Humana stock slides on lower ratings for its Medicare Advantage plans

Published On Oct 2, 2024, 1:59 PM

Humana's stock fell sharply after the Centers for Medicare and Medicaid Services (CMS) downgraded the star rating of its Medicare Advantage plans from 4.5 to 3.5 for 2024. This downgrade suggests lower enrollment for 2025 and is expected to impact Humana's revenue in 2026, along with affecting bonuses for that year. The stock dropped approximately 15% to $235.75 per share, having previously fallen over 20% in premarket trading. The rating changes reflect a decrease in the performance metrics of its plans, which have traditionally been highly rated. Higher medical loss ratios (MLR) for Humana and other insurers further complicate their financial outlook as they face increased costs and utilization from Medicare members. The official ratings will be released by CMS by October 10, 2024, and Humana is currently awaiting decisions on appeals regarding these ratings.