NEW YORK, Feb 11, 2026, 12:14 EST — Regular session
- Humana dropped roughly 2% after projecting 2026 earnings that missed Wall Street’s expectations.
- The insurer warned that 2026 profit faces a $3.5 billion hit, citing reduced Medicare Advantage “star” ratings.
- Investors have their eyes on an April call about 2027 Medicare Advantage payment rates.
Humana dropped 1.9% to $177.87 by midday Wednesday, after the health insurer said it expects 2026 profit to miss analyst targets. The company blamed softer government quality scores on its Medicare Advantage plans for the outlook.
This call is a big deal: those one-to-five ratings aren’t just for show — they help determine government bonus money, and low marks can shrink those payouts. The timing doesn’t help either, with the industry still on edge about Medicare reimbursement tweaks as Washington debates payment changes for 2027.
Humana is forecasting roughly 25% growth in individual Medicare Advantage membership heading into 2026, with around 45% of its members in plans rated four stars or higher. Chief Financial Officer Celeste Mellet noted that lower plan ratings will hit profits, estimating a $3.5 billion impact in 2026.
“It’s not surprising to see much lower 2026 earnings expectations for Humana, but the scale of the membership gain seems poised to squeeze margins more than the market had expected,” said Morningstar analyst Julie Utterback.
Humana put its 2026 adjusted profit per share floor at $9. That’s well below the $11.92 analysts had penciled in, per LSEG data.
The company delivered its outlook following the Trump administration’s January proposal of 2027 payment rates for insurers managing Medicare Advantage plans—rates that landed lower than many had anticipated for this private-market alternative to government-run Medicare.
“Medicare Advantage sits at the intersection of U.S. fiscal pressures and a program that is incredibly popular with seniors,” CEO Jim Rechtin said. “We will adapt to the rate notice once it is final.”
The agency’s 0.09% rate hike is on track for final approval in April, though that could still shift. For now, April’s shaping up as the key date for the entire group.
Humana reported it’s been tweaking benefits and raising plan prices to protect margins, with medical costs stubbornly high across the sector. For the quarter, its medical cost ratio landed at 93%, pretty much matching forecasts.
The company turned in an adjusted loss of $3.96 per share for the fourth quarter, slightly better than the $4.01 loss analysts had been expecting.
The outlook isn’t straightforward. Should medical costs remain stubborn and star ratings lag behind Humana’s expectations, rising membership might not prevent margins from getting squeezed even more. Plus, any negative surprise in the final April rate notice would probably continue to weigh on the stock.
Investors are eyeing April’s final Medicare Advantage payment update for 2027 as the next major data point. They’re also watching for any new information on Humana’s plan pricing and benefits heading into the next enrollment cycle.
