child welfare services, which we see is giving us a positive boost. We are opening up new units within disability where we have a very high margin. We have a couple of openings coming up in the end of this year now, and we have an additional couple of openings over next year. We feel pretty confident that we will continue to improve in Finland.

You don’t think the openings will be diluted initially?

Initially, they will be a little bit, but based on the strong base that we have there, we do expect a continued improvement.

Do you think you could do a 6.5% margin in Finland next year?

Yeah.

Despite the, okay.

Yeah.

Great.

We have also, as I mentioned, we are shifting our organization towards a more sales-oriented organization, and we are strengthening that team to fill up the units with the first move here from November 1 joining us. We feel pretty confident about that, yeah.

Christopher Hunter, CFO, Humana: Your first question was about the efficiency program. As said on the previous question, some of it is included in the operating profit and some are also in the financing costs. Most of it will be visible or is visible in the Sweden segment, and some of it also in the other segment. If that was answered to your.

Yeah, okay. That’s very clear. Thank you.

Good.

The next question comes from Jakob Lemke from SEB. Please go ahead.

Just to follow up with a small sort of technical question. Looking at the cash flow on the investments in non-current assets, you have a bit positive, and you say that you have received some investment subsidies of SEK 18 million. I’m just wondering what those are.

Yes, exactly. That is related to our property construction in Stagnes, where there was an investment payback. I don’t know the exact English word for that. When the construction is finalized, you get a subsidy back from the authorities. That is what is a positive cash flow effect in this quarter.

I’d say it’s a one-off?

Yes.

Okay, thank you.

Conference Moderator: We have no more questions at this time. I want to remind you, if you would like to ask a question, dial pound key five on your telephone keypad. It seems we have no more questions at this time, so I will hand back the conference to the speakers for any written questions or closing comments.

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