Humana Inc.’s HUM third-quarter 2020 operating earnings per share of $3.08 beat the Zacks Consensus Estimate of $2.86 by 7.7% on the back of improved revenues. However, the same plunged 38.8% year over year due to COVID-19 testing and treatment costs.Operational UpdateRevenues of $20.08 billion were up nearly 24% year over year. Moreover, the top line surpassed the Zacks Consensus Estimate by 7.5% on the back of better premium revenues from Medicare Advantage along with improved membership in state-based contracts and an increase in per member Medicare Advantage premiums. Other factors, such as higher investment income also contributed to this upside.Benefit ratio contracted 240 basis points (bps) to 82.6%.Operating cost ratio expanded 180 bps to 13.2%.Total expenses shot up 18.7% year over year due to higher benefits and operating costs.Humana Inc. Price, Consensus and EPS Surprise Humana Inc. price-consensus-eps-surprise-chart | Humana Inc. QuoteSegmental ResultsRetailRevenues from the Retail segment were $16.74 billion, up 19% year over year. This can primarily be attributed to premium rise owing to Medicare Advantage along with state-based contracts membership growth and higher per member Medicare Advantage premiums.Benefit ratio of 85.1% contracted 80 bps year over year on temporary deferral of non-essential care along with reinstatement of the non-deductible health insurance industry fee in 2020.The segment’s operating cost ratio of 11.2% expanded 190 bps year over year due to reinstatement of the non-deductible health insurance industry fee in 2020 along with COVID-19-related costs.Group and SpecialtyRevenues from the Group and Specialty segment were $1.79 billion, down 5% from the prior-year quarter due to reduction in fully-insured group commercial membership.Benefit ratio expanded 670 bps year over year to 93% due to expenses involving the ongoing pandemic relief efforts along with COVID-19 testing and treatment costs for fully-insured commercial group medical membersOperating cost ratio expanded 330 bps year over year to 25.2%.Healthcare ServicesRevenues of $7.13 billion increased 8% year over year, primarily owing to Medicare Advantage membership growth and additional pharmacy revenues associated with the Enclara Healthcare buyout.Operating cost ratio expanded 20 bps year over year to 96.4% due to coronavirus-related administrative costs as well as expenses incurred in the pharmacy business for timely delivery of prescriptions.Financial UpdateAs of Sep 30, 2020, the company had cash and cash equivalents, and investment securities of $20.7 billion, up 37.9% from the level at 2019 end.Debt-to-total capitalization as of Sep 30, 2020 was 33%, expanding 100 bps from the level as of Dec 31, 2019.In the September quarter, cash flows provided by operating activities came in at $1.8 billion, down 25.7% year over year.Capital DeploymentThe company did not complete any open-market transaction in the quarter under review.It paid out cash dividends worth $74 million in the period.Its board of directors also announced a cash dividend of 62.5 cents per share, payable Jan 29, 2021 to its shareholders of record on Dec 31, 2020.2020 GuidanceAfter announcing third-quarter results, the company updated its 2020 guidance. Adjusted EPS is expected in the range of $18.50-$18.75, narrowed from the previous outlook of $18.25-$18.75.The full-year individual Medicare Advantage membership is now anticipated to be around 375,000 members, up from the previous range of 330,000-360,000 members.Humana reiterated its expectations for group Medicare Advantage net membership gains. It expects a year-over-year increase of 90,000 members in 2020. For its stand-alone PDP business, it still anticipates a membership decline of 550,000.Zacks Rank and Performance of Other PlayersHumana carries a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Of the medical sector players that already reported third-quarter results, earnings of Universal Health Services, Inc. UHS and UnitedHealth Group Incorporated UNH ) beat the respective Zacks Consensus Estimate while that of HCA Healthcare Inc. 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