哈门那医保(Humana)

On Oct. 8, the Centers for Medicare and Medicare Services released Medicare Advantage star ratings, including composite figures and ratings for each plan. Humana rose 13% in after-hours trading while other MCO shares were much less volatile.

Why it matters: Humana's shares rose as a key plan received a rating of 4 stars for 2027, versus 3.5 stars in 2026. That change should improve marketing in 2027 and materially boost profits in 2028, after a couple of years of that key plan falling below the 4-star threshold. Plans rated 4-star or higher receive 5% higher benchmark rates versus 0% for 3.5-star or lower plans, which can make a significant difference in the profitability of Medicare Advantage plans that typically only target low- to mid-single-digit operating margins. With the important annual enrollment period scheduled to start on Oct. 15, 71% of MA members are currently enrolled in 4-star plans or above for 2027, up from 67% in 2026. So aside from Humana's big improvement, we expect relative stability across the industry, although key MA insurers will likely make announcements about this important measure shortly.

The bottom line: We are raising our fair value estimate for narrow-moat Humana to $502 per share from $350, pushing our assumptions closer to our previous bull case, which depended on significant margin improvement as Humana improves its Medicare Advantage fundamentals. We appreciate this step in the right direction from Humana and think it bodes well for future profit growth at this MA-concentrated firm. Specifically, we now assume Humana can reach at least $40 of earnings per share by 2030, up from closer to $30 in our previous model. However, we still see significant uncertainty around Humana's profit trajectory on both the upside—primarily if margins rise higher or faster than anticipated—and the downside, related to ongoing regulatory concerns.

BLANK PAGEFor more details on how Humana stacks up against its peers, along with the industry's growth prospects, moat ratings, moat sources, and regulatory concerns, please see our September 2026 Industry Landscape on managed care organizations.

We are increasing our fair value estimate to $502 per share from $350 per share to reflect the firm's higher profit prospects after a favorable change in its Medicare Advantage star ratings.

We continue to expect 2026 to be a trough year for the firm's profits. After that, though, we expect Humana's profit prospects to materially improve. Specifically, we assume revenue growth of 8% compounded annually through the five years ended in 2031, but as Medicare Advantage margins rise closer to long-term targets and total operating margins return to the mid-3s, we think adjusted EPS can exceed 35% annually through 2031.

Operationally, most of the company's membership growth will likely come from its fully insured business, particularly its Medicare Advantage business, which could have a disproportionate impact on results. While still one of the fastest-growing end markets in medical insurance, Medicare Advantage has faced substantial headwinds that cut into Humana's profits in recent years. However, we expect operating margins to return to more acceptable levels as the elevated utilization is balanced by more attractive plan designs, a better operating structure, and a rebound in its currently weak MA star ratings.

Humana earns a Narrow Morningstar Economic Moat Rating, which reflects its top-tier position in the US private health insurance market. Like many of its peers, Humana benefits from cost advantages, although its focus on Medicare-related plans makes it unique in an industry where intangible assets appear more important than in other medical insurance niches. We do not recognize intangible assets as a companywide moat source, however. Overall, with its ongoing competitive advantages in the US health insurance industry, we expect Humana to typically produce economic profits above capital costs during the next 10 years, although ongoing challenges in the Medicare Advantage market may make that more difficult than usual in the near term.

Medicare Advantage Leadership Keeps Humana's Moat Rating in Narrow Territory

Humana’s cost advantages relate primarily to scale in government programs like Medicare Advantage. For example, Humana enjoys the number-two position in Medicare Advantage, behind only UnitedHealth. Humana is typically the number-one or -two Medicare Advantage insurer in the counties in which it offers plans, and Medicare Advantage enrollment share can rise closer to 1 out of every 3 in its core local markets. This local scale creates negotiating power over local service providers that cater to seniors in this end market, which we think contributes to its cost advantage over most Medicare Advantage peers.

In Medicare Advantage, the government aims to pay insurers like Humana roughly the same amount as the traditional Medicare program to provide benefits for seniors on a risk-adjusted basis. Then, the insurer needs to lower the costs associated with caring for users by making them healthier to provide additional benefits (dental, vision, pharmacy, and so on) while also generating a profit. Within this framework, insurers like Humana need specialized expertise in managing the needs of seniors to improve their health outcomes and ultimately lower costs. Humana has built up this expertise over decades, which generally helps it create a better experience for end users from beginning to end and contributes to intangible assets specifically in that end-user-controlled market.

With its focus on making the complex healthcare system simpler and driving better health outcomes for end users, Humana typically leads the health insurers that we cover in terms of customer satisfaction, which we believe creates a brand-related intangible asset in this end market. In the consumer-driven Medicare Advantage market, factors like brand and differentiated benefits play a strong role for decision-makers because MA plans are sold directly to end users rather than through intermediaries, like employers, in most of the industry. Also, in Medicare Advantage, the government pays insurers bonuses related to star ratings achieved by each insurance plan (1 being the worst and 5 being the best) on measures of outcomes, processes, patient experience, and access. Typically, Humana stands out positively in terms of star ratings, too, scoring well above peers in 2019-24 ratings. However, MA star ratings in 2025-26 remain significantly below what Humana typically produces based on higher regulatory cutoff standards under Democrats and weaker-than-expected scores on certain aspects like its phone center operations. These lower star ratings cut into Humana's marketing in 2025 and bonus payments in 2026. However, in the long run, we expect Humana to improve its star ratings, with a particular focus in one plan where membership is highly concentrated.

Noninsurance Markets Are Not Additive, but Not Destructive, to Humana's Moat

While probably not moatworthy on a stand-alone basis, in our opinion, Humana's ownership of the fourth-largest pharmacy benefit manager and its growing presence in the provider space (primary care facilities and at-home health) help support the outcomes and cost management needed to run successful health insurance plans. Through both direct ownership and partnerships, Humana remains at the forefront of encouraging value-based offerings to boost health outcomes and better manage costs. Management continues to push members toward full-risk arrangements with providers, which could lead to higher profits for Humana and better health outcomes for patients than those in unaligned provider relationships, too.

Regulatory Concerns Create Potential Headwinds for Humana

Our moat rating for Humana is informed by an analysis of potential changes to the US healthcare system, which is the key environmental, social, and governance risk that Humana faces, in our opinion, as efforts to achieve universal coverage may continue. During the next 10 years, we view scenarios where Humana profitably provides medical and pharmaceutical benefits primarily through government programs, such as Medicare Advantage and Medicaid managed care plans, as more likely than not. Also, we expect its economic profits to rebound once it turns around its Medicare Advantage business in the intermediate term, even in a negative regulatory scenario that includes substantial but manageable clawbacks.

With its prowess in Medicare Advantage plans, Humana looks likely to benefit from strong demographic trends and increasing popularity of that program in the long run.

Humana enjoys industry-leading customer satisfaction metrics that positively influence its brand and reputation in the consumer-driven Medicare Advantage and Medicaid insurance sectors.

Humana's growth trajectory could rebound from current weakness, with management calling for pretax profits to more than double from 2025 to 2028 and grow in the low double digits in the long run at its June 2025 investor day.

Healthcare policy changes may remain a key threat to private insurers like Humana for the foreseeable future.

With its relatively concentrated operations, any missteps in its target markets could have an amplified effect on Humana's bottom line relative to peers.

Humana's top market—Medicare Advantage—appears to be under regulatory scrutiny to curb abuses. Margin pressure, fines, and meager rates notices all appear possible in the short and long run.