Humana stock rises after Medicare star ratings update

Investing.com -- Humana Inc (NYSE: HUM) stock rose 7% on Thursday following the company’s update on Medicare star ratings, which showed progress in its strategic initiatives to improve performance metrics.

The health insurer revealed that approximately 20% of its current members, or about 1.2 million people, are enrolled in plans rated 4 stars and above for 2026, with an average star rating of 3.61. This average remains consistent with the company’s 2025 Medicare Advantage star ratings. Notably, Humana has increased the percentage of members in 4.5-star plans to 14% for 2026, up from just 3% in 2025.

Humana emphasized that these preliminary 2026 Medicare Advantage star ratings align with assumptions used in its multiyear financial planning, and therefore do not affect the 2025-2028 incremental earnings potential detailed at its June 2025 Investor Conference.

The company is implementing a Medicare Advantage contract diversification strategy beginning with the 2026 Annual Election Period starting October 15. This strategy is expected to significantly increase the percentage of members enrolled in contracts rated 4 stars and above for 2027.

Looking ahead, Humana expressed confidence in returning to "Top Quartile" results for its 2027 Medicare Advantage star ratings, citing operational improvements made during the final months of the 2026 measurement period.

The company also affirmed its 2025 earnings guidance of approximately $13.77 in diluted earnings per share, or approximately $17.00 in adjusted EPS, consistent with guidance issued in July and affirmed in August. Humana remains confident in its 2026 Individual Medicare Advantage pricing and benefit design, including expectations to double individual MA pre-tax margin in 2026 (excluding Stars) and return to membership growth.

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