Humana shares surged 12%, poised to close at their highest level in more than two years, after the insurer won sharply improved scores on bonus-generating Medicare quality measures.
Late Thursday, the agency that oversees Medicare unveiled its annual quality ratings, which rank Medicare insurers on a scale of one to five stars. Insurers that do well get bonuses that can make a huge difference in their financial performance. The newly revealed scores will affect payments in 2028.
Analysts estimated that roughly 95% of Humana's enrollment would be in plans ranked with four stars or more, up from around 41%. J.P. Morgan analysts said the jump was significantly better than expected, and "a clear win" for the company.
Humana said the result will translate into around $160 extra in revenue per member each month, well above its goal and also the performance of peer companies. The company said it planned to use the benefit for "one-time investments and return to shareholders."
In other scores:
-- Medicare giant UnitedHealth saw its performance worsen. The company said the result was in line with its expectations, and its shares rose 1%.
-- CVS Health's Aetna also saw a decline, which Evercore analysts suggested was "slightly worse than expectations." The company said Aetna was one of the highest-performing among big publicly-traded Medicare plans. CVS shares were down 1.6%.
-- The biggest quality-ratings dropoff was at the smaller company Alignment Healthcare, which said it planned a legal challenge to the results. Its shares dropped 16%.