Disaster Stock Of The Day: Humana Faces Sharp Decline In Medicare Star Ratings For 2025, Braces For 2026 Revenue Hit

Benzinga

According to preliminary data from the Centers for Medicare and Medicaid Services (CMS), Humana Inc. (NYSE:HUM) faces a substantial drop in its Medicare Advantage (MA) Star Ratings for 2025.

Transcript

00:00Wow, I don't even know what to say here.

00:03I kind of want to start with Humana,

00:04even though we have so many other stories.

00:06We have war, China, so many things to talk about,

00:10but this Humana just jumps out

00:12like a sore thumb on my screen here today.

00:15It gets rocked for like 30 bucks yesterday

00:19and people coming and buying the dips.

00:21I saw them saying, yep, buy the dip.

00:23This goes to show, don't buy the dip on day one.

00:27You usually don't want to buy the dip on day one

00:29when it's a bad headline.

00:31And we get the bad headline.

00:33Now you get multiple analysts commentary here

00:35talking about their earnings getting whacked.

00:38A, B, give us these details here on Humana

00:40because this stock is your disaster stock of the day.

00:44Yeah, and the title of the show,

00:46an unhealthy market because you know, of course,

00:49Humana, the healthcare insurance company.

00:52So basically they're these Medicare Advantage star ratings.

00:58Last year, 94% of Humana's members

01:03had four stars or higher.

01:05So either four stars, four and a half stars

01:07or five stars on this plan.

01:09This year, a change in some sort of contract

01:14is now leaving Humana with only 25% of its members

01:18in plans rated four stars or higher.

01:21So last year they had 94% of their members

01:23in four star or higher plans.

01:25This year, it's only set to be 25%,

01:29which then limits the amount of money

01:32that Humana gets for different things

01:36from like the government and stuff.

01:38So either way, the plans here,

01:42the Medicare Advantage star ratings here

01:45is bad news for Humana.

01:47They're saying, the article that I read this morning

01:49is saying that there could be some,

01:51despite appealing potential errors

01:54in the rating calculations

01:55and actively working on improvement strategies

01:58to boost future performance and quality payouts,

02:00Humana acknowledges increased risk

02:03in meeting its financial targets

02:04while remaining committed to enhancing value

02:06for customers and shareholders.

02:08So either way, it sounds like Humana came out

02:10and said like, yeah, this isn't good

02:11for our financial targets,

02:12but they're trying to work on it.

02:15That's basically the headline.

02:16What's hammering Humana, not just this morning,

02:18but hit yesterday as well.

02:21And it appears what Humana's loss is,

02:25seems to be UNH and the other healthcare providers

02:28gain here, because UNH is ripping this morning.

02:31It's up 15 points.

02:32CVS is trading up another 4% here.

02:35We know they got the Aetna back on them.

02:39This is a hard one to figure out,

02:40the Love Triangle and obviously there's others,

02:43there's CI, WellPoint or whatever it is, WellCare.

02:48There's just a pile of these things

02:51that are going to trade.

02:52It's a tough one to figure out,

02:54because naturally thinking, you'd think like,

02:56well, Humana getting whacked,

02:58they're going to whack UNH too,

03:00but that is not happening.

03:02That is not happening at all.

03:03The opposite is occurring,

03:04where UNH is actually rallying on this.

03:06So this is very interesting.

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Transcript

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