Humana says it exceeded Top Quartile Stars goal and affirms $9.00 adjusted EPS guidance
The company expects a one-time benefit in 2028 for investments and shareholder returns, and will hold a virtual investor update on Dec. 10.
Key takeaways
- Humana Inc. (HUM) said in a filing on Oct. 9 that it exceeded its goal of Top Quartile results in the final 2027 Medicare Advantage Star Ratings, provided by CMS on Oct. 8. It affirmed at least $9.00 in 2026 adjusted EPS guidance and expects a one-time 2028 benefit for one-time investments and return to shareholders.
Humana Inc. (HUM) said Friday in a filing that it exceeded its goal of Top Quartile results in the final 2027 Medicare Advantage Star Ratings, which the Centers for Medicare and Medicaid Services, or CMS, provided on Thursday.
Top Quartile results are defined as Stars revenue per member per month, or PMPM, 10% above the peer group median. The peer group includes Centene, CVS, Elevance, HCSC and United.
Stars revenue PMPM is the incremental revenue associated with obtaining a 3.5, 4 or 4.5 Star rating, including the incremental rebate retained and the quality bonus payment received for a 4 Star rating.
To normalize for plan design, geographic mix and membership mix, the calculation uses a consistent 3.0 benchmark of $1,370, a consistent risk score of 1.15, and a rebate of $222 for all payers. It uses current membership and contract distribution from CMS membership files dated September 2026.
Actual 2028 Stars revenue PMPM for Humana and the peer group will differ from the figures presented, the filing said. Those figures depend on actual 2028 membership, contract mix, risk scores, benchmark and rebates. The comparison is shown in a graphic in the filing.
The company said it intends to manage its product and benefit structure assuming performance that approximates Top Quartile results. It anticipates that some of the outperformance in 2028 relative to Top Quartile will be one time in nature, and it will manage its expenses accordingly.
As a result, the company expects a benefit for 2028 that it will use for one-time investments and return to shareholders. It will share the level and expected use of that benefit once it has more 2028 information.
That information will include competitive dynamics, the rate and regulatory environment, and expected contract mix and membership size. The company intends to share it before or when it gives detailed 2028 financial guidance on its fourth quarter 2027 earnings call.
Humana also said it believes it is well positioned to deliver on its commitment to unlock the earnings potential of the business by 2028, as laid out at its 2025 Investor Day.
Separately, the company affirmed its guidance of at least $9.00 in adjusted earnings per common share for the year ending Dec. 31, 2026. The guidance is consistent with an earlier press release dated July 29 and was affirmed in an 8-K filed in September.
Humana said it is unable to reconcile that guidance to GAAP diluted earnings per share without unreasonable effort, because it is still completing the financial close for the three and nine months ended Sept. 30, 2026. The guidance is preliminary and subject to change.
The company does not expect changes to its adjusted EPS guidance. It does expect potential changes to its GAAP EPS guidance because of its ongoing value creation and other strategic initiatives.
As previously announced, the company will hold a virtual investor update on Dec. 10, 2026. It will mark progress against the framework from its 2025 Investor Day, including initiatives expected to support earnings growth through 2028. Supplementary audio commentary from President and Chief Executive Officer Jim Rechtin is available on Humana's investor relations page.