Humana (HUM) stock is plunging in Wednesday's session after the health benefits company announced preliminary 2025 Medicare Advantage (MA) Star Ratings data provided by the Centers for Medicare and Medicaid Services (CMS).
HUM is down 15% at last check, making it the worst S&P 500 stock so far today. And this follows a 12% decline in the stock yesterday when the CMS plan finder website included Star Ratings for 2025 plans.
In a filing with the Securities and Exchange Commission (SEC) this morning, Humana said that approximately 1.6 million, or 25%, of its members are currently enrolled in MA plans that are rated as four stars and above for 2025, which is down from 94% in 2024.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"The decline in Stars performance for 2025 will impact Humana's quality bonus payments in 2026," Humana said in the filing. "2025 Star rating details are expected to be formally released by CMS on or around October 10th."
However, Humana went on to say that it believes "there may be potential errors" in the calculations by the CMS. It currently has outstanding appeals and said it has requested additional information to ensure the accuracy of the ratings.
"Despite ongoing appeal efforts, the Company is disappointed with its performance and has initiatives underway focused on improving its operating discipline and returning to an industry leading Stars position as quickly as possible," Humana said, adding that it "is exploring all available options to mitigate the expected 2026 revenue headwind related to its 2025 Star ratings in the event its challenges to the results are unsuccessful."
Is Humana stock a buy, sell or hold?
Humana has woefully underperformed the broader market so far this year, down 38% on a total return basis (price change plus dividends) vs the S&P 500's 21% gain. Yet, Wall Street remains bullish on the healthcare stock.
According to S&P Global Market Intelligence, the average analyst target price for HUM stock is $384.28, representing implied upside of more than 60% to current levels. Additionally, the consensus recommendation is Buy. However, these ratings and price targets may very well change following the news.
Financial services firm Argus Research has already moved to the sidelines when it comes to the large-cap stock, as evidenced by its Hold rating.
"Humana faces headwinds to revenue and earnings growth, as its profit margin is squeezed by an increase in medical utilization," wrote Argus Research analysts David Toung and Owen Shelley in an August 13 note. "Despite the favorable demographics of an aging population, with some 26 million Americans aging into Medicare-eligibility from 2023 through 2030, we are concerned that Medicare Advantage is not an unalloyed growth vehicle."
Related Content
-
The Most Tax-Friendly State for Retirement in 2025: Here It IsRetirement Tax How do you retire ‘tax-free’? This state doesn’t tax retirement income, has a low median property tax bill, and even offers savings on gas. Are you ready for a move?
-
Plan for Higher Health Care Costs in 2026: Projected Medicare Part B and Part D PremiumsIn 2026, Medicare participants will pay more for their health care. Part B costs are expected to rise more than 10%. Here's what you can do.
-
Avoid Medicare's 'Shadow Tax' With This Financial Expert's IRMAA-Busting TipsYou're cruising along in retirement, and then bam: Your Medicare premiums soar because your income crossed the limit. Take a breath. There could be a solution.
-
Grilling Season and ETFs: There's More Than One Way to Cook Up a PortfolioExchange-traded funds come in a multitude of 'flavors' these days, from passive to active to factor-based. Their flexibility is what makes them so delicious.
-
You Don't Want It, But You Should Plan for It Anyway: An Expert Guide to Long-Term CarePlanning for long-term care is crucial to protect your independence, family and financial stability against unexpected health events and rising care costs not covered by standard insurance.
-
Japan Tariffs: 5 Things That Might Get More Expensive for YouPresident Donald Trump's trade agreement with Japan features a 15% reciprocal tariff for all imported products, which could impact the prices of these items when you go shopping.
-
Five Questions to Help Ensure a Happy, Secure RetirementYou need to drill down to what you really want out of retirement. Then you can get down to the business of crafting a financial plan to make it happen.
-
I'm a Financial Adviser: This Is How You Can Save for Big Goals Even if You Feel Like You're Barely Getting ByLearning good financial habits — building an emergency fund, paying down debt, saving consistently — gives you flexibility, options and a path to security.
-
How to Buy an Annuity Online (Without Regret)You should never be rushed into buying an annuity. But now that they can be sold quickly and easily online, you need to be more alert than ever to pushy salesmanship. Here are four signs you're working online with a professional.
-
Dow Dives 542 Points on Soft Jobs Data: Stock Market TodayThe last day of a busy week ends with the first greater-than-1% move in either direction in more than a month.
