Humana slashed its annual profit forecast as lower Medicare ratings squeezed bonuses

The health insurer revised its full-year GAAP earnings target to a minimum of $6.52 per share, compared with its earlier projection of at least $8.36 per share. The adjusted forecast, however, was left intact at a minimum of $9 per share.

The Medicare Advantage Star Ratings, which run on a scale of one to five, are tied to bonus payments from the Centers for Medicare and Medicaid Services. A significant decline in the number of Humana's plans rated four stars or higher has weighed on its 2026 bonus payments, the company said.

Humana's second-quarter profit came in at $694 million, or $5.73 per share, versus $545 million, or $4.51 per share, in the same period last year. Total revenue rose 26% to $40.87 billion.

On an adjusted basis, the company earned $7.61 per share in the quarter. Analysts had expected adjusted earnings of $7.26 per share, according to the Wall Street Journal.

The company's benefit ratio — the share of premium revenue paid out to cover medical costs — came in at 91.2% for the quarter, which Humana said was in line with its expectations.

Humana also reaffirmed its expectation that individual Medicare Advantage enrollment will expand by roughly 25% compared with 2025, a gain the company attributes to new sales, better member retention, and adjustments to how it serves customers.

Across the industry, health insurers have grappled with elevated medical costs stemming from a combination of greater patient demand for services and steeper drug prices, according to the Wall Street Journal. Seniors have accounted for a disproportionate share of that increased demand, a trend that hits Humana harder than rivals because of how heavily its business depends on Medicare Advantage.

Humana stock fell about 9% in premarket trading on Wednesday.