Humana shares dip after Medicare releases final quality ratings

Investing.com -- Shares in Humana (NYSE:HUM ) dropped in premarket US trading on Friday after the US government released the final results of its quality ratings for 2025 Medicare health and prescription drug plans.

About 62% of people enrolled in Medicare Advantage prescription drug plans are currently in cotracts that have the four-star or higher ratings which can indicate better performance, according to a statement from the Centers for Medicare & Medicaid Services. In the prior year, the figure stood at 74%.

Last week, preliminary numbers showed that 25% of Humana's members had signed up for plans that had ratings of 4 stars or above in 2025 -- down from 94% in the prior year.

Much of this decrease was due to the rating of Humana's H5216 contract being lowered to 3.5 stars from 4.5 stars, the company has said. The plan contains roughly 45% of Humana's Medicare Advantage customers, including more than 90% of its employer group waiver plan members, it added.

"The decline in Stars performance for 2025 will impact Humana’s quality bonus payments in 2026," the firm flagged at the time. The Centers for Medicare and Medicaid typically awards a quality bonus to health plans that achieve 4 stars or higher.

Humana said it also had outstanding appeals related to some of the results and had requested additional information to ensure the accuracy of the threshold calculations.

However, in a note to clients, analysts at Wells Fargo said the final quality ratings were in line with Humana's previous statement. This appeared to indicate that Humana's "appeals have failed and litigation could follow," the analysts added.

They estimated that the updated ratings will present a $13.60, or 52.3%, headwind to Humana's 2026 earnings per share.

The ratings decline is not expected to impact Humana's financial results or outlook for this year or 2025, but the company said it is taking steps to "mitigate" an anticipated impact to its 2026 revenue should its appeals prove unsuccessful.

Source: Investing.com