Humana rises after favorable ruling peer UnitedHealth star rating

Investing.com -- Shares of Humana Inc (NYSE:HUM ) were up 2.5% at $305 after a favourable court ruling involving peer UnitedHealth Group (NYSE:UNH ) over Medicare Advantage star ratings, boosting optimism about Humana's ongoing appeal regarding its own star scores.

Humana is highly exposed to Medicare Advantage.

Analysts at RBC Capital Markets said that the ruling could improve Humana's prospects for similar complaints, though significant hurdles remain.

UnitedHealth's victory challenges the Centers for Medicare and Medicaid Services (CMS) over star rating practices, including the controversial use of "secret shoppers" to evaluate customer experience.

Humana’s star ratings for 2025 were impacted primarily by unexpectedly high cut points for individual measures, which the company described as well above historical trends during a call with analysts on Oct. 2.

These ratings are critical, as they determine bonus payments for 2026. With nearly 70% of its membership falling below the 4-star threshold, RBC estimates the rating issue could result in a 15% hit to Humana's 2026 earnings per share (EPS), which it projects at around $17.

While the court decision is seen as a positive step, RBC expects any recovery of lost bonus revenue to take time, making a full resolution a longer-term process for Humana.

 

 

Source: Investing.com