HUM · Humana

The thesis

Humana's shares are modestly more likely than not to beat the S&P 500 over the next three months. The reason is the 6 November 2026 third-quarter report: medical costs came in better than guided, and the 2026 adjusted earnings floor rose to $9.50, which keeps the Star Ratings recovery on track to lift 2028 margins. The 10 December 2026 virtual investor update settles how much of that recovery reaches shareholders.

Humana's 6 November Form 8-K showed a third-quarter Insurance segment benefit ratio of 93.7%, below the "slightly above 94 percent" it had guided. The benefit ratio is the share of premiums paid out as medical costs. The adjusted loss was $0.70 per share, against a $3.24 profit a year earlier. Revenue was $41.16 billion, up from $32.65 billion.

The same filing raised 2026 adjusted earnings per share (EPS) guidance to at least $9.50, from at least $9.00. It raised generally accepted accounting principles (GAAP) EPS guidance to at least $15.09, from at least $6.52. On 9 November, Humana launched cash tender offers for eight series of senior notes, capped at $1.5 billion in aggregate purchase price, per its 8-K.

The rating is Medium because the business evidence keeps improving, but the shares already trade near their high. The price already reflects the recovery: the 11 November close of $446.31 sat 2.2% below the 52-week intraday high of $456.50 set on 9 October, the day the 2027 Star Ratings were released. Further gains depend on 2027 and 2028 figures Humana has not yet published.

Bullish and bearish views on Humana Inc.

The bull case on Humana Inc. (HUM), in brief: costs came in better than guided. The bear case: the year-over-year earnings drop is steep.

Bull case

• Costs came in better than guided. The Q3 Insurance benefit ratio was 93.7% against guidance of slightly above 94%, per Humana's 6 November Form 8-K. Healthcare Dive reported the same day that analysts credited better-controlled medical costs and strong investment income.
• The earnings floor rose to $9.50. Humana lifted 2026 adjusted EPS guidance to at least $9.50 from at least $9.00 on 6 November. Investors now have a firm floor for the year, with only the fourth quarter left to report.
• Early 2027 enrollment is beating plan. CEO Jim Rechtin said on the 6 November call that early sign-ups beat Humana's forecast, with strong recapture of members whose plans closed, per Healthcare Dive. About 600,000 of 7.2 million Medicare Advantage members were affected by 2027 plan exits.
• The ratings lead over peers holds. Humana said on 9 October 2026 that 95% of its Medicare Advantage members are in 4-star-or-better plans for 2027, up from about 20% for 2026. CVS Health's 4 November release put Aetna at 69%.
• The balance sheet is being used. Humana's 9 November 8-K set a $1.5 billion cap on tender offers covering notes due from 2027 to 2032, expiring 16 November. A company buying back debt after a loss-making quarter is signalling confidence in its cash position.
• Post-report targets mostly sit above the price. Wells Fargo raised its target to $602 on 12 November, Barclays to $587 on 9 November and Jefferies to $520 from $420 on 10 November, per Benzinga and Fiscal.ai. Piper Sandler moved to $526 and Guggenheim to $521.

Bear case

• The year-over-year earnings drop is steep. The Q3 adjusted result was a $0.70 loss per share against a $3.24 profit in Q3 2025, per the 6 November Form 8-K. The 8-K says 2026 adjusted EPS still declines year over year because of the 2026 Star Ratings headwind.
• GAAP earnings carry large noncash items. The 8-K says a noncash option liability tied to the HPS (BlackRock) CenterWell clinic venture will be recorded in the fourth quarter and is excluded from adjusted EPS. The $15.09 GAAP floor is a poor guide to operating earnings.
• No 2027 numbers yet. Humana declined to give 2027 margin guidance on 6 November and said it is too early to size membership, per Healthcare Dive. Management expects 2027 growth to be smaller than in 2026, when more than 1 million seniors joined.
• Risk-adjustment exposure is undisclosed. The Q3 release cites the final risk adjustment data validation (RADV) rule as a risk without disclosing an accrual. Elevance Health accrued $935 million year to date for similar exposure, per its 21 October Form 8-K.
• Some brokers see the price as full. TD Cowen raised its target to $430 from $370 on 11 November, below that day's $446.31 close, per Benzinga. JPMorgan kept a Neutral rating with a $484 target on 10 November.

Price setup

The shares closed at $446.31 on 11 November 2026, 2.2% below the 52-week intraday high of $456.50 set on 9 October. The 52-week closing low was $163.67 on 12 March 2026. The three-month change is 16.2% in adjusted daily closes.

The earnings week moved the price in steps. The shares closed at $411.79 on 5 November, $433.74 on 6 November, $423.22 on 9 November, $438.06 on 10 November and $446.31 on 11 November. Benzinga tied the 10 November gain to the raised outlook and a new cancer-care model with Evolent and American Oncology Network, launched in eight states, that removes prior authorization.

As of 11 November, the 50-day moving average was $406.25 and the 200-day moving average was $313.73. The kill line sits below the 50-day average and below the price range that held before the 9 October ratings release; a close there would erase both the ratings move and the earnings move.

Chief Legal Officer Joseph Ventura sold 5,495 shares in the open market at $433.85 on 9 November, per a Form 4 filed 12 November. The next quarterly report is not expected until February 2027.

Catalysts ahead

• 16 November 2026: Expiration of Humana's $1.5 billion cash tender offers for senior notes. Shows how much debt Humana retires ahead of 2027 and how much cash it commits to the balance sheet after a loss-making quarter.
• 7 December 2026: Medicare open enrollment for 2027 coverage closes. Fixes 2027 membership size and mix after early sign-ups ran ahead of Humana's forecast; it is the main input to 2027 margin guidance.
• 10 December 2026: Humana virtual investor update. First venue to show how the 2028 Star Ratings benefit splits between reinvestment and shareholder returns, and whether the 3% 2028 Medicare Advantage margin goal holds.
• ~31 December 2026 (est.): Closing of the HPS (BlackRock) CenterWell clinic venture. Replaces the put-option clinic ventures and triggers the noncash option liability Humana expects to record in the fourth quarter.
• ~1 February 2027 (est.): CMS 2028 Medicare Advantage Advance Notice. Sets the proposed 2028 payment rate and any changes to quality-bonus or risk-adjustment mechanics behind the 2028 margin target.
• ~10 February 2027 (est.): Q4 2026 results and first 2027 guidance. Shows whether the $9.50 adjusted EPS floor held and sets the first numeric 2027 earnings and margin outlook.

What would change the view

A daily close below $390, back in the early-October range before the 2027 Star Ratings release, which would erase the ratings and earnings gains. A cut to the $9.50 adjusted EPS floor or a 2028 CMS Advance Notice that reduces Medicare Advantage payment would also break the recovery case.

The risks this note tracks, each with what would confirm it:

• Fourth-quarter medical costs run above plan and erase the Q3 improvement. Confirmed by: Humana lowers the $9.50 adjusted EPS floor or cites rising Medicare Advantage utilization before or at the Q4 report.
• A CMS risk-adjustment data review produces a charge like the $935M Elevance accrued. Confirmed by: Humana discloses a RADV accrual or CMS repayment estimate at the investor update, in a filing or with Q4 results.
• CMS policy reduces the value of quality-bonus or risk-adjustment payments before 2028. Confirmed by: the 2028 Advance Notice or a CMS proposed rule cuts Medicare Advantage payment or quality-bonus mechanics.
• New 2027 enrollees carry higher costs and squeeze 2027 margins. Confirmed by: 2027 guidance implies a benefit ratio at or above 2026 levels despite membership growth.
• Humana spends more of the 2028 ratings benefit on one-time investments than investors expect. Confirmed by: the 10 December 2026 investor update directs most of the benefit to reinvestment or lowers the 3% 2028 margin goal.

What it trades with

Humana trades with the other large Medicare Advantage insurers, UnitedHealth, CVS Health, Elevance and Centene, on Centers for Medicare & Medicaid Services (CMS) rate notices and cost-trend news. CVS reported a Health Care Benefits medical benefit ratio of 91.3% in Q3 2026 against 92.8% a year earlier, per its 4 November 8-K. A cost-trend warning from any large peer would weigh on the whole group.

Humana's revenue is set annually by CMS rates and plan bids. The shares tend to move on policy and medical-cost data more than on the economic cycle or technology spending. The CMS 2028 Advance Notice, expected in early 2027, is the shared event for the group.