Feb 11 (Reuters) – Humana forecast annual profit below Wall Street estimates on Wednesday, as the health insurer expects a hit from lower quality ratings for its Medicare Advantage plans for older adults, pushing its shares down more than 8% before the bell.
Lower quality ratings for its Medicare Advantage plans have emerged as a major worry for 2026 as they could cost Humana millions of dollars in bonus payments from the U.S. government.
Humana is one of the largest providers of Medicare Advantage plans for people aged 65 and older and those with disabilities, and gets most of its revenue from those plans.
The company expects full-year 2026 adjusted profit to be at least $9 per share, compared with analysts’ average estimate of $11.92 per share, according to data compiled by LSEG.
The level of conservatism in the 2026 initial outlook is higher than typical to account for the dynamic environment, the company said in its prepared remarks.
Humana has been repricing plans and adjusting benefits to shore up profits while confronting the persistent cost pressures that have gripped the industry for more than two years.
The company reported a quarterly medical cost ratio, the percentage of premiums spent on medical care, at 93%, roughly in line with analysts’ expectations.
At the same time, investors have been on the edge as the health insurer expands enrollment of members, while major peers retreat from the Medicare Advantage market.
The company anticipates 2026 individual Medicare Advantage membership to grow about 25% over the year earlier.
It expects about 45% of its members to be enrolled in Medicare Advantage plans rated 4 stars and above for 2026.
Humana posted an adjusted fourth-quarter loss of $3.96 per share, compared with the estimate of a $4.01-per-share loss.
(Reporting by Puyaan Singh and Sriparna Roy in Bengaluru; Editing by Shilpi Majumdar)
