Humana Shares Jump 15% as Medicare Advantage Ratings Improve

Humana shares rose 15% in premarket trading on Friday after analysts identified the US health insurer as the biggest beneficiary of the government’s new 2027 Medicare Advantage star ratings.

The company said 95% of its Medicare Advantage members would be enrolled in plans rated four stars or higher in 2027, up from just 20% in 2026. Analysts at J.P. Morgan had expected the figure to reach between 60% and 70%.

The ratings, issued by the US health department, assess the quality of Medicare Advantage and prescription drug plans on a five star scale. Higher ratings can qualify insurers for billions of dollars in government bonus payments and help attract more members.

Humana’s performance contrasts with those of major competitors. J.P. Morgan estimates that the proportion of UnitedHealth’s plans rated four stars or higher will fall from 81% to about 67%, while CVS Health’s share is expected to decline from 84% to roughly 70%.

Overall, about 71% of Medicare Advantage prescription drug plan enrollees will be covered by contracts rated four stars or higher in 2027, according to the health department.

Evercore ISI analyst Elizabeth Anderson attributed Humana’s improvement to gains in drug plan quality, health plan quality and hospital readmission measures. She said the results reflected management’s focus on addressing weaknesses in these areas over the past year.

Medicare Advantage plans are offered by private insurers on behalf of the US government and primarily serve people aged 65 and older, as well as eligible people with disabilities.