Humana (NYSE: HUM) shares jumped about 14% in early US trading today after federal quality ratings lifted its largest Medicare Advantage contract back to four stars. The Louisville insurer, whose core business is the private-insurer version of Medicare, lost access to ratings-linked bonus payments after its scores collapsed.
The shares were $442.00 at 2.36pm London time, a delayed quote, up 14.18% on yesterday’s close of $387.12. They had already risen in post-market trading on Thursday. Today’s high of $453.50 is above the previous 52-week high of $428.88, set on the 16th of July.
CMS, the federal agency that runs Medicare, published its 2027 star ratings yesterday. They score plans from one to five stars on care quality, member experience and customer service. Humana’s release came this morning, and said 95% of its Medicare Advantage members are in plans rated four stars or above for 2027, with 42% in 4.5-star plans. Its largest contract moved up from 3.5 stars. Chief executive Jim Rechtin said:
We’re extremely proud of these Star Ratings. They’re a direct reflection of the hard work that thousands of Humana employees put in everyday, helping members get the high-quality care and coordinated support they need to achieve their best health.
Jim Rechtin, Humana CEO
Plans at four stars or above qualify for quality bonus payments and, if they bid below CMS’s per-member benchmark, larger rebates, which are federal money used to fund extra benefits. Humana’s share of members in such plans had fallen from 94% to 25% for 2025 and 20% for 2026. J.P. Morgan had expected 60% to 70% for 2027. The payments are due in 2028.
J.P. Morgan analyst Lisa Gill called the outcome a clear win for a company that had worked towards it for several years. TD Cowen analyst Ryan Langston estimated the improvement could be worth $3bn or more of extra revenue in 2028, a single analyst’s estimate rather than a company figure.
Others fared worse. Alignment Healthcare, a California-focused Medicare Advantage insurer, fell about 23% after its largest contract dropped to 3.5 stars from four, and said it would pursue administrative remedies. Modern Healthcare reported that UnitedHealth and Aetna ratings slipped.
UnitedHealth Group, the largest Medicare Advantage insurer, is due to report third-quarter results on Tuesday next week. Humana reports on the 6th of November.
