Humana lifts its four-star Medicare Advantage share to 95%, beyond J.P. Morgan's 70% top estimate

In July, lower star ratings reduced the quality bonuses Humana receives from the federal government ^[7]. The company cut its full-year 2026 GAAP earnings target to at least $6.52 a share from at least $8.36, qz.com reported ^[7]. The gap is $1.84 a share, or 22% of the original target ^[16].

Friday's premarket gain ^[2] is a guess at how much of that comes back, or rather at that amount plus the extra members that higher ratings tend to attract ^[3]. Humana did not disclose a dollar figure for its 2027 bonus, and the payments across the industry are reported only as worth billions ^[3].

The ratings themselves are easier to measure. Humana's four-star share rose 75 points in a year ^[8]. It finished 25 points above the top of J.P. Morgan's range ^[17] and 24 points above the 71% that HHS reported for the whole market ^[19]. Evercore ISI analyst Elizabeth Anderson said Humana improved on drug-plan quality, health-plan quality and readmissions ^[13]. The improvement "reflects the importance management has placed on fixing this metric over the past year," she said ^[14]. Chief executive Jim Rechtin said the ratings are "a direct reflection of the hard work that thousands of Humana employees put in everyday" ^[15].

Humana will sell its best-rated lineup in fewer places. Its 2027 Medicare Advantage plans will reach just over 80% of US counties, down from 85% this year, part of what qz.com described as a broader industry pullback from less profitable markets ^[10].

The stock can turn out right for different reasons. In the first case, the 2027 bonus recovers something close to the $1.84 a share of 2026 guidance lost in the July cut ^[16]. A slower version has the gain arriving mainly through enrollment, across fewer counties than this year ^[10]. The third possibility sits outside Humana. J.P. Morgan's figures for UnitedHealth and CVS are estimates ^[5], and if those rivals land higher, Humana's lead over them narrows.

I think the first case is closest. The July cut was tied directly to lower bonuses ^[7], and a ratings recovery this large works through the same federal payments in the other direction ^[3]. The second case is the strongest counter: coverage for new members does not start until January 1, 2027 ^[11], so earnings driven by enrollment arrive later than Friday's price move. What would prove the view wrong is a first 2027 outlook from Humana that implies a bonus recovery well short of $1.84 a share.