Humana surges after topping 2027 Medicare star ratings

In this article

• HUM

Follow your favorite stocksCREATE FREE ACCOUNTSignage is displayed on a Humana Inc. office building in Louisville, Kentucky, U.S., on Saturday, Feb. 2, 2019. Humana is scheduled to release earnings figures on February 6.Luke Sharrett | Bloomberg | Getty Images

Humana's shares rose 15% on Friday after analysts named it the top beneficiary ​of the new star ratings for 2027 Medicare Advantage plans, marking a sharp turnaround for the health insurer.

Humana said 95% of its Medicare Advantage members will be enrolled in plans rated four stars or higher in 2027, up from just 20% in 2026, and above J.P. Morgan's expectations of 60% to 70%.

Higher ratings from the U.S. health department insurers billions of dollars in bonus payments from the government.

Analysts said Humana's ratings outshine those of larger rivals: J.P. Morgan estimates UnitedHealth's share of enrollments in plans rated four stars or higher will fall to about 67% from 81% and that of CVS Health to roughly 70% from 84%.

Poor ratings in 2025 and 2026

Humana had been under pressure since a steep drop in its 2025 ratings threatened its bonus payments. The insurer lost a lawsuit challenging how the 2025 ratings were calculated in October last year, and forecast 2026 profit below Wall Street estimates in February.

Evercore ISI analyst Elizabeth Anderson attributed the sharp rise to improvements in measures of drug-plan quality, health-plan quality and readmissions. The insurer could receive $4.8 billion in bonus payments in 2028 as a result, she said.

Baird analysts said the boost to profits will depend on reinvestment in member benefits and arrangements with healthcare providers.

Humana is one of the largest providers of Medicare Advantage plans serving people aged 65 and older as well as people with disabilities.

Overall, about 71% of Medicare Advantage prescription drug plan enrollees are in contracts that will be rated four stars or higher in 2027, the health department said late on Thursday.

Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.