Humana Investors Get Annihilated After Medicare Ratings Cut... (Stock Plummets -47% YTD)

Well, Humana, you had a good run. But it looks like the health insurance giant just hit the iceberg, and the ship is taking on water fast. For months, Humana has been dodging higher medical costs thanks to the greed of Big Pharma - but yesterday? Well, let’s just say the government just added a nice TKO to its highlight reel as they just sent Humana into a downright free fall. 

(Source: Giphy) 

In short, Humana rolled out its 2025 Medicare Advantage and Prescription Plan offerings, packed with goodies like vision and dental coverage. Sounds decent, right? Well, shareholders weren’t exactly throwing confetti. 

(Source: Washington Post) 

On Tuesday, the stock took a hit, but yesterday was a full-on nosedive (-11.79%) due to the fact that the Centers for Medicare and Medicaid Services (CMS) is about to drop the hammer and downgrade one of Humana’s big Medicare Advantage plans. 

Why the downgrade, you ask? Well, the big issue here is Medicare’s star ratings. For those of you who don’t live and breathe health insurance, these stars are kind of a big deal. Think of them like Yelp reviews, but for health insurance plans. The more stars you get, the more cash you rake in from the government. The fewer stars… well, you’re basically trying to run a Michelin-star restaurant with a Taco Bell budget.

(Source: Reuters) 

Last year, Humana had 94% of its members in plans rated 4 stars or higher—basically, the health insurance equivalent of a standing ovation. But for 2025? Well, Humana is embracing the “Suck” as only 25% of its members will be in 4-star plans. That’s like going from the penthouse to crashing on your buddy’s couch.

(Source: Giphy) 

As expected, the result of this isn’t just a embarrassing PR nightmare, analysts are already sharpening their knives, predicting that this downgrade could seriously dent Humana’s rebates and quality payments in 2026. One analyst straight-up called the ratings drop a “worst-case scenario.” Ooof… 

Meaning, for all you’re Humana investors out there, I don’t blame you for reaching for the Pepto. Especially considering the stock has already shed nearly half its value this year (-47.57% YTD), and with yesterday's $4 billion market cap wipeout, the stock is officially scraping 2020 levels.

(Source: Yahoo Finance) 

In addition to Humana losing out on those girthy government rebates, the downgrade gives members even more reason to peace out and shop around for a new provider. I mean, if you had a choice between a 3.5-star plan and a 4.5-star plan, which one are you picking? Exactly.

On the other hand, Humana isn’t rolling over just yet. They’ve hinted that there might’ve been some errors in the CMS’s star ratings calculations (classic deflection move), and they’re exploring all their options. Translation: They’re thinking about suing the government. And before you laugh, it’s been done before—Elevance Health pulled it off last year, and it worked. So don’t be surprised if Humana’s legal team is already sharpening their friggin pencils on this one. 

(Source: Giphy) 

In the end, if Humana can’t pull a rabbit out of its hat, this is going to sting for years. Sure, the star ratings won’t affect earnings in 2024 or 2025, but 2026 is shaping up to be a financial clusterf***k for the company - as analysts predict a $3 billion hit to its bonus payments. 

Now with all the doom and gloom said, Humana says it’s still confident in hitting its 2027 Medicare Advantage margin target of 3%. But with the way things are going… Let's just say I wouldn’t bet the farm on it. 

(Source: ABC) 

As for the stock? Well right now it’s down 47.57% this year, with the stock plummeting - 20.98% over the past five days alone. Let that sink in. That’s basically like falling off a cliff and hitting every branch on the way down. And based on the price action, it definitely doesn’t look like it’s done falling. 

(Source: Giphy) 

But, but, but… while this could be a massive “BTFD” opportunity for those of you who like getting bloody with falling knives -  if you’re still holding onto Humana stock at this point, either you’re a glutton for punishment, or you’ve got the patience of a monk. 

In the meantime, keep an eye on Humana’s price action going forward and as always, stay safe and stay frosty, friends! Until next time… 

P.S. 54% short interest, and a 648.5% borrow fee?! Once this catalyst hits this little known stock… we could be going to the moon! Of course, we’ll be dropping the ticker symbol sometime soon… so click here ASAP to upgrade to premium so you don’t miss out on this seismic opportunity! 

Stocks.News does not hold positions in companies mentioned in the article.