Humana 2026 Outlook: Why Stock & Profits are Falling

 Why Is Humana Stock Dropping in 2026? Humana's Quarterly Loss and Earnings Forecast Explained

​Key Takeaways

• ​Financial Results: Humana reported an adjusted quarterly loss of $3.96 per share, slightly better than analyst fears but still reflecting a massive year-over-year decline.
• ​The "Star Ratings" Cliff: The biggest hit to 2026 earnings is a projected $3.5 billion revenue headwind due to lower Medicare Advantage Star Ratings.
• ​Profitability Squeeze: 2026 earnings per share (EPS) are forecasted at approximately $9.00, a sharp drop from $17.14 in 2025.
• ​Strategic Market Exits: To stabilize finances, Humana is exiting 194 counties and cutting certain "extra" benefits like over-the-counter (OTC) allowances.
• ​Comparative Outlook: While UnitedHealth shows resilience through diversification (Optum), Humana’s heavy reliance on Medicare Advantage makes it highly vulnerable to regulatory shifts.

Introduction: Understanding Humana's Financial Troubles

​If you follow the health insurance industry or own Humana stock, you've likely noticed troubling headlines recently. On February 11, 2026, Humana officially confirmed the scale of its financial challenges, reporting a significant quarterly loss and providing a sober 2026 outlook. For investors, Medicare Advantage members, and industry watchers, this raises critical questions: What caused this decline? Why is the stock dropping? What does this signal about the company’s long-term direction?

​The answer lies in a "perfect storm" of rising medical costs and a catastrophic drop in quality-based government bonuses. Humana, one of America's largest health insurers, is struggling with a fundamental problem: medical expenses are rising faster than the government is willing to pay. Unlike its competitor, UnitedHealth Group, Humana lacks the massive diversification needed to absorb these shocks. This explains why Humana's 2026 outlook is considerably darker than many anticipated.

What Caused Humana's $3.96/Share Quarterly Loss?

​Humana's latest results for the end of 2025 shocked the market. The company posted an adjusted loss of $3.96 per share. While this was technically "better" than the $4.01 loss some analysts feared, it confirmed that the company is in a defensive crouch.

​1. The "Star Ratings" Revenue Cliff

​The single most damaging factor for Humana heading into 2026 is the drop in its Medicare Advantage Star Ratings. These ratings determine the "Quality Bonus Payments" an insurer receives from the federal government. For 2026, Humana expects only 20% of its members to be in plans with 4 stars or higher—a massive drop from 94% previously. This "Star Ratings Cliff" represents a $3.5 billion revenue headwind, making it nearly impossible for the company to maintain previous profit levels.

​2. Rising Medical Utilization (The "GLP-1" and Aging Factor)

​Healthcare inflation has accelerated. In 2025, Humana saw members using healthcare services at much higher rates. Two main drivers are at play:

• ​The Post-Pandemic Surge: Older adults are increasingly seeking elective surgeries and routine care that was delayed.
• ​The High Cost of Innovation: The explosion in demand for GLP-1 drugs (weight-loss and diabetes medications) and new biological treatments has added billions to the industry's cost base.

​3. Inadequate Premium Pricing

​Humana miscalculated the "Medical Loss Ratio" (MLR) for its 2025 plans. In simple terms, the premiums they collected weren't enough to cover the claims that came in. By the time the data reflected this trend, the company was already locked into its 2025 contracts, leading to the reported quarterly losses.

Why Is the 2026 Earnings Forecast So Negative?

​During its recent earnings call, Humana's management provided a very cautious forecast for 2026. The company expects Earnings Per Share (EPS) of roughly $9.00. To put that in perspective, they earned over $17.00 per share in 2025.

​Continued Medical Cost Pressure

​Humana does not expect medical inflation to vanish. Hospital labor costs remain high, and the aging "Baby Boomer" generation requires more complex, frequent care. To combat this, Humana is forced to pivot from "growth at all costs" to "margin protection."

​Strategic Market Exits

​In an unprecedented move, Humana is exiting 194 counties where its plans were consistently unprofitable. While this helps the bottom line in the long run, it leads to a loss of scale and immediate restructuring costs that depress the 2026 forecast.

The Medicare Advantage Crisis: Humana’s Exposure

​Humana’s troubles are a window into a broader crisis. Medicare Advantage (MA) was once the "crown jewel" of the insurance industry, but the rules are changing.

• ​CMS Reimbursement Environment: The Centers for Medicare and Medicaid Services (CMS) has become stricter. Reimbursement increases are now often below the rate of medical inflation.
• ​Concentration Risk: Unlike UnitedHealth, which has Optum (a massive health services and tech business), about 70% of Humana’s revenue is tied directly to Medicare Advantage. When the government squeezes MA, Humana has nowhere to hide.

Is Humana Cutting Benefits in 2026? What Members Should Know

​For the millions of Americans enrolled in Humana plans, the financial news isn't just about stock prices—it’s about their healthcare. Humana has admitted that to reach its $9.00 EPS goal, it must reduce costs.

​Likely Benefit Adjustments for 2026:

• ​Reduced "Extra" Benefits: Look for cuts in Over-the-Counter (OTC) allowances, fitness memberships, and dental/vision stipends.
• ​Higher Out-of-Pocket Costs: Deductibles and co-pays for specialists are likely to rise.
• ​Narrower Networks: To save money, Humana may limit the list of "in-network" doctors and hospitals in certain regions.

​Humana is attempting to balance these cuts so they don't lose too many members to competitors, but they have signaled that "margin over membership" is their new priority.

Humana vs. UnitedHealth: A Tale of Two Insurers

​The contrast between Humana and UnitedHealth (UNH) has never been sharper. While both face rising costs, UNH’s stock has shown more resilience.

• The Optum Advantage: Through Optum, UnitedHealth integrates care delivery, pharmacy services, and data analytics. When medical costs rise, UnitedHealth often "pays itself" (Optum), keeping the profit within the parent company. Humana lacks this deep vertical integration.
• ​Scale and Leverage: UnitedHealth’s massive size gives it more power to negotiate lower rates with hospitals. Humana, while large, doesn't have the same "bully pulpit" in every market.

​What Does This Mean for the Future?

​As we navigate 2026, Humana is at a crossroads. There are three potential paths forward:

1. ​The Recovery Path (2027 and Beyond): If Humana successfully cuts costs and improves its Star Ratings for the 2027 cycle, the stock could see a massive rebound. 2026 is being treated as a "reset year."
2. ​The Acquisition Scenario: With its stock price depressed, Humana remains a target for a larger player (like Cigna or even a tech giant) looking to buy a massive Medicare footprint at a discount.
3. ​The Attrition Risk: If benefit cuts are too deep, members might flee to UnitedHealth or Aetna, leaving Humana with a smaller, sicker, and less profitable pool of members.

Frequently Asked Questions (FAQs)

​1. Why did Humana's stock drop so much in early 2026?

The drop was triggered by the 2026 earnings guidance of $9.00 per share, which was far lower than investors expected, combined with the $3.5 billion Star Ratings revenue loss.

​2. Are Humana's Medicare Advantage plans still safe?

Yes. Humana is a financially stable company with deep reserves. While they are cutting some "extra" benefits and exiting certain counties, they are not at risk of going out of business.

​3. When will Humana release 2026 plan details?

Specific plan changes for 2026 will be made public in October 2025, just before the Annual Enrollment Period (AEP).

​4. Should I sell my Humana stock?

This depends on your strategy. Most analysts see 2026 as a painful transition year. If you believe in the long-term value of the Medicare market, the current dip might be a "buy" opportunity, but near-term volatility is guaranteed.

Conclusion: Navigating the 2026 "Reset"

​Humana’s current situation is a sobering reminder of the risks in the healthcare sector. The wider quarterly loss and the $3.5 billion Star Ratings headwind have forced the company to stop focusing on growth and start focusing on survival.

​For 2026, the theme is "stabilization." Expect a leaner Humana with fewer plans, slightly fewer benefits, and a much tighter focus on efficiency. While the 2026 earnings decline is significant, the company is betting that this "short-term pain" will lead to a more sustainable, profitable business by 2027. For now, investors and members alike should keep a close eye on the October plan announcements to see exactly how these financial pressures will reshape their healthcare experience.