According to preliminary data from the Centers for Medicare and Medicaid Services (CMS), Humana Inc. (NYSE:HUM) faces a substantial drop in its Medicare Advantage (MA) Star Ratings for 2025.
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00:00Wow, I don't even know what to say here.
00:03I kind of want to start with Humana,
00:04even though we have so many other stories.
00:06We have war, China, so many things to talk about,
00:10but this Humana just jumps out
00:12like a sore thumb on my screen here today.
00:15It gets rocked for like 30 bucks yesterday
00:19and people coming and buying the dips.
00:21I saw them saying, yep, buy the dip.
00:23This goes to show, don't buy the dip on day one.
00:27You usually don't want to buy the dip on day one
00:29when it's a bad headline.
00:31And we get the bad headline.
00:33Now you get multiple analysts commentary here
00:35talking about their earnings getting whacked.
00:38A, B, give us these details here on Humana
00:40because this stock is your disaster stock of the day.
00:44Yeah, and the title of the show,
00:46an unhealthy market because you know, of course,
00:49Humana, the healthcare insurance company.
00:52So basically they're these Medicare Advantage star ratings.
00:58Last year, 94% of Humana's members
01:03had four stars or higher.
01:05So either four stars, four and a half stars
01:07or five stars on this plan.
01:09This year, a change in some sort of contract
01:14is now leaving Humana with only 25% of its members
01:18in plans rated four stars or higher.
01:21So last year they had 94% of their members
01:23in four star or higher plans.
01:25This year, it's only set to be 25%,
01:29which then limits the amount of money
01:32that Humana gets for different things
01:36from like the government and stuff.
01:38So either way, the plans here,
01:42the Medicare Advantage star ratings here
01:45is bad news for Humana.
01:47They're saying, the article that I read this morning
01:49is saying that there could be some,
01:51despite appealing potential errors
01:54in the rating calculations
01:55and actively working on improvement strategies
01:58to boost future performance and quality payouts,
02:00Humana acknowledges increased risk
02:03in meeting its financial targets
02:04while remaining committed to enhancing value
02:06for customers and shareholders.
02:08So either way, it sounds like Humana came out
02:10and said like, yeah, this isn't good
02:11for our financial targets,
02:12but they're trying to work on it.
02:15That's basically the headline.
02:16What's hammering Humana, not just this morning,
02:18but hit yesterday as well.
02:21And it appears what Humana's loss is,
02:25seems to be UNH and the other healthcare providers
02:28gain here, because UNH is ripping this morning.
02:31It's up 15 points.
02:32CVS is trading up another 4% here.
02:35We know they got the Aetna back on them.
02:39This is a hard one to figure out,
02:40the Love Triangle and obviously there's others,
02:43there's CI, WellPoint or whatever it is, WellCare.
02:48There's just a pile of these things
02:51that are going to trade.
02:52It's a tough one to figure out,
02:54because naturally thinking, you'd think like,
02:56well, Humana getting whacked,
02:58they're going to whack UNH too,
03:00but that is not happening.
03:02That is not happening at all.
03:03The opposite is occurring,
03:04where UNH is actually rallying on this.
03:06So this is very interesting.