Fitch downgrades Humana's credit ratings

By Matt Tracy

WASHINGTON, Dec ⁠15 (Reuters) - Credit ⁠rating ‍agency Fitch on Monday downgraded the credit ratings of insurance giant Humana along with various subsidiaries.

In ‍a Monday report accompanying its downgrades, Fitch analysts cited ​a dim outlook for Humana's revenue margins recovery to previously higher ​levels. This was due primarily to higher-than-normal use of healthcare across the sector, as well as "significantly lower" Medicare Advantage-related quality bonus payments, the ​analysts said.

Humana's reported earnings have gradually declined over the past five years and shown volatility in part due ​to pandemic-linked, as well more recent elevated, healthcare utilization.

Humana's debt-to-Ebitda ratio, which is ‌a key financial leverage ratio used by Fitch, was significantly above Fitch's guidelines for its previous ​higher rating of the insurer. It ⁠last stood at 3.6x as of the end of September.

Fitch downgraded Humana's long-term issuer rating ‌to the second-lowest rung of investment-grade quality on Monday. Analysts maintained Humana has a favorable company profile, due primarily to a strong ‌competitive position in the Medicare Advantage market, among other factors.

Humana in ‌October lost a bid in court to challenge the Centers for Medicare & Medicaid Services' 2025 ratings for its Medicare Advantage plans, which could ‍result in millions of dollars in lost bonus payments to the company from the government.

The ⁠rating agency also downgraded the insurer financial strength ratings of various Humana subsidiaries by one notch though still in the upper-medium grade of investment-grade quality.

(Reporting by Matt Tracy in Washington, D.C.; Editing by Chris Reese)

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