What Happened?

Shares of health insurance company Humana (NYSE: HUM) jumped 6.4% in the afternoon session after the company provided a positive update on its Medicare star ratings and affirmed its full-year earnings guidance. 

The health insurer revealed that for 2026, approximately 20% of its members were in plans rated 4 stars and above. Notably, the percentage of members enrolled in 4.5-star plans increased significantly to 14% for 2026, a substantial rise from just 3% in 2025. Humana stated that these preliminary ratings were in line with the assumptions used in its multiyear financial planning, signaling stability to investors. Reinforcing the positive outlook, the company also reconfirmed its 2025 earnings guidance. While the company noted it was not fully satisfied with the results, it was pleased with operational improvements and believed they would support a return to top-tier ratings in the future.

After the initial pop the shares cooled down to $252.73, up 2.4% from previous close.

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What Is The Market Telling Us

Humana’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was about 22 hours ago when the stock dropped 5.2% on the news that the company announced it will reduce the reach of its Medicare Advantage plans next year, citing rising costs. 

The health insurer will decrease its Medicare Advantage presence from 48 states to 46 and will cover 85% of U.S. counties, down from 89% this year. This decision comes as insurers face higher utilization of medical services and claim that government payments have not kept up with increasing costs. The pullback is not unique to Humana, as other major insurers are also retreating from less profitable markets. For instance, CVS Health's Aetna announced a similar reduction in its plan offerings. Despite the smaller footprint for its main Medicare Advantage plans, Humana did note that it expects to lower premiums for about 83% of its stand-alone prescription drug plans in the coming year.

Humana is flat since the beginning of the year, and at $252.73 per share, it is trading 19% below its 52-week high of $312 from September 2025. Investors who bought $1,000 worth of Humana’s shares 5 years ago would now be looking at an investment worth $618.95.

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