Wolfe Research analyst Justin Lake says weakness in Humana shares yesterday was “initially difficult to understand,” with early focus on benefits, which looked reasonably conservative, and then on the company’s lack of Star Rating mention in its 2025 Medicare Advantage press release given that the company did note in its 2024 release that it was the industry leader on Stars. However, “everything came into focus in the afternoon,” when it became clear that investors had potentially found a way to “back into” 2025 Star ratings using the CMS planfinder website. Using a workaround method to get an early view on Stars is “unproven at best,” but the firm found that should this method of backing into 2025 Star results prove predictive, it would indicate that Humana may see a “startling” 67% deterioration in membership in 4 Star plans for 2025 after analyzing 94% of total membership. The firm has an Outperform rating on Humana shares, which declined nearly 12% on Tuesday to close at $279.45 and are indicated down another 25% to $209.32 in Wednesday pre-market trading.
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